Time to rethink foreign worker levies, say struggling SMEs

Quotas should not impede growth.

Policymakers should consider changing current foreign worker levies to help firms cope with slower growth, according to a position paper by the Singapore Business Federation.

The paper stated that businesses question the need for foreign worker levies when quotas on maximum number of foreign workers allowed here has already been established.

“Policy implementation should take into account market-driven dynamics in order to promote growth and competitiveness instead of impeding growth,” said Professor Hui Weng Tat of the Lee Kuan Yew School of Public Policy. 

SBF said that the levies increase the cost of doing business, especially for the sectors that are more heavily reliant on foreign manpower such as construction, retail, and food and beverage. 

“We recommend that the Government recalibrates the levy quantum to take into consideration the latest net inflow of foreign workers into Singapore. We believe that there is scope to further defer the planned increase or even reduce some levies,” said the SBF.

For instance, the SBF urged the government to remove the levy for S Passes since there will still be qualification salary and quota restriction for S Pass applications. 

The levies for higher skilled foreign workers can also be reduced to encourage businesses to employ such workers.

“For manpower, it will be prudent to apply differentiated quotas across various sectors given the disparity in manpower needs, where one sector may require more foreign workers over another due to the inability to attract Singaporeans,” Hui added.