Singapore’s Foreign Worker Quota – Eligibility, Calculation, FAQs

  • Post category:Singapore

Depending on the company’s size and industry, Singapore’s foreign worker quota places a limit on the number of foreign employees that can be hired. In order to manage the entry of foreign workers into Singapore and guarantee that its people have access to employment opportunities, the government adopted the foreign worker hiring quota. 

Additionally, the quota changes according to the economy’s various sectors. For instance, compared to the service sector, the construction sector has a higher percentage of foreign workers.

Singapore’s Foreign Worker Quota

Singapore has had a foreign worker hiring quota in place for a number of years, and it has undergone several adjustments to fit the demands of the nation. To make sure the quota system is functional and efficient, the government frequently reviews it. The quota system involves taxes and other restrictions on the employment of foreign workers in addition to limiting the quantity of foreign workers that a company may hire.

HOW IS THE FOREIGN WORKER QUOTA DETERMINED?

The Ministry of Manpower (MOM) initially calculates the number of local employees that are employed in the company using data from the company’s Central Provident Fund (CPF) account before determining the international worker quota.

Only if the following requirements are met will the local employees be included in the quota entitlement:

  • An employee who is a Singaporean or a Permanent Resident and receives the Local Qualifying Salary (LQS) of at least $1,400 each month is considered one local employee.
  • An employee who is a Singaporean or a Permanent Resident and makes half the LQS, or at least $700 but less than $1,400 per month, is regarded as a 0.5 local employees.

These employees are not included when determining the quota, in addition to those whose salaries are below $700 per month:

  • Owners of partnerships or sole proprietorships.
  • Employees who work for three or more employers and get salary and CPF payments.

The local employee count is updated every Saturday, and the following workday is the appropriate time to check the quota balance. 

The employees may be assigned to higher levy tiers as a result of the late or non-payment of CPF contributions and salary disclosures, which may have a negative impact on the quota.

FOREIGN WORKER QUOTA AND LEVY IN SINGAPORE

Businesses must pay the levy when using international employees. The tax is calculated by comparing the percentage of domestic employees to foreign employees at the company. 

The purpose of this program is to encourage companies to hire more domestic workers and lessen their dependence on overseas labor.

FOREIGN WORKER QUOTA AND LEVY FOR F&B BUSINESSES

The food and beverage (F&B) sector of the economy of Singapore plays a significant role in the nation’s vibrant and diverse food culture. This industry has higher tax rates and a lower foreign worker quota than other industries. This is to guarantee that Singaporeans are given preference in employment opportunities.

For the growth of the industry, the Singaporean government offers a few F&B-focused programs.

One program that helps F&B businesses in acquiring equipment and technologies that can improve their operations and output is the Production Solutions Grant (PSG). This can include things like inventory management software, point-of-sale systems, and automated kitchen appliances.

Another program that F&B businesses might benefit from is the Capability Development Grant (CDG), which provides financial assistance for businesses to increase their capacities in areas like marketing, branding, and human resource management.

FOREIGN WORKER QUOTA AND LEVY FOR SELF-EMPLOYED

Self-employed people are allowed to hire one foreign worker, in contrast to businesses. As a result, they must carefully select the foreign worker and make sure they possess the knowledge and expertise needed to advance the company.

The good thing is that a more flexible 20% foreign worker quota is in place for independent contractors. This gives more freedom to support the firm by hiring international labor.

It is significant to remember that self-employed people must also pay a monthly charge in order to hire foreign labor. The levy rates vary according to the industry in which the company works and the quantity of foreign employees they hire.

HOW TO CALCULATE THE TOTAL WORKFORCE?

As the foreign worker quota is capped at a proportion of the overall employment, the applicant must first determine the number of local employees before calculating the total workforce. The formula to determine the entire staff is:

The full staff =LQS count (based on the average of three months’ worth of CPF payments and stated salaries) + S Pass holders and Work Permit holders

It’s crucial to take Employment Pass (EP) holders out of the workforce total calculation.

QUOTA FOR FOREIGN WORKERS

The maximum number of foreign workers varies by industry and includes both S Pass and Work Permit holders.

Sector Maximum number of foreign workers*
Construction LQS count x 7
Process LQS count x 7
Marine shipyard LQS count x 3.5
Manufacturing LQS count x 1.5
Services LQS count x 0.538462

QUOTA FOR WORK PERMIT HOLDERS

The quota for those with work permits varies depending on the industry.

Sector Quota (from 1 Jan 2023 onwards)
Construction 87.5%
Process 87.5%
Marine shipyard 77.8%
Manufacturing 60%
Services 35%

Please take note that the Work Permit Quota for Employees from the People’s Republic of China (PRC) is as follows for the Manufacturing and Services Sectors:

  • Manufacturing: 25%
  • Services: 8%

QUOTA FOR S PASS HOLDERS

The quota for S Pass holders varies by industry and is included in the overall foreign worker quota.

Sector Quota (from 1 Jan 2023 onwards)
Construction 15%
Process 15%
Marine shipyard 15%
Manufacturing 15%
Services 10%

QUOTA FOR EMPLOYMENT PASS (EP) HOLDERS

Holders of Employment Passes (EPs) are not subject to quota restrictions in Singapore. For EP holders, there is a minimum salary requirement:

  • $5,000 a month (in general)
  • $5,500 a month (for financial services)

Refer to the Singapore Employment Pass Scheme for more information.


FOREIGN WORKER ELIGIBILITY

To get hired as a foreign worker in Singapore, the applicant must meet a number of requirements and have a particular degree of skill.

  • Qualification Standards – For foreigners looking for work in Singapore, the MOM establishes stringent eligibility requirements. A minimum age requirement, educational or professional qualifications, employment experience, and a spotless record free of any offenses are some of these requirements. The eligibility requirements vary depending on the sector.
  • Skill Levels – The MOM additionally classifies international employees according to their skill levels. They fall into one of three categories: skilled, semi-skilled, or unskilled labor. Semi-skilled work just requires primary or secondary education, whereas skilled work requires postsecondary education or a comparable level of experience. Unskilled labor requires no formal training and little prior work experience.

Reach out to us at Relin Consultants – Leading Global Business Set Up Partners for further assistance.

FAQs

Does Singapore’s foreign worker quota apply to all foreign employees there?

No, the S Pass and Work Permit holders are the main groups affected by the foreign worker quota. Holders of Employment Passes, who are often more experienced workers, are exempt from dependency ratio ceilings but must meet certain eligibility standards.

How frequently is the foreign labor quota reviewed?

The Singaporean government reviews the foreign worker quota on a regular basis to make sure it remains responsive to changing demographics, labor market dynamics, and economic situations. During the review process, the government takes into account the opinions of numerous stakeholders, including corporations, trade groups, and unions.

Is the foreign worker quota the same for all industries?

No, different industries have different foreign worker quotas. Construction and manufacturing are two industries that tend to have higher dependency ratio ceilings than other industries, allowing for a greater proportion of foreign workers. The dependency ratio ceilings are often lower in other industries, such as services and finance.

What are the foreign worker quotas in Singapore?

The Dependency Ratio Ceiling (DRC) policy, often known as Singapore’s foreign worker quota policy, places restrictions on the percentage of foreign workers that companies can hire in particular industries. The goal of the strategy is to maintain a balance between local workers’ employment options and the need for international labor.

Why does Singapore enforce foreign worker quotas?

Singapore uses the foreign worker quota to solve a variety of social and economic issues. It helps in controlling the inflow of foreign labor to avoid becoming overly dependent on them, preserve the local workforce’s competitiveness, and protect their interests.