Foreign Worker Quota for Construction, Shipyard and Process Sectors to be Reduced

The situation

Singapore’s Ministry of Manpower has announced that the foreign worker quota for S Pass workers in the construction, marine shipyard and process sectors (which incudes the manufacturing of petroleum, petrochemicals, specialty chemicals and pharmaceutical products) will be cut in a phased approach, the first in January 2021 from 20% to 18%, and subsequently in January 2023, to 15%.

Impact for foreign nationals

Existing S Pass holders in the affected industries may not be able to renew their passes if their company exceeds the quota.

Foreign nationals seeking to obtain an S Pass after these quota reductions may not be able to enter Singapore if their employer has already met the foreign worker quota.

Impact for employers

Employers in the affected industries should hire more local workers so the company can retain its existing S Pass holders when the quota reductions take effect.

Background

• Progressive reduction of quota. Singapore imposes quotas that restrict the number of foreign workers an employer may hire under the S Pass and Work Permit categories. The S Pass quota has been progressively cut since July 2012, when it was reduced from 25 percent to 20 percent (for all sectors), and then again in July 2013 from 20 percent to 15 percent and most recently in January 2020 to 13% (for the services sector).
• Current reduction rationale. Because the number of S Pass holders in the construction, shipyard and process sectors has been growing by 3.8 per cent per year over the past two years, and because of the lack of local skilled workers in these industries, the government is implementing this policy to encourage local workers to participate in these trades. The current reduction reflects a continuing government policy of ensuring that local workers have access to highly-skilled jobs.
• Global comparison. Quotas and ratios are effective tools used by governments worldwide in regulating the intake of foreign workers. Some recent examples of this are in Indonesia, Saudi Arabia, Switzerland and the United Kingdom. Many countries reduced foreign worker quotas for 2020 to encourage local worker participation in the labor market, such as in Kazakhstan and Russia.

Looking ahead

• Services sector quota faces further reduction. The government will reduce the services sector foreign worker quota again in January 2021, from the current 13% to 10%.
• Manufacturing sector likely to face quota reduction. Singapore’s finance minister stated in a press conference that because the manufacturing sector is also lacking local skilled workers, it is possible that the government will reduce the foreign worker quota in this sector in the future. Fragomen will report on relevant developments.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].