Singapore Government Press Release

Media Division, Ministry of Information and The Arts

36th Storey, PSA Building, 460 Alexandra Road, Singapore 119963. Tel: 3757794/5

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The Ministry of Labour (MOL) has reviewed the Foreign Worker Levy rates. With effect from 1 April 1998, the levy rate for unskilled foreign workers in the construction sector will be raised from the current $440 per month to $470 per month. The levy rate for Foreign Domestic Workers (FDWs) will also be raised from the current $330 per month to $345 per month with effect from 1 April 1998. In addition, MOL will be reducing the levy for skilled foreign workers in all sectors from the current $200 per month to $100 per month with effect from 1 April 1998.

2 The objective of the levy is to regulate demand for foreign workers. The levy has to be adjusted from time to time to remain effective in meeting its objective. The number of foreign workers in Singapore has increased significantly from more than 350,000 at the beginning of last year to more than 450,000 today. The main cause of the increase was the sharp rise in the number of foreign construction workers and FDWs. Hence the need to adjust the levy to moderate rising demand for foreign workers in these two sectors.

Levy for Construction Sector

3 Government is concerned over the heavy dependence of the construction sector on unskilled foreign workers. This sector has suffered from low productivity since 1995. The continued reliance on unskilled foreign workers will hinder upgrading of the construction industry. Moreover, the presence of a large number of NTS construction workers will exacerbate the social problems caused by foreign workers.

4 The Ministry had earlier announced a package of measures aimed at reducing the demand for foreign construction workers. One of the measures to be taken up by the Ministry of National Development is to legislate buildability for construction projects as a requirement for building plan approval. By adopting more buildable designs and using more efficient methods of construction, the need for manpower can be reduced and productivity improved. Another measure is a new work permit allocation system where work permit entitlements are given to main contractors. The third measure is levy adjustments for foreign workers in the construction sector to moderate rising demand.

5 The levy for unskilled foreign workers in the construction sector will be raised from $440 to $470 with effect from 1 April 1998. The Ministry intends to review and adjust the foreign worker levy regularly. This is to ensure that contractors do not bring in more unskilled foreign workers than necessary. Regular review of the levy will also encourage the construction industry to upgrade and reduce its heavy dependence on unskilled foreign labour.

Levy for Foreign Domestic Worker

6 There are presently more than 100,000 FDWs in Singapore. In the last 5 years, the levy for FDWs has been increased by only 10% whereas income levels of Singaporeans have gone up by 25%, after adjusting for inflation. Hence, FDWs have become affordable to more families. More households are now turning to employing FDWs as an easy option instead of considering other alternatives such as child and elderly care centres.

7 In order for the levy to be effective in regulating demand for FDWs, it should be increased regularly to keep pace with the rise in income levels of Singaporeans. Hence, MOL has decided to raise the levy for FDWs from $330 to $345 per month with effect from 1 April 1998. This is approximately a 4.5% increase.

8 MOL intends to adjust the levy on foreign domestic workers on an annual basis. The levy adjustment will be announced around October to November each year and will take effect in April of the following year. Existing and prospective employers of FDWs are advised to take into consideration future increases in levy when considering employing a foreign domestic worker.

Levy for Skilled Foreign Workers

9 Currently, the levy rate for foreign workers who are certified skilled is $200 per month. MOL has decided to reduce this to $100 per month with effect from 1 April 1998. This is consistent with the policy of encouraging the employment of skilled foreign workers while moderating the demand for unskilled foreign workers. The reduction in levy for skilled workers will help employers to recruit and retain skilled foreign workers.

10 The levy rate of $100 per month will be applicable to all skilled foreign workers in the construction, marine, manufacturing and service sectors. In particular, MOL urges construction companies to upgrade the skills of their foreign workers or to bring in a greater proportion of skilled foreign workers. Contractors who employ skilled foreign workers or upgrade the skills of their existing foreign workers can save $370 per worker. In the same way, companies in the marine, manufacturing and service sectors who employ better qualified foreign workers will enjoy a levy reduction of $230 per worker (for the service sector) and up to $300 per worker (for the manufacturing sector).

11 For queries on the above levy changes, please call the Work Permit Department at 5383033 during office hours.