Impact of Tightened Foreign Worker Quotas on SMEs

Ms Jessica Tan Soon Neo asked the Acting Minister for Manpower with the tightened inflow of foreign workers (a) whether the Ministry tracks its impact on SMEs' ability to continue their operations and capacity to address growth opportunities in Singapore and the region; (b) for SMEs in industries which have shown productivity improvements and good hiring practices but yet difficult to attract locals to take up jobs, whether the Ministry will consider refining policies to allow these SMEs to retain skilled foreign workers; and (c) for the renewal of their foreign workers' employment passes or work permits, whether the Ministry gives consideration to the training provided by SMEs, employment track record and skills attained.

Since 2010, the Government has introduced policies to restructure our economy to be more manpower-lean, including tightening of foreign workforce controls. Since then, we have received about 19,000 appeals related to S Pass and work-permit renewals from SMEs6. About 48% of these cases were considered favourably. These were mostly temporary concessions to help companies in their transition.

We recognise that SMEs face rising business costs and tighter foreign worker restrictions. SMEs are a vital part of the economy – they make up 99% of enterprises and contribute to about 45% of GDP and 70% of employment in Singapore. That is why we have been actively engaging SMEs over the last few years, to gather feedback and understand their manpower challenges.

Another common appeal from SMEs is to be able to retain experienced staff for longer periods. They may have been unable to do so because they could not

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obtain the skilled R1 status for their experienced Work Permit Holders (WPHs), which would have allowed them to stay longer. This is why we introduced the market-based skills framework in July 2013 to allow Services WPHs to attain skilled status if they earn at least $1,600 and have four years of working experience in Singapore, even if there was no training course for that occupation. Employers can then retain these skilled WPHs for up to 18 years, up from the maximum of 10 years for unskilled WPHs. Employers will also enjoy levy savings, as the levy for skilled WPHs is lower than that of unskilled WPHs.

Despite the tightened manpower situation, this has not stopped SMEs from tapping on overseas business opportunities. Based on results from the 2012 SME Development Survey conducted by DP Singapore, more SMEs explored opportunities overseas. Based on a sample of 2,603 SMEs, more than half (54%) of all SMEs reported overseas revenue in 2012, a 10% increase from 20117.