By Hwee Goh/Joanne Chan, Channel NewsAsia | Posted: 22 February 2010 1628 hrs
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SINGAPORE: Foreign worker levies are going up for both Work Permit and S-Pass holders. The increases will be phased in gradually over the next three years.
Finance Minister Tharman Shanmugaratnam, presenting the 2010 Budget Statement in Parliament on Monday, said the increases will be "calibrated and carefully phased in".
For a start, levy rates will go up between $10 to $30 for most Work Permit holders on July 1 this year. Adjustments will be made in 2011 and 2012.
In the next three years, companies can expect a gradual total increase of about $100 on average per worker in manufacturing and services.
The construction industry will see a larger increase, according to the minister.
Changes will also be made for S Pass workers, with two levy tiers instead of one. The rates for the first and second tiers will be $100 and $120 in July this year - going up from a single rate of $50 currently.
Further adjustments will be made till rates reach $150 and $250 by July 2012.
Mr Tharman spent some time explaining the thinking behind raising the foreign worker levies. He said that in the past, companies were able to get the workers they needed and expand during boom time. In fact this growth enabled household incomes to rise significantly from 2005 to 2008.
"This was therefore not a strategy of 'growth at all costs', but of growing our economy to raise Singaporean incomes," he said.
But with foreigners making up a third of the workforce, there is a limit to how many more Singapore can absorb. And if foreign workers are too readily available, employers will not have enough incentive to carry out the all-important goal of raising productivity.
- CNA/ir
For a start, levy rates will go up between $10 to $30 for most Work Permit holders on July 1 this year. Adjustments will be made in 2011 and 2012.
In the next three years, companies can expect a gradual total increase of about $100 on average per worker in manufacturing and services.
The construction industry will see a larger increase, according to the minister.
Changes will also be made for S Pass workers, with two levy tiers instead of one. The rates for the first and second tiers will be $100 and $120 in July this year - going up from a single rate of $50 currently.
Further adjustments will be made till rates reach $150 and $250 by July 2012.
Mr Tharman spent some time explaining the thinking behind raising the foreign worker levies. He said that in the past, companies were able to get the workers they needed and expand during boom time. In fact this growth enabled household incomes to rise significantly from 2005 to 2008.
"This was therefore not a strategy of 'growth at all costs', but of growing our economy to raise Singaporean incomes," he said.
But with foreigners making up a third of the workforce, there is a limit to how many more Singapore can absorb. And if foreign workers are too readily available, employers will not have enough incentive to carry out the all-important goal of raising productivity.
- CNA/ir
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