On 18 February 2022, Minister for Finance of Singapore Mr Lawrence Wong delivered the Budget Statement for Financial Year 2022 (the "Budget"). In addition to measures aimed at mitigating the effect of the COVID-19 pandemic on businesses and individuals, the Budget also introduced long-term measures to continue investing in the economy and workers.
This client update summarises the key employment-related measures announced in the Budget.
Brief overview of employment-related measures introduced in the Budget
Changes and new measures in the following areas will be discussed below:
- Jobs Growth Incentive ("JGI")
- SGUnited Jobs and Skills Package
- Foreign workforce policies
- Uplifting lower-wage workers
- Central Provident Fund ("CPF")
Jobs Growth Incentive
The JGI was introduced in September 2020 to support employers to expand Singapore Citizens and Permanent Residents hiring by providing salary support for new employees.
The JGI will be extended by six months to September 2022, with stepped-down rates, to reflect the improved labour market conditions. The extension is limited to mature workers aged 40 and above who have been unemployed for six months or more, persons with disabilities and ex-offenders.
Further details are expected to be released by the Ministry of Manpower at its Committee of Supply.
SGUnited Jobs and Skills Package
The SGUnited Jobs and Skills Package was introduced in 2020 with the purpose of creating jobs, traineeships and skills training opportunities. This package comprised of SGUnited Jobs, SGUnited Traineeships, SGUnited Mid-Career Pathways and SGUnited Skills.
The SGUnited Skills and SGUnited Mid-Career Pathways – Company Training will be replaced by SkillsFuture Career Transition Programme ("SCTP") from 1 April 2022. Key features of the SCTP include:
- Industry-oriented courses with elements of actual industry experience (e.g. work attachments or industry projects) conducted by the Continuing Education and Training Centres and programme partners, to help individuals secure employment in sectors with good hiring opportunities;
- Enhanced pre- and post-training support services; and
- Additional course fee support of up to 95% of total course fees for Singapore Citizens who meet the following criteria:
- ComCare Short-to-Medium-Term Assistance recipients;
- Workfare Income Supplement recipients;
- Long term unemployed; or
- Persons with disabilities who are registered with SGEnable.
Furthermore, the SGUnited Mid-Career Pathways – Company Attachment which offers full-time attachment opportunities of four to six months to support mid-career jobseekers in widening their professional networks and gaining meaningful industry-relevant experience, will be made permanent.
Foreign Workforce Policies
An Employment Pass is a type of work pass for eligible foreign professionals, managers and executives to work in Singapore.
The table below sets out the changes made to the minimum qualifying salary pursuant to the Budget. These changes will apply to new applications from 1 September 2022, and to renewal applications from 1 September 2023.
|Category of applicants||Before 1 September 2022||1 September 2022 onwards|
|Older applicants (in their mid-40s)||Approximately S$9,000||Approximately S$10,500|
For applicants seeking to work in the financial services sector, the following changes apply:
|Category of applicants in the financial services sector||Before 1 September 2022||1 September 2022 onwards|
|Older applicants (in their mid-40s)||Approximately S$10,000||Approximately S$11,500|
The S Pass is a type of work pass for eligible mid-skilled technical staff to work in Singapore.
The table below sets out the changes made to the minimum qualifying salary pursuant to the Budget. These changes will apply to new applications from 1 September 2022, and to renewal applications one year later (for example, the increase for new applications from 1 September 2022 will only affect renewals from 1 September 2023).
|Category of applicants||Before 1 September 2022||1 September 2022 onwards||1 September 2023 onwards||1 September 2025 onwards|
|Young applicants||S$2,500||S$3,000||At least S$3,150*||At least S$3,300*|
|Older applicants (in their mid-40s)||Approximately double the minimum qualifying salary for the youngest applicants||Approximately S$4,500||-||-|
For applicants seeking to work in the financial services sector, the following higher minimum qualifying salaries have been introduced:
|Category of applicants in the financial services sector||Before 1 September 2022||1 September 2022 onwards||1 September 2023 onwards||1 September 2025 onwards|
|Young applicants||-||S$3,500||At least S$3,650*||At least S$3,800*|
|Older applicants (in their mid-40s)||-||Approximately S$5,500||-||-|
NB: * the specific minimum salary values applicable from 2023 onwards will be announced closer to the implementation date based on the prevailing local wages then.
Furthermore, the Tier 1 S Pass Foreign Worker Levy rate will progressively increase as follows:
|Before 1 September 2022||1 September 2022 onwards||1 September 2023 onwards||1 September 2025 onwards|
|Tier 1 S Pass||S$330||S$450||S$550||S$650|
The Work Permit is a type of work pass for eligible semi-skilled foreigners to work in Singapore, in the construction, manufacturing, marine shipyard, process and services sectors.
Currently, an allocation system known as the Man-Year Entitlement ("MYE") framework applies for workers in the construction and process sectors from non-traditional sources and the People's Republic of China ("PRC"). Under this framework, a quota is allocated to each project(s), and firms which hire eligible Work Permit holders from non-traditional sources and the PRC above such quotas will need to apply for a MYE waiver and pay higher levy rates.
From 1 January 2024, this framework will be replaced with a new levy structure for the construction and process sectors.
The current and new levy structure for the construction sector is as follows:
|Before 1 January 2024|
|Skills level||Non-traditional sources and PRC||Malaysia and North Asian Sources||Off-site|
|1 January 2024 onwards|
|Skills level||Non-traditional sources||Malaysia, North Asian Sources and PRC||Off-site|
The current and new levy structure for the process sector is as follows:
|Before 1 January 2024|
|Skills level||Non-traditional sources and PRC||Malaysia and North Asian sources|
|1 January 2024 onwards|
|Skills level||Non-traditional sources||Malaysia, North Asian sources and PRC|
For clarity, Non-traditional sources refer to Bangladesh, India, Myanmar, Philippines, Sri Lanka and Thailand, while North Asian sources refer to Hong Kong, Macau, South Korea and Taiwan.
Lower Dependency Ratio Ceilings
In Singapore, employers seeking to hire foreign employees under S Passes and Work Permits are subject to a dependency ratio ceiling ("DRC"). A DRC is the maximum ratio of foreign workers (under the S Pass and Work Permit holders) to the total workforce (eligible local employees, S Pass and Work Permit holders) that a company in a given sector can employ.
The DRC will be reduced for the Construction and Process sectors from 1 January 2024 as follows:
|Sector||Before 1 January 2024||1 January 2024 onwards|
|Construction||1:7 (87.5%)||1:5 (83.3%)|
|Process||1:7 (87.5%)||1:5 (83.3%)|
Uplifting Lower-Wage Workers
The Progressive Wage Credit Scheme ("PWCS") will be introduced to support businesses in increasing the wages of lower-wage workers. Under the PWCS, the government will co-fund wage increases between 2022 and 2026 at the following rate:
|Qualifying Year||Pay-out period||First Tier||Second Tier|
|Gross monthly wage ceiling ≤ S$2,500||Gross monthly wage ceiling > S$2,500 and ≤ S$3,000|
Employers are not required to apply for the PWCS and can expect to receive the pay-out by the first quarter of each subsequent year.
Furthermore, the Workfare Income Supplement ("WIS") scheme will be enhanced from 1 January 2023 in the following manner to benefit more lower-wage Singapore Citizen and Permanent Resident workers:
- The qualifying monthly income cap will be raised from S$2,300 to S$2,500;
- Extension to those aged 30 to 34, as well as persons with disabilities; and
- Higher pay-outs across the age bands.
A minimum income criterion of S$500 per month will also be introduced.
The increased maximum annual WIS pay-out for employees would be as follows:
|Age band / category||Before enhancement (i.e. work done before 1 January 2023)||After enhancement (i.e. work done from 1 January 2023)|
|60 and above||S$4,000||S$4,200|
|All persons with disabilities||Varies by age||S$4,200|
Central Provident Fund
Under the Budget, the progressive increase in employer and employee CPF contribution rates for workers aged 55 to 70 will continue, with the next increase scheduled to take place on 1 January 2023. The current and target CPF contribution rates are as follows:
|Age band||From 1 January 2022||From 1 January 2023||Target
|> 55 – 60||28.0%||14.0%||14.0%||29.5%||14.5%||15.0%||37.0%|
|> 60 – 65||18.5%||10.0%||8.5%||20.5%||11.0%||9.5%||26.0%|
|> 65 – 70||14.0%||8.0%||6.0%||15.5%||8.5%||7.0%||16.5%|
In addition, a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contribution rates for every Singapore Citizen and Permanent Resident worker they employ who is aged above 55 to 70 is and will be available for both the increased rates in 2022 and 2023.
Employers should review the changes and new schemes announced in the Budget and examine the impacts on their businesses. When in doubt, legal advice should be sought.
The full Budget Statement may be found here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.