A tighter foreign labor market will be the product of the changes announced during the Singapore Budget 2019 earlier this week. Expat employees and employers in the service sector will steadily feel the ripple effects of this decision.

The primary goal for the country’s labor market is to reduce dependency on foreign labor in a sustainable way, Singapore’s Minister for Trade and Industry Chan Chun Sing told the media this week. The focus is to ensure that the country attracts “a higher quality of foreign workers.”

The island country's Finance Minister Heng Swee Keat announced lower quotas for foreign workers in the service sector. Industries such as food and retail will have to adapt to new rules starting next year in order to stop labor growth.

This move is a part of a long-term strategy to make Singaporean enterprises self-reliant in terms of their talent pool. Even though the quota reduces the dependency of the service sector on foreign labor, Chan reassured the companies that industries such as AI and fintech would welcome global talent.

Small businesses and enterprises that have to adjust to the new policies can expect help from the government with new measures during post-budget Parliament sessions. The government wants to help firms become “manpower-lean” in order to reap benefits in the long-run, Chan added.

In tandem with tightening the foreign labor market, the government is also giving a boost to the technical enterprises and allocating about S$4.6 Bn towards capability building initiatives.

Singapore continues to have a shortage of talent skilled in specialized roles such as AI, machine learning, data science, UI/UX and digital transformation, according to a recent report by Michael Page. It is crucial for businesses to have strategies in place in the country’s tight labor market. The government’s skill-building efforts in partnership with major educational institutions in the country are a step towards bridging the skills gap.