Singapore is attempting to reduce its dependence on imported talent and focus more heavily on building the capabilities of the existing talent pool instead. In the Budget 2022 statement delivered on 18 February, Finance Minister Lawrence Wong revealed that the city-state will be dedicating a considerable amount of money to continuing the upskilling drive of the last few years, while also introducing more stringent criteria for granting employment passes.

More funding for digital capabilities and productivity

The government is setting aside $200 million over the next few years to enhance schemes that build the digital capabilities of businesses and workers, and $600 million to drive the development and adoption of productivity solutions, especially for SMEs. According to the Budget statement, this financing is expected to support over 100,000 productivity projects over the next four years.

Upskilling is likely to receive more funding, with the criteria for receiving the SkillsFuture Enterprise Credit relaxed. This $10,000 credit is granted to cover out of pocket expenses for enterprise development and workforce transformation initiatives. At present, only employers that have at least three local employees and contributed at least $750 to the Skills Development Levy – an employers' levy that goes into a special fund for workforce upgrading and training grants – are eligible to receive the credit. However, the government will waive the levy requirement for 2021, allowing approximately 40,000 more small businesses to claim the $10,000 and ideally upgrade their workforces.

In addition, the government will launch a new Singapore Global Executive Programme to help local enterprises attract and nurture the next generation of business leaders. The programme will support enterprises in putting these leaders through industry and overseas attachments and connecting them with mentorships and peer support networks.

The minister also called on employers and other stakeholders in the training ecosystem to be more forward-looking about the skills needed, and to respond more quickly to the needs of the market.

“We must also ensure a good match between the skills demanded by the industry and those offered by the workforce,” he said.

“This means bringing together the various parties involved: training providers, employment facilitation providers, employers, and job seekers themselves to anticipate the areas where new skills are required and ensure that effective training is provided in a timely manner. At the same time, employers need to redesign jobs to harness technology more effectively, and make better use of the upgraded skills of their workers.”

Tighter requirements for bringing in foreign talent

With its small local talent pool, Singapore's economy has typically relied on being able to import talent, but this has also been a contentious strategy, with local PMETs in particular objecting that competition from countries with relatively lower salary scales has squeezed them out of the job market. In the Budget 2022 statement, the minister announced that the minimum qualifying salary for granting employment passes will be increased by $500, starting this September for new passes and next September for renewals.

“How much the employer is prepared to pay is a practical indicator of the quality of the pass holder,” Wong said of this move. “We will aim to ensure that incoming EP holders are comparable in quality to the top one of our local PMET workforce.”

For lower-wage jobs in the construction and process sectors, which are heavily dependent on foreign workers, the ratio of foreign workers that a company can bring in will be reduced. The legislation around this change will also be adjusted to encourage firms to shift to higher-skilled, more manpower-efficient solutions rather than throwing large amounts of cheap labour at projects, which had previously been the case until the government began tightening quotas some years back. These changes will take effect from 1 January 2024.

The minister also took pains to highlight that these changes do not mean Singapore is closing its doors to international talent.

“Let me emphasise that Singapore will continue to stay open and welcome talents from around the world,” he said.

“The adjustments in our foreign worker policies apply mainly to the broad middle of the workforce. This is where we have Singaporeans doing their jobs, but we need to continually adjust our rules to ensure better complementarity between our foreign and local workforce. At the higher end of the workforce, where there are acute skill shortages, we will continue to bring in professionals with the right abilities.”