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SMEs get some relief with interim access to foreign manpower

MOM launches LED scheme in response to feedback that tight labour market and current manpower policies are hindering SMEs from restructuring

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The Ministry of Manpower (MOM) has launched a new scheme which gives small and medium-sized enterprises (SMEs) interim access to foreign manpower while they embark on projects to build a stronger Singaporean core with a smaller but higher-quality pool of foreign workers.

Singapore

THE Ministry of Manpower (MOM) has launched a new scheme which gives small and medium-sized enterprises (SMEs) interim access to foreign manpower while they embark on projects to build a stronger Singaporean core with a smaller but higher-quality pool of foreign workers.

The Lean Enterprise Development (LED) scheme, which was launched by Manpower Minister Lim Swee Say on Wednesday, can be tailored, for instance, to allow companies to cut down the number of work permit holders without affecting their existing quota for S Pass Holders. The quota on S Pass holders is 15-20 per cent of each company's total workforce based on the current sub-dependency ratio ceiling (DRC).

Alternatively, companies could potentially take on temporary foreign workers while recruiting and training locals to take on better jobs when their new business model has stabilised.

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For example, a company may have committed to sponsoring local polytechnic and ITE students or have had to send its staff for training and upgrading. The SME may, meanwhile, have an insufficient foreign worker quota to hire more foreigners to meet its current manpower needs.

Under LED, the firm would be able to hire some S Pass holders in the interim. Eventually, the company would have a stronger Singaporean core and also become manpower-leaner since its output would increase faster than its headcount.

In another instance, a company could establish a training facility and hire master craftsmen to help transfer know-how to the local workforce, said Mr Lim. The DRC quota would not be extended to cover these master craftsmen if the company's proposal is approved by the LED task force, a cross-agency body led by Spring Singapore and the Singapore Workforce Development Authority.

"I've explained to the SMEs that it's not about U-turning," said Mr Lim. "It's about having more access to foreign workers (in the interim)."

The minister added that the temporary manpower policy adjustment during the period of transition came about from feedback from SMEs that the tight labour market and current manpower policies are hindering them from restructuring.

National Trades Union Congress (NTUC) assistant secretary-general Yeo Guat Kwang urged SMEs to look at the scheme, noting that it addresses concerns of employers who have already come up with "breakthrough ideas" on how to transform their business and reduce manpower reliance.

"Over the last two years, we've seen more and more SME owners actually understand what kind of transformation is right for them, to help them overcome this manpower issue," he said. The pain point has been the transitional period while workers are being trained or business models are being relooked.

"I would like to urge employers to look at it seriously to understand that the outcome is to build a strong Singaporean core and to reduce our reliance on foreign manpower. But for the transitional period of 1-2 years, we will allow SMEs to do more with the same, so (that) subsequently they can do more with less. This is the key outcome and I hope all SMEs will take this opportunity to ride on the scheme," Mr Yeo said.

The LED scheme will be piloted for two years, starting from Oct 1, but the task force is ready to accept SME proposals. These proposals should be impactful, scalable, and have the potential to transform industry practices, within a 2-3-year time frame, added MOM. The transitional manpower support for each SME project will be reviewed annually and is renewable for up to a maximum of three years.

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