Budget 2021: Wage Credit Scheme, Capability Transfer Programme extended

The government will support the employment of Singaporeans while deepening their capabilities and promoting capability transfer, as well as moderate the country's dependence on foreign labour where necessary, said Deputy Prime Minister and Finance Minister Heng Swee Keat in his Budget Speech on Tuesday.

Two initiatives - the Wage Credit Scheme and the Capability Transfer Programme (CTP) - will be extended, while the S Pass Sub-Dependency Ratio Ceiling (or sub-DRC) for foreign workers in manufacturing will be cut in two steps to 15 per cent by Jan 1, 2023.

Mr Heng said: "The way forward is neither to have few or no foreign workers, nor to have a big inflow. We have to accept what this little island can accommodate. To strike a balance, we must focus on enhancing the complementarity of local and foreign manpower, and step up on industry transformation."

The Wage Credit Scheme will be extended for a year, at a co-funding level of 15 per cent, to support wage increments to retain or draw in locals. The scheme subsidises wage raises of at least S$50 given to Singaporean employees, with a qualifying gross monthly wage ceiling of S$5,000.

Meanwhile, the CTP - which supports foreign-to-local skills transfer - will be extended until the end of September 2024. As at end last year, over 140 firms and over 970 locals have benefitted or are expected to benefit from 40 projects.

Mr Heng also said that the S Pass Sub-Dependency Ratio Ceiling (or sub-DRC) for Manufacturing will be reduced, as previously announced, in two steps. It will be reduced from 20 per cent currently to 18 per cent from Jan 1, 2022 and to 15 per cent from Jan 1, 2023. Other sectors, such as the Services, Construction, and Marine Shipyard and Process sectors, are already experiencing a tightening in their sub-DRC.

"To achieve our vision of being a global advanced manufacturing hub, our local workforce needs to develop deep skills and our industry has to reduce reliance on foreign workers," said Mr Heng.

"The move has been carefully calibrated, so that firms have one year to adjust, before changes are implemented," he added. "To complement our local workforce, we also have the S Pass for companies to hire workers with technical expertise. We will continue to review our S Pass framework, including the qualifying salary and levies to maintain the complementarity."

Manufacturing is a key pillar of Singapore's economy, enabling the nation to create jobs for some 450,000 workers, or 12 per cent of Singapore's workforce, over the years. Median wages in the manufacturing sector is also about 10 per cent higher than the median for the economy.