NDR 2026: Childcare leave salary caps still leave gaps for higher-income parents
The bigger government reimbursement will ease cost burden, but sectors with in-person work flag staffing strain
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[SINGAPORE] The move to reimburse employers for the cost of statutory child-related leave will alleviate financial strain, but the caps set by the government could still fall short for higher-paid, specialised staff, said businesses.
Further, businesses and trade association leaders to whom The Business Times spoke said manpower pressures will likely intensify with the number of childcare leave days set to rise, and companies would need to work out how to cover for employees on leave – particularly in sectors where remote work is not possible.
Prime Minister Lawrence Wong announced at the National Day Rally on Sunday (Aug 23) that statutory childcare leave would be increased to up to 12 days, tied to the number of children a worker has.
Currently, working parents receive six days of childcare leave if their youngest child is aged six or below, or two days if their youngest child is between seven and 12.
The government will also fully cover the cost of all statutory child-related leave up to a reimbursement cap, moving away from the current co-sharing arrangement under which employers bear part of the cost.
This means employers will be reimbursed at a rate of up to S$500 a day, or S$1,500 a year, for childcare leave. For most other forms of child-related leave, including maternity, paternity and adoption leave, reimbursement is to be limited to S$10,000 for every four weeks, though cumulative caps vary for some.
Reimbursement limits
Businesses generally welcomed the fuller reimbursement as a meaningful reduction in labour costs, though industry leaders noted that the cap could still fall short for specialised roles, where wages exceed the thresholds.
It will be especially helpful for small and medium-sized enterprises, which may have limited resources, said Hao Shuo, CEO of the Singapore National Employers Federation (Snef).
Agreeing, William Chin, founder and chief executive of Mummys Market, said the reimbursement will meaningfully reduce direct costs for his business, particularly for longer periods of leave such as maternity leave.
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Ang Yuit, president of the Association of Small & Medium Enterprises (Asme), said that for most SMEs, the reimbursement limit covers the bulk of their workforce. “Not many SMEs pay at that (higher) range,” he said.
Benson Chian, CEO of wholesale trader Sustainable Familie Trading, said that the government’s reimbursement gives him confidence to spend on hiring short-term or part-time staff to plug manpower gaps, since the cost is now covered.
But this assurance holds less true for specialised or higher-paid roles.
Lennon Tan, president of the Singapore Manufacturing Federation, noted that while the S$500-a-day reimbursement rate for childcare leave covers most rank-and-file wages, it will not cover higher-paid, specialised and technically skilled employees whose daily pay exceeds the cap.
And with staff going on extended leave and companies needing to hire part-timers or temporary cover, costs can mount further, he added. “Hiring short-term talent or temporary replacement staff, especially for specialised shift work, incurs extra costs above the standard wages.”
More broadly, though, higher-paid workers are usually measured by their output rather than hours or days worked, making the shortfall less taxing for most other employers in practice, said Asme’s Ang.
Manpower still needed
Even with costs eased, businesses said a persistent challenge remains – making the necessary manpower arrangements when working parents go on leave.
This is a particular challenge for sectors such as manufacturing, where shift-based roles are dominant, said SMF’s Tan. Factories run on tight teams and strict shift schedules with continuous production lines, and the increase in childcare leave could create real staffing pressures.
Similarly for events management and AV content production company Adrenalin Group, employees in project management and technical roles, for example, need to be on site when an event goes live, noted group managing director Jeremy Tan.
Hiring to fill child-related absences may not always be possible.
Tan noted that childcare leave is usually spread across a year. Meanwhile, other forms of leave, such as the 16 weeks of maternity leave, can be broken up and taken in smaller chunks, making it unfeasible to hire to fill gaps.
The project-based nature of the work also makes it difficult to work around leave schedules, he added.
With the workforce rapidly ageing, wholesale trader Chian also called on the government to consider extending caregiver leave to grandparents, who are typically heavily involved in formal childcare arrangements.
Manageable impact
Overall, the impact of more days of leave should be manageable for most employers, said Snef’s Hao – unless a business has a disproportionately high share of employees in the age groups most likely to use the leave.
Asme’s Ang noted that leave patterns are more predictable for employees with older children, giving businesses more room to plan around their absence.
For those with younger children, however, leave tends to be “more random”, often triggered by unexpected issues such as illness. If the new leave entitlement did not exist, these parents would have turned to options such as unpaid leave.
To help employers with manpower challenges, Singapore Business Federation chairman Mark Lee said trade associations can play a useful role, including aggregating demand for shared manpower solutions that individual SMEs may not sustain on their own.
Industry bodies can also support businesses with digitalisation “so that the benefits of these measures reach both parents and businesses”.
While the government’s move to take on costs is “directionally right” and recognises the reality of working life, employers must address operational realities, Adrenalin’s Tan said.
“It’s about how to ensure that there is a skill set knowledge transfer, so that it’s not just one person understanding how to do the job,” he said, highlighting the importance of cross training.
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