Supporting Industry Transformation in the Construction and Process sectors

Friday, 18 February 2022

The Construction and Process sectors are key drivers of Singapore’s economy. The Government has been working closely with the industry to drive business and workforce transformation. These sectors have been impacted by the COVID-19 pandemic, as their heavy reliance on foreign workers resulted in significant manpower challenges, with the restrictions on cross-border travel.

2      The Government has provided significant assistance to support the Construction and Process sectors during the COVID-19 pandemic. For example, foreign worker levy rebates of $250 per Work Permit holder (WPH) in these sectors have been provided for firms to cope with elevated manpower costs due to the tight worker inflow situation. The Government will also be helping firms address their acute worker shortages in the immediate term by ramping up the inflow of new workers and the return of existing workers.

3       However, the significant and repeated disruptions to manpower inflows for the Construction and Process sectors over the past two years of the pandemic reaffirm the need for the sectors to press on with productivity improvements to become more manpower-lean. This will make our Construction and Process firms more resilient against future disruptions.

4       The Government has been working with the industry for some time to help it become more productive and manpower lean. We have previously mentioned that we are studying a reduction in the Dependency Ratio Ceiling (DRC) and removal of the Man-Year Entitlement (MYE) framework. To this end, the Ministry of Manpower (MOM), Building and Construction Authority (BCA), Economic Development Board (EDB) and Enterprise Singapore (ESG) will make the following policy changes for the Construction and Process sectors, to support this transformation and incentivise firms to hire higher-skilled foreign workers:

1. Reduce the DRC from 1:7 (i.e. 1 local employee to 7 WPHs or S Pass holders) to 1:5 (i.e. 1 local employee to 5 WPHs or S Pass holders);

2. Phase out the MYE framework[1];

3. Revise the levy structure for WPHs (refer to Annex for new levy structure).

5       Firms will be given time to adjust. These changes will take effect from 1 Jan 2024. In addition, firms that exceed the DRC of 1:5 on 1 Jan 2024 will be allowed to retain their incumbent WPHs and S Pass holders until the work passes expire. However, these firms will not be able to renew, or apply for new WPHs or S Pass holders, until they bring their firm’s workforce within the DRC of 1:5.

6       Firms can continue to apply for and use their MYE quotas up to 31 Dec 2023. Project contracts that have already been awarded or had tender calling date on or before 18 Feb 2022 will be allowed to use their MYE quotas up to 31 Dec 2024 or their project completion date, whichever is earlier.

Support to help firms transform and hire locals

7       Firms in the Construction and Process sectors are encouraged to tap on various Government initiatives to transform their businesses and hire locals. The aims and details of such initiatives include:

1. Supporting business transformation

   • Enterprise Development Grant (EDG), which provides customised support to help firms upgrade their business capabilities, innovate or venture overseas.

   • Productivity Solutions Grant (PSG), which provides co-funding (capped at $30,000) to support costs of adopting pre-approved digital solutions for local Small and Medium Enterprises (SMEs).

   • Productivity Innovation Project (PIP), which provides up to 70% co-funding for the costs of adopting technologies such as Design for Manufacturing & Assembly (DfMA) and Integrated Digital Delivery (IDD) in the Construction sector.

2. Helping firms build up the local talent pipeline

   • Career Conversion Programmes (CCP), which offer up to 90% funding support for salary and training costs for firms to hire mid-career jobseekers and equip them with the necessary skills to take on jobs.

   • Jobs Growth Incentive (JGI), which provides salary support for firms looking to hire new local mature workers who have not been employed for at least six months, persons with disabilities, and ex-offenders.

   • iBuildSG Scholarship and Sponsorship Programme, which offers scholarships/sponsorships jointly with firms in the Construction sector to high-calibre students intending to pursue Built Environment courses at Institutes of Higher Learning.

8        The Government will continue to collaborate with the Construction and Process sectors to achieve their transformation objectives, including building up long-term capabilities to improve productivity and enhance their manpower resilience.

[1] The MYE framework is an allocation system for WPHs from Non-Traditional Sources (NTS) (Bangladesh, India, Myanmar, Philippines, Sri Lanka and Thailand) and the People’s Republic of China (PRC). The MYE quota allocated to each project depends on the project type and the contract value. Firms that hire NTS or PRC WPHs above their allocated MYE quotas will need to pay a higher levy rate (on the MYE-waiver tier).

The In-Principle Support (IPS) is an allocation system for Process maintenance NTS and PRC WPHs, and will also be phased out from 1 Jan 2024.

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