Singapore - Budget: Restructure economy, reduce reliance on foreign workforce

SINGAPORE: Budget 2012 will prioritise to restructure Singapore's economy so that incomes can grow steadily.

It also aims to build an inclusive society by generating resources to help all Singaporeans get a fair share of the economic pie.

This year's budget also provides significant support to older Singaporeans, those with disabilities and lower-income citizens.

Mr Tharman said the first major priority of this budget is restructuring the economy on the basis of skills, innovation and productivity.

He said the government will now have to look further to reduce reliance on the foreign workforce.

This is by lowering the limit of foreign workers in which firms in the manufacturing and service sectors can hire through a calibrated reduction in the Dependency Ratio Ceilings (DRCs), which specify the maximum proportion of foreign workers a company can hire.

From July 2012, the DRC for manufacturing companies will be lowered from 65 per cent to 60 per cent. Firms in the service industry will see DRC reduced from 50 per cent to 45 per cent.

An estimated 500 manufacturing companies and 8,500 service companies should be affected by the DRC changes.

Mr Tharman noted that a slow growth year ahead is a good chance to lower "DRCs across the board in both manufacturing and services. All firms can then take this into account in their future hiring decisions," he said.

And across all sectors, S Pass Sub-DRC will also be reduced from 25 per cent to 20 per cent.

These companies will not be allowed to bring in new foreign workers, but existing foreign workers will not be affected by this change until June 2014. 

Foreign workers in the construction sector will also be affected, as the Man-Year Entitlement quotas will also be reduced by five per cent. 

Budget 2012 will also see a comprehensive set of measures to help older Singaporeans find work and build up their savings.

Those with disabilities will get help to maximise their potential at each stage of life and more support will be given to lower income in the form of GST Vouchers.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam also promised more support for their children's education. 

Besides restructuring the economy to sustain growth while incomes grow steadily, Budget 2012 also provides for Singapore's economy to grow on the basis of skills, innovation and productivity.

More help will be given to support the lower and middle income Singaporeans though education, work, housing and healthcare,

Help will also be given for the lower income to acquire skills so they can hold good jobs and consequently improve their incomes over time.

But the right balance in public finances must be struck as social expenditures will grow in the coming years.

- CNA/fa


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