Last week’s Budget sent a clear message that Singapore is serious about reducing its reliance on foreign workers. The Dependency Ratio Ceiling, or the proportion of foreigners on work permits or S Passes whom a firm can employ, will be cut from 40 per cent to 38 per cent on Jan 1 next year, and to 35 per cent on Jan 1, 2021. The quota for S Pass workers – mid-skilled foreigners paid at least $2,300 a month – will drop from 15 per cent to 13 per cent on Jan 1 next year, and to 10 per cent on Jan 1, 2021. The timeline for implementation of the new quotas gives companies an opportunity to prepare for the change, but change they must, particularly because it has been six years since the last tightening of the foreign worker quota in the service sector.

The move on the foreign worker front reflects a wider preoccupation with the management of manpower growth. Relying on greater numbers of foreign workers will not save companies from the inexorable logic of tapering workforce growth. Instead, they must use the time that they have to upgrade Singaporean workers – the core of the economy – as part of perpetual corporate restructuring. Foreign workers cannot be the answer to the inadequacies of managing local workers. If corporate management functions well, foreigners will complement locals. Amendments to the regulatory structure seek to ensure a balance of complementarity.