The following article was published in the Straits Times on 2 Dec 2003.
Higher levy plan on hold
By Tan Hui Yee
Straits Times, 2 December 2003
Govt agrees to defer system aimed at raising foreign construction workers' skills level
THE Government has agreed to put on hold its plan to impose a higher levy aimed at raising the skills level of foreign construction workers, after an appeal by industry players.
The Building and Construction Authority (BCA), the Manpower Ministry and the Ministry for National Development said in a joint statement yesterday that the new foreign worker levy system, which was to have been implemented in stages starting from next year, is to be delayed indefinitely.
Under the original plan, announced in February, construction firms that hire new foreign workers with only one skill would have to pay a higher monthly levy of $320, compared to the $30 that they are now charged.
Such a move would have raised costs significantly - which struggling construction companies can ill afford at present.
Mr Simon Lee, executive director of the Singapore Contractors Association Limited (Scal), told The Straits Times: 'In these bad times, every dollar counts. The changes, once imposed, would have hurt the companies' cash flow.'
It has been estimated that the cost of imparting new skills to each foreign worker would be in region of $1,500.
Industry sources estimate that about 90 per cent of the approximately 150,000 foreign construction workers here have only one skill.
That would have worked out to an estimated $39 million in additional levies every month if the changes had gone ahead as planned.
Scal spent the last few months appealing to the relevant authorities for the changes to be postponed.
Their cries were heard and the BCA yesterday said that it would review the situation 'when the industry recovers'.
It emphasised, however, that the the Government remained committed to its long-term objective of developing a highly skilled workforce with low reliance on foreign labour.
To this end, the Government yesterday said that while it was delaying the introduction of the new levy system, it would still require those companies that employed unskilled foreign workers to continue paying a monthly levy of $470.
Also, from July next year, companies employing skilled foreign workers would have to pay $50 a month, instead of the current $30 a month.
The reason, said the BCA, was because of the construction industry's heavy reliance on foreign workers. 'The productivity record of the construction industry remains poor. It continues to be more heavily reliant on foreign workers, compared with other sectors like the marine industry and manufacturing.
'In lieu of the multi-skilling changes, the increase in the levy from $30 to $50 is necessary to encourage the industry to continue working towards lower reliance on foreign workers and higher productivity,' the BCA said.
