Foreign worker levies to increase

[land118]

Foreign worker levies to increase, this would mean construction cost to go up and price of property to also go up, especially new projects.
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Foreign worker levies to increase, says MOM
By Saifulbahri Ismail, S Ramesh | Posted: 21 February 2011 1654 hrs


SINGAPORE: Singapore's Ministry of Manpower (MOM) is sending a strong signal to businesses to invest in productivity changes and reduce their reliance on low-skilled foreign workers.

The ministry said changes in the foreign worker levies, which will be increased in phases from January 2012 to July 2013 at six monthly intervals, will have the greatest impact on the construction and services sectors.

It said the impact on the manufacturing, marine and process sectors will be more moderate.

Announcing details of the changes, which were first revealed by Finance Minister Tharman Shanmugaratnam in his Budget Statement last Friday, MOM said employers in the construction sector would need to fork out on average S$320 more per work permit holder between now and July 2013.

Service sector employers can expect an average rise of S$260 per work permit holder.

On top of this, the levy tiers will also be tightened.

Employers in both sectors will pay up to S$600 per work permit holder by July 1 2013.

Employers in the manufacturing sector can expect an average increase of S$130 in the levy for each work permit holder between now and July 2013, accompanied by a tightening of the levy tiers. By July 2013, they will pay up to S$550 per work permit holder.

Employers of S Pass holders can expect an average increase of S$240 in the monthly levy between now and 2013, and will pay up to S$450 per S Pass holder by July 2013.

MOM said the changes are a strong signal to businesses to invest in productivity changes.

However, smaller companies in the construction industry will find this a big challenge.

Mohd Abdul Akbar, the managing director of Nan Guan Construction, said: "I think for the very small companies, the SMEs - especially the smaller ones, when you talk about productivity, it's something that's difficult to implement.

"When you talk about manufacturing, maybe it's possible through automation, improvements in processes and things like that."

MOM said there will be no change to the foreign domestic worker levy rate, and overall dependency ratios for all categories of foreign workers will remain unchanged.

There are currently 871,000 work permit holders in Singapore, of which 248,000 are foreign construction workers. There are 98,000 S Pass holders.

The Singapore Contractors Association believes the levy hikes will also impact consumers.

Andrew Khng, president of the Singapore Contractors Association, said: "We have been absorbing some of these cost increases throughout last year - the materials price have gone upwards.

"But this time, it is difficult even to absorb the levy increase because the levy increase is really substantial during this period. As a contractor, we are always sandwiched in between and sometimes costs need to be gradually spread through the whole value chain."

- CNA/cc/al

[peterng8]

housing price will go up as cost will go up unless stomach less margin or other costs being cut down(bid lower for land possible?)

[romeo]

then more cooling measures..

[peterng8]

than LTV 50% , capital tax..etc...

[hyenergix]

The government gives many people $, but it is now taking back indirectly via higher foreign workers levies. The extra revenue from levy is a large amount:

Assuming average rise of $250 levy per worker per month:
1,305,000 foreign workers* x $250 = $326 million more every month

This extra cost borne initially by the companies will result in higher prices for the masses. Inflation will be higher than expected in the next few months.

* SingStats http://www.singstat.gov.sg/pubn/popn/c2010acr.pdf

[westman]

With the increase in levy, think the construction progress will speed up thus shortening the TOP time. With more projects completed sooner, we will face over supply in the very near future if levy caused hundreds of millions per month....

Hope above does not nhappened so soon...

[land118]

The way it see it, big construction firms maybe able to use more machinery and also make their foreign workers worker hard, maximize the levies paid, perphaps slightly shorter time to complete, but smaller firms will have no choice but pass these costs to clients. Renovation contractors, A&A contractors will increase price. E.g. Tiler or bricks layer contractor, how r they going not to increase cost, the job scope still the same. At most do OT to complete. Overall cost will go up, and developer willing to absorb, I doubt so, many are public companies, YOY need to show better results. Ya, maybe they may bid for land tender lower...provided demand sentiments is dampened and the rest think the same...

[phantom_opera]

With the increase in levy, think the construction progress will speed up thus shortening the TOP time. With more projects completed sooner, we will face over supply in the very near future if levy caused hundreds of millions per month....

Hope above does not nhappened so soon...

I am not worried about OCR home 2br 743sqft, 3br 1000sqft being completed in large quantity as long as HDB resale prices stay flat. Sooner or later, HDB upgraders will snap such units. If large number of good size 3br/4br CCR homes obtain TOP when G7 economies are still in limbo, shit will hit the wall .

[phantom_opera]

Another extremely worrying trend is Middle East ... if oil spikes to 150USD .... hyperinflation may run rampant.

Brent for April settlement on the London-based ICE Futures Europe exchange climbed $3.22, or 3.1 percent, to $105.74 a barrel yesterday.

And stock up your premium coffee b4 price adjustment coming soon Arabica coffee up 100% this year in USD term.

Suzuki Italian Expresso Rosta ... nice

[zzz1]

If you happen to observe any construction site, u will notice that at any time this scene >> 1 man working 4 men watching , tis is what they called the ‘foreman’ or 4 men. There is effectively no proper supervision and dedication of work instructions.

The mind set of the supervisor is that the worker pay are low (around $2-3/hrs), pumping more and more men to do the same level of effort of work.

Using marine industry for example, not using offshore standard,

I had seen in china, (don talk about quality first)
Avg they required 50-60 manhrs to fab a ton of steel

In Japan, they can achieve using 30-40 manhrs for the same ton of steel (with good quality)

In Sg,, we need avg x2 - x2.5 time the rate of China.

In the earlier day, we still see a mix of local, Malaysian and Thais workers but productivity is good also higher wages.

The message is clear….ram up the productivity of the foreign worker via training and proper supervision.
When the pocket is hurt, the intended result will follows

[land118]

If you happen to observe any construction site, u will notice that at any time this scene >> 1 man working 4 men watching , tis is what they called the ‘foreman’ or 4 men. There is effectively no proper supervision and dedication of work instructions.

In the earlier day, we still see a mix of local, Malaysian and Thais workers but productivity is good also higher wages.

The message is clear….ram up the productivity of the foreign worker via training and proper supervision.
When the pocket is hurt, the intended result will follows

I have friends in contruction industry, some their own bosses. This foreman used to be Singaporean, Malaysian. Lately, due to boom, this foreman now mostly foreign talent. And you are right, this 4man is like the sergeant or section commander..., in the past, local or Msian foreman need to "make sure" the 4men foreign workers don't idle & work, if not they go ROC ("relax one corner"). Now if foreman is foreigners, maybe ROC together, productivity drop further...

[devilplate]

The government gives many people $, but it is now taking back indirectly via higher foreign workers levies. The extra revenue from levy is a large amount:

Assuming average rise of $250 levy per worker per month:
1,305,000 foreign workers* x $250 = $326 million more every month

This extra cost borne initially by the companies will result in higher prices for the masses. Inflation will be higher than expected in the next few months.

* SingStats http://www.singstat.gov.sg/pubn/popn/c2010acr.pdf

den everything tat govt tax leads to inflation hor....mabe we shdnt nid a govt at all? zero tax....less inflation? LOL

[hopeful]

.....
In the earlier day, we still see a mix of local, Malaysian and Thais workers but productivity is good also higher wages.
.......

whatever happened to Thai workers? In 80s, used to have lots of Thai construction workers. Do they caused a lot of social problems or what?

[zzz1]

whatever happened to Thai workers? In 80s, used to have lots of Thai construction workers. Do they caused a lot of social problems or what?

The Thais, those whom make it, become own bosses, and many returned as their pay is higher now then in SG. Overall Thai had the best attitude and efficiency...


Not really much of social problems...take any social group,,once the number is huge and gether together u will get problems...

[zzz1]

I have friends in contruction industry, some their own bosses. This foreman used to be Singaporean, Malaysian. Lately, due to boom, this foreman now mostly foreign talent. And you are right, this 4man is like the sergeant or section commander..., in the past, local or Msian foreman need to "make sure" the 4men foreign workers don't idle & work, if not they go ROC ("relax one corner"). Now if foreman is foreigners, maybe ROC together, productivity drop further...

Now those foregn worker, speak better english(to understand instruction) and a bit smarter is pick up as foreman, with little skill as well.

Those work for 2 years returned to their home town(paid up debt) or go middle east.. every years the industries receives new patches of workers in the cycle...

[romeo]

levy increase leads to higher production cost, leads to higher property price, inflation.. faster production, lacklustre quality..?