Singapore Budget 2022 - HR Report

Index: 2022 Singapore Budget - HR

HIGHLIGHTS

2022 Budget Highlights

The Minister for Finance, Lawrence Wong, delivered the 2022 Budget Statement on 18 February 2022.

A variety of short-term aid measures for those affected by the COVID-19 pandemic, as well as long-term measures to continue investing in the economy and workers, were announced.

The full Budget Statement is available at mof.gov.sg/singaporebudget and the Ministry of Finance’s media release is available at mof.gov.sg/singaporebudget/media-centre/media-releases.

The HR highlights are set out below.

Jobs Growth Incentive

• The Jobs Growth Incentive, which encourages employers to hire more locally, will be extended by six months until September 2022.

SGUnited Jobs and Skills Package

• Jobseekers will be able to enrol in highly subsidised courses through a new SkillsFuture Career Transition Program.
• Company attachments for mature mid-career workers will be made a permanent feature through the SGUnited Mid-Career Pathways Program.

Foreign workforce policies

• The qualifying salary for Employment Pass holders will be increased to S$5,000. The Financial Services sector meanwhile will continue to have a higher EP minimum qualifying salary, which will be raised to S$5,500.
• The minimum qualifying salary for S Pass holders will be gradually increased in phases from 2022 to 2025 for new S Pass applications.
• New levy framework to replace current Man-Year Entitlement framework, as well as adjustments to the Foreign Worker Levy rates for Work Permit holders in the Construction and Process sectors.
• The government will tighten the foreign workforce quota by lowering the Dependency Ratio Ceiling in order to reduce the construction and process sectors’ reliance on foreign workers and spur productivity improvements.

Uplift lower-wage workers

• Between 2022 and 2026, a new Progressive Wage Credit Scheme will be implemented to co-fund wage increases for lower-wage workers.
• The government will significantly enhance the Workfare Income Supplement scheme to boost lower-wage workers and to encourage them to work regularly.

Central Provident Fund

• Singaporean and Permanent Resident senior workers will see their Central Provident Fund contribution rates rise by 3 to 4 percentage points over the next 2 years.
• Employers will be given a Central Provident Fund Transition Offset that will cover half of the increase in employer’s contribution rates for older workers.
• From 2023 to 2027, the Basic Retirement Sum will be increased by 3.5% per year for those turning 55. This is to provide seniors with higher monthly Central Provident Fund payouts in their retirement years. 

Jobs Growth Incentive

Extending the Jobs Growth Incentive, which supports employers to expand local hiring

The Jobs Growth Incentive will be extended for another 6 months until September 2022, with stepped-down rates reflecting improved labour market conditions, but only for mature workers aged 40 and above who have been unemployed for 6 months or more, persons with disabilities, and ex-offenders. 

The Ministry of Manpower will share more details at their Committee of Supply.

Source: Budget Statement, para A.24, Annex A-1 (I-2).

SGUnited Jobs and Skills Package

Providing training courses for jobseekers

The SkillsFuture Career Transition Program (SCTP) is a Train-and-Place scheme. It will commence from 1 April 2022 to replace the SGUnited Skills (SGUS) and SGUnited Mid-Career Pathways - Company Training (SGUP-CT) programs.

Key features of the SCTP include:

• Industry-oriented courses with elements of actual industry experience, such as work attachments or industry projects, will be delivered by Continuing Education and Training centres and program partners between 3–12 months. It seeks to help individuals secure employment in sectors with good hiring opportunities.
• Enhanced pre- and post-training support services, such as skills and training advisory to help individuals select suitable courses, employment facilitation and career coaching activities.
• Additional course fee support of up to 95% of total course fees for Singapore citizens who meet the following criteria:

1. ComCare Short-to-Medium-Term Assistance recipients
2. Workfare Income Supplement recipients
3. Long Term Unemployed, or
4. Persons with Disabilities who are registered with SGEnable.

Source: Budget Statement, para C.136, Annex C-3 (I-1).

Making the SGUnited Mid-Career Pathways Program a permanent feature

The SGUnited Mid-Career Pathways Program — Company Attachment (SGUP-CA), which offers full-time attachment opportunities of 4 to 6 months, will be made permanent.

The SGUP-CA supports mid-career jobseekers in widening their professional networks and gaining meaningful industry-relevant experience.

Trainees will receive a training allowance of up to $3,800 per month for the duration of the attachment. The government co-funds the training allowance with the host organisation.

Source: Budget Statement, para C.134, Annex C-3 (I-2).

Foreign workforce policies

Increasing the minimum salaries for Employment Pass holders

The Employment Pass (EP) minimum qualifying salary will be increased from $4,500 to $5,000 to ensure that incoming EP holders are of comparable quality to the top one-third of Singapore’s professional, managerial, executive and technical workforce.

The minimum qualifying salary for EPs in the Financial Services sector will be increased from $5,000 to $5,500.

These changes will apply to new EP applications from 1 September 2022, and to renewal applications from 1 September 2023.

Qualifying salaries for older EP applicants, which increase progressively with age, will also be increased in tandem.

See Table 1.

Table 1: Revised EP qualifying salaries

Sector(s)	Revised minimum qualifying salary
All sectors, except for Financial Services	$5,000 (increases up to $10,500 for a candidate in mid-40s)
Financial Services sector	$5,500 (increases up to $11,500 for a candidate in mid-40s)

 

Source: Budget Statement, para C.141, Annex C-4 (I).

Increasing the minimum salaries for S Pass holders

The minimum qualifying salary for S Pass applicants will be increased in phases. The first step will be on 1 September 2022 for new applications, and subsequently on 1 September 2023 and 1 September 2025 to ensure they are comparable in quality to the top one-third of Singapore’s local Associate Professionals and Technicians (APT) workforce.

For new applications, the S Pass qualifying salary for the Financial Services sector will be introduced on 1 September 2022. These changes will apply to renewal applications one year later (eg the increase for new applications from 1 September 2022 will only affect renewals from 1 September 2023 onwards).

Specific salary values will be announced closer to implementation date, and will be based on the prevailing local wages at the time.

See Table 2.

Table 2:  Revised S Pass qualifying salaries

	Revised minimum qualifying salary for new applications
Sector(s)	1 Sep 2022	1 Sep 2023	1 Sep 2025
All sectors, except for Financial Services	$3,000 (increases up to $4,500 for a candidate in mid-40s)	At least $3,150*	At least $3,300*
Financial Services sector	$3,500 (increases up to $5,500 for a candidate in mid-40s)	At least $3,650*	At least $3,800*

 

Notes:

1. *The finalised values will be announced closer to the implementation date based on prevailing local APT wages at the time.

The number of S Pass holders are currently regulated with sub-Dependency Ratio Ceilings and levies. To better manage the flow of S Pass holders, the Tier 1 levy will be increased from the current $330 to $650 by 2025.

See Table 3.

Table 3: Current and new Foreign Worker Levy (FWL) rates for S Pass

(i) Current S Pass FWL rates:

Tier	Dependency Ratio Ceiling (DRC)	Levy rates
Tier 1	≤ 10%	$330
Tier 2	>10%*	$650

 

(ii) New S Pass FWL rates:

		New levy rates
Tier	DRC	From 1 Sep 2022	From 1 Sep 2023	From 1 Sep 2024
Tier 1	≤ 10%	$450	$550	$650
Tier 2	>10%*	$650

 

Notes:

1. *The S Pass sub-DRC is 18% in Manufacturing, Construction, Marine Shipyard, and Process; and 10% in Services sector.

Source: Budget Statement, paras C.145–147, Annex C-4 (II).

Increasing the levy structure for work permit holders in Construction and Process sectors

The current Man-Year Entitlement (MYE) framework will be replaced by a new levy framework that will encourage firms to support more off-site work and employ more higher-skilled work permit holders.

The Foreign Worker Levy (FWL) rates for Work Permit holders (WPHs) in the Construction and Process sectors will be adjusted from 1 January 2024.

Table 4: Current and new FWL rates for Construction sector WPHs

(i) Current Construction FWL rates:

	Non-Traditional Sources and PRC		Malaysia, North Asian Sources	Off-site
Skills level	MYE Waiver	MYE
Higher-Skilled (R1)	$600	$300	$300	$300
Basic-Skilled (R2)	$950	$700	$700	$700

 

(ii) New Construction FWL rates from 2024:

Skills level	Non-Traditional Sources	Malaysia, North Asian Sources, PRC	Off-site
Higher-Skilled (R1)	$500	$300	$250
Basic-Skilled (R2)	$900	$700	$370

 

Table 5: Current and new FWL rates for Process sector WPHs

(i) Current Process FWL rates:

	Non-Traditional Sources and PRC		Malaysia, North Asian Sources
Skills level	MYE Waiver	MYE
Higher-Skilled (R1)	$600	$300	$300
Basic-Skilled (R2)	$750	$450	$450

 

(ii) New Process FWL rates from 2024:

Skills level	Non-Traditional Sources	Malaysia, North Asian Sources, PRC
Higher-Skilled (R1)	$300	$200
Basic-Skilled (R2)	$650	$450

 

Notes:

1. North Asian Sources refer to Hong Kong, Macau, South Korea, and Taiwan. Non-Traditional Sources refer to Bangladesh, India, Myanmar, Philippines, Sri Lanka, and Thailand.

Source: Budget Statement, paras C.148 and C.149, Annex C-4 (III).

Reducing the Dependency Ratio Ceiling

The Dependency Ratio Ceiling (DRC) will be reduced from the current 1:7 to 1:5 with effect from 1 January 2024.

When a DRC or a sub-DRC cut is implemented, firms that have exceeded the revised DRC or sub-DRC will not be able to renew work passes of foreign workers or hire new foreign workers. However, for the foreign workers above the DRC/sub-DRC limits, firms can retain them until their work passes expire to avoid disrupting existing operations.

See Table 6.

Table 6: Current and new DRC for Construction and Process sectors

Uplift lower-wage workers

Uplifting lower-wage workers to a new Progressive Wage Credit Scheme

The government is launching a new Progressive Wage Credit Scheme (PWCS) to co-fund lower-wage workers' wage increases between 2022 and 2026. For workers earning up to $2,500, the co-funding rate will be 50% for the first 2 years, 30% for the next 2 years, and 15% in 2026.

The co-funding rate for workers earning between $2,500 and $3,000 will be 30% in the first 2 years and 15% in 2024.

To co-fund the wage increase, the government will establish a PWCS fund this year with an initial injection of $2 billion, providing certainty of funding for wage increases over the next 5 years.

See Table 7.

Table 7: Government co-funding levels

		First tier	Second tier
Qualifying year	Payout period	Gross monthly wage ceiling ≤ $2,500	Gross monthly wage ceiling > $2,500 and ≤ $3,000
2022	Q1 2023	50%	30%
2023	Q1 2024	50%	30%
2024	Q1 2025	30%	15%
2025	Q1 2026	30%	-
2026	Q1 2027	15%	-

 

Source: Budget Statement, paras C.199−204, Annex E-1 (A-1).

Enhancing the Workfare Income Supplement scheme to uplift the income of lower-wage workers

From 1 January 2023, the government will enhance the Workfare Income Supplement (WIS) scheme by increasing the qualifying income cap from the current $2,300 to $2,500 per month to supplement the incomes and Central Provident Fund savings of lower-wage Singaporean workers, as well as encourage them to work regularly. Workfare is paid directly to eligible workers.

The WIS will be extended to younger workers aged 30 to 34 so that they can start saving for housing and retirement earlier in their careers. They will receive a maximum annual payout of $2,100.

Payouts depend on age and income, and have been enhanced across all age bands. Eligible employees can receive up to $4,200 per year in payouts, compared to $4,000 per year currently.

Those aged 35 to 44 will receive a maximum annual payout of $3,000; those aged 45 to 59 will receive a maximum annual payout of $3,600. Those aged 60 and above will receive the highest maximum payout tier of $4,200 annually.

All persons with disabilities will qualify for the highest Workfare payout tier (up to $4,200), regardless of age.

Singaporean workers will need to earn at least $500 per month to qualify for WIS.

Table 8: Maximum annual Workfare payout for employees*

Age band	Before enhancement (for work done from 1 Jan 2020)	After enhancement (for work done from 1 Jan 2023)
30–34 (new tier)	-	$2,100
35–44	$1,700	$3,000
45–54	$2,500	$3,600
55–59	$3,300	$3,600
60 & above	$4,000	$4,200
All persons with  disabilities	Varies by age	$4,200

 

*The payouts depend on actual incomes. The payouts for self-employed persons are set at two-thirds of employee  payouts.

Source: Budget Statement, paras E.205−210, Annex E-1 (A-2).

Central Provident Fund

Increasing senior workers Central Provident Fund contribution rates from 2023

The Singapore Government will continue with the next increase in senior workers Central Provident Fund (CPF) contribution rates which will take place on 1 January 2023.  Once the CPF increases for Singaporean and Permanent Resident workers aged 55 to 70 are fully implemented, those aged 55 to 60 will have the same CPF contribution rates as younger employees.

The median 55-year-old member can expect his monthly retirement payouts to be boosted by close to 10% compared to current rates.

See Table 9.

Table 9: Current and target CPF contribution rates (employer + employee) by age band

Age Band	2016–2021	From 1 Jan 2022	From 1 Jan 2022
≤55	37.0%	No change
>55–60	26.0%	28.0%	37.0%
>55–60	16.5%	18.5%	26.0%
>65–70	12.5%	14.0%	16.5%
>70	12.5%	No change

 

Note:

i. The timeline is subject to changes depending on prevailing economic conditions.

Table 10: CPF Contribution Rates for Senior Workers from 1 Jan 2023

	CPF contribution rates			CPF transition offset
Age band	Total	Employer	Employee
≤ 55	No change
>55 to 60	29.5% (+1.5%-pt)	14.5% (+0.5%-pt)	15% (+1%-pt)	0.25%-pt
>60 to 65	20.5% (+2%-pt)	11% (+1%-pt)	9.5% (+1%-pt)	0.5%-pt
>65 to 70	15.5% (+1.5%-pt)	8.5% (+0.5 %-pt)	7% (+1%-pt)	0.25%-pt
>70	No change

 

Notes:

i. The CPF contribution rates are stated as a percentage of wages.

ii. The percentage point figures in parentheses refer to the increase in CPF contribution rates from 1  January 2023, compared to current levels.

Source: Budget Statement, para E.215 and E.217, Annex E-2.

Providing a one-year Central Provident Fund Transition Offset equivalent to half the increase in employer contributions

The government is providing employers with a one-year Central Provident Fund (CPF) Transition Offset equivalent to half of the increase in employer’s CPF contribution rates for every Singaporean and Permanent Resident worker they employ who is aged above 55 to 70 due to the increase of CPF contribution rates in 2022.

The next increase in senior worker CPF contribution rates, which will take place on 1 January 2023, will be fully allocated to the Special Account to help senior workers save more for retirement. A similar one-year CPF Transition Offset will be automatically provided for the 2023 increases and employers need not apply.

Table 11: Current and target CPF contribution rates (employer + employee) by age band

Age band	2016-2021	From 1 Jan 2022	From 1 Jan 2022
≤55	37.0%	No change
≤55	26.0%	28.0%	37.0%
>60–65	16.5%	18.5%	26.0%
>65–70	12.5%	18.5%	16.5%
>70	12.5%	No change

 

Note:

i. The timeline is subject to changes depending on prevailing economic conditions.

Source: Budget Statement, paras E.216 and E.217, Annex E-2.

Increasing the Basic Retirement Sum to help retiring seniors

The Basic Retirement Sum (BRS) will increase by 3.5% per year for each cohort turning 55 from 2023 to 2027.

Those who set aside the BRS when they turn 55 in 2027 will receive close to $1,000 per month when they are 65, and these payments will continue for the rest of their lives.

There is no requirement for members to top up their Central Provident Fund (CPF) accounts in cash or sell their property if they are unable to set aside their BRS. Those who meet the eligibility criteria for the Silver Support Scheme, enhanced in 2021, will also receive additional retirement support from the government of up to $900 a quarter.

In conjunction with the increase, the BRS payouts for male members turning age 55 in 2027 on the CPF Lifelong Income For the Elderly (CPF LIFE) Standard Plan will be close to $1,000 per month when they turn 65, up from about $850 per month for male members turning age 55 in 2022.

Members can continue to contribute to their retirement income after the age of 55, supported by various government initiatives that help them earn more and save more, such as Workfare, Progressive Wages, and the higher CPF contribution rates for senior workers.

The CPF withdrawal rules remain unchanged.

See Table 12.

Table 12: Estimated monthly payouts and retirement sums for members reaching age 55 from 2023 to 2027

	Year that members reach age 55
	2022 (previously announced)	2023	2024	2025	2026	2027
Estimated monthly payouts provided by retirement sums at age 651
BRS	$850	$870	$900	$930	$950	$980
FRS	$1,570	$1,620	$1,670	$1,730	$1,780	$1,840
ERS	$2,300	$2,370	$2,450	$2,530	$2,610	$2,690
Retirement sums at age 55
BRS	$96,000	$99,400	$102,900	$106,500	$110,200	$114,100
FRS	$192,000	$198,800	$205,800	$213,000	$220,400	$228,200
ERS	$288,000	$298,200	$308,700	$319,500	$330,600	$342,300

 

1 Assumes male member under CPF LIFE Standard Plan, starting payouts at age 65.

Source: Budget Statement, paras E.218 and E.219, Annex E-3.

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Contributors

The Wolters Kluwer HR Team

Premsheila Khindria LLB; Kavitha Kesavan LLB, BA.

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