Why It Matters

Labour relief for SMEs

MOM will allow SMEs to hold on to more of their better-skilled foreign workers on S Passes while they shed the number of foreign workers on work permits who do manual work.
MOM will allow SMEs to hold on to more of their better-skilled foreign workers on S Passes while they shed the number of foreign workers on work permits who do manual work. ST PHOTO: JOYCE FANG

Small and medium sized-enterprises (SMEs) will get unexpected short-term relief from their labour woes from October.

In an unusual move, the Manpower Ministry (MOM) will ease up on how it applies the foreign worker quota and ratio to SMEs undergoing restructuring. The temporary relief can last up to three years.

Under the new Lean Enterprise Development Scheme announced last Wednesday, the MOM will allow SMEs to hold on to more of their better-skilled foreign workers on S Passes while they shed the number of foreign workers on work permits who do manual work. Ordinarily, both ranks would have had to be cut in similar proportions.

The MOM may even allow some SMEs to hire foreign workers who will not count towards the foreign worker quota. This applies to cases where foreign experts are hired to train local staff or cover the work of local workers undergoing training.

Although Manpower Minister Lim Swee Say stressed that the latest move is not a policy U-turn, the unexpected benevolence by the MOM is significant in three ways.

First, it is a clear deviation from a one-size-fits-all approach. It is a welcome change from the strict approach that the MOM now takes, such as automatically rejecting applications when SMEs do not meet quotas and ratios.

Second, it shows the MOM is willing to consider feedback and help local SMEs , even if it means temporarily lifting some rules. This sends an important signal as SMEs are the hardest hit by the labour shortage.

Third, the ministry is giving SMEs with unions and the backing of industry associations more priority to join the new scheme.

With the latest MOM move, the ball is now in the SMEs' court to use the borrowed time to get themselves ready for the future.

A version of this article appeared in the print edition of The Straits Times on August 26, 2015, with the headline 'Labour relief for SMEs'. Print Edition | Subscribe