More flexible foreign manpower policies, enhanced AI adoption on SNEF’s Budget 2026 wish list

SINGAPORE – The Singapore National Employers Federation (SNEF) has called for the Government to offer greater flexibility in foreign manpower policies to support firms taking on restructuring projects. It also hopes for more structured training and certification pathways for skills related to artificial intelligence (AI) to be developed.

These are among seven Budget 2026 recommendations submitted to the Government to support employers in managing manpower and cost pressures while accelerating business and workforce transformation in an uncertain global economic environment, said SNEF on Dec 16.

SNEF president Tan Hee Teck said the recommendations are focused on helping businesses adapt to a more digital and AI-enabled economy.

In November 2025, SNEF conducted a series of surveys and engagements with employers.

It noted that while the Ministry of Trade and Industry upgraded its 2025 gross domestic product growth forecast to “around 4 per cent”, the business outlook remains uneven across industries.

More bosses here are

planning for hiring freezes and wage moderation in 2026

, according to figures released by the federation on Dec 2. It found that 72 per cent of the 238 employers polled said they faced uncertain prospects in 2025, up from 58 per cent in 2024.

Help for employers to manage rising business costs

As employers continue to face rising business costs from employee salaries, Central Provident Fund (CPF) contributions, rentals and utilities, SNEF proposed continued “broad-based cost relief” that includes targeted support for rental and utility expenses, particularly for small and medium-sized enterprises (SMEs).

During the engagements, employers brought up difficulties in filling key roles amid tighter foreign manpower policies, rising qualifying salaries and persistent local manpower shortages. Considering these challenges, SNEF proposed greater foreign manpower flexibilities for employers that adopt progressive employment practices.

Such practices include the provision of structured flexible work arrangements or programmes to hire and retain senior workers. This can be done through temporary quota adjustments or cross-deployment arrangements under the Manpower for Strategic Economic Priorities Scheme.

“This would create a win-win outcome, helping companies meet operational needs while supporting the needs of local workers,” said SNEF.

To keep rising manpower costs manageable, SNEF suggested expanding approved source countries for work permit holders, adopting a more sector-differentiated approach for sub-quotas in industries “facing acute manpower shortages”. This would moderate the pace of qualifying salary increases for S Pass and Employment Pass holders.

Sustaining older workers in the workforce

Another recommendation is focused on sustaining senior employment in an ageing workforce. Higher manpower and healthcare-related costs arising from hiring mature and senior workers can be significant, especially for SMEs.

The federation is calling for an extension of the Senior Employment Credit (SEC), with tiered co-funding or enhanced support for SMEs hiring lower-wage and senior workers. The SEC, which helps cover the wage costs employers bear for hiring Singaporeans aged 60 and above earning under $4,000 monthly,

has been extended by a year

to Dec 31, 2026, as announced in Budget 2025.

SNEF also recommended the continuation of the CPF Transition Offset beyond 2026 to mitigate cost increases arising from higher CPF contribution rates for senior workers. Employers remain worried about the cost of complying with higher CPF contributions from January 2026, SNEF added. As part of Budget 2025, the Government said it would

continue to cover half the increases

in employer contributions in 2026.

Meanwhile, emerging from discussions with employers is the issue of the cost, scale and duration of training, which often results in operational challenges, particularly for SMEs operating with lean teams. 

Suggestions to encourage more bosses to invest in training and skills development include extending the duration of support for Career Conversion Programmes for employees. Another recommendation is providing absentee payroll funding or study leave reimbursement to encourage bosses to allow their employees to commit to more intensive upgrading programmes. 

Among the other suggestions the survey surfaced are ways to accelerate AI adoption, sustain progressive employment practices, and enable bosses to uphold wage commitments for lower-wage workers sustainably.

Noting the growing cost pressures from the

expansion of the Progressive Wage Model

and higher wage floors, SNEF proposed to improve and extend the Progressive Wage Credit Scheme beyond 2026. The scheme’s co-funding of salary was increased from 30 per cent to 40 per cent in 2025, and from 15 per cent to 20 per cent in 2026.

To support workplace safety and health, mental well-being and implementation of workplace fairness practices – particularly in sectors with less operational flexibility – SNEF proposed expanding avenues for short-term staffing support to help employers maintain operational continuity during staff’s periods of absence.

Many businesses also said that while they are excited about AI, they are unsure of where to start. Proposals to provide firms with a head start include boosting support for simple “plug-and-play” AI tools that SMEs can adopt quickly and affordably, and expanding AI adoption subsidies and grants to cover employee training and reskilling. This includes training in AI literacy, technical capabilities and the responsible use of AI across the workforce.

“We are calling for stronger support in workforce transformation, skills upgrading, and technology adoption so that employers can stay competitive and workers can progress,” said Mr Tan.