SINGAPORE - Foreign worker levies were not waived in this year's Budget because the priority is to preserve local employment, move businesses to be less reliant on such workers and spur them to transform, said Manpower Minister Josephine Teo on Wednesday (Feb 26).

She noted that these businesses had hoped for a waiver or a reduction in the levies as the coronavirus outbreak rocks the economy, but such a move would have run counter to the Government's two objectives.

"First, in supporting businesses, our priority was also to preserve local employment,'' she said in Parliament in her response to a call for a waiver by MPs.

"Second, as much as we want to help businesses, measures to deal with the short-term fallout should not negate longer-term efforts for companies to become less reliant on foreign manpower for growth."

MPs such as Mr Seah Kian Peng (Marine Parade GRC) and Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) has asked for the waiver for sectors hit hard by the Covid-19 disease, such as food services and retail.

"In light of the difficulties experienced across many sectors, we have to ensure that the continued shift away from employment of foreign workers is conducted in a sustainable manner," said Mr Saktiandi.

Mrs Teo said the ministry is waiving levies for employers whose foreign workers are required to serve quarantine, leave of absence or stay-home notice when they have a travel history to China.

Levies have not been changed since 2017 for the construction sector, and for others, since 2016 or earlier.

To reduce reliance on foreign workers, the Budget statement also announced a cut in the quota for S Pass workers in three sectors: construction, marine shipyard and process.

S Pass workers refer to mid-skilled foreigners earning at least $2,400 a month.

The cuts to the S Pass sub-Dependency Ratio Ceiling (DRC) - the proportion of S Pass holders a company can employ - will be done in two phases.

The first will reduce the sub-DRC from 20 per cent to 18 per cent on Jan 1, 2021.

The second will slice it further to 15 per cent on Jan 1, 2023.

Mrs Teo noted that employers already have short-term flexibility in meeting foreign workforce criteria under such schemes as the Capability Transfer Programme, which helps companies bringing in foreign specialists or sending Singaporeans abroad to improve their expertise.

She also said the quota varies among sectors, given the differing appeal of job roles.

In construction, for every 100 workers, up to 87 can be foreigners, of which 15 can be S Pass holders, when the 2023 changes take effect.

But in services sector, the quota will be lowered from 2021.

A same-sized company can then have up to 35 foreign employees, of which 10 can be S Pass holders.

Mrs Teo said: "Beyond these gradations, we should be realistic. Which sub-sector or occupation will accept having more restrictions compared to others that have less?

She added: "Consider the longer term, too. Can we be so sure that foreigners will always accept the work conditions our own people find unappealing, or that they will not find better jobs back home in time to come?"

Instead, the focus is to help employers reach out to fresh graduates and mid-career employees switching jobs, she told the House.

Employers can also help by transforming their business and making such jobs more attractive.

"Waiving or cutting levies would blunt the motivation to restructure, improve job quality and become more manpower lean. We would not have seen how industries can rise to the occasion," she said.

"In the last few years, I have witnessed the resolve and creativity of hoteliers to overcome their manpower constraints... Likewise for other sectors, we should try our best to position ourselves for the future even when the chips are down."