Firms and HR professionals support Budget 2026’s push for strong Singaporean core in workforce
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Industry players say Budget 2026 measures reinforce the Government’s focus on quality over quantity when it comes to workforce planning.
ST PHOTO: LIM YAOHUI
SINGAPORE - Human resources (HR) professionals and industry players have backed Budget 2026’s efforts to better protect the Singapore workforce, reinforcing the Government’s focus on quality over quantity as the bar for foreign talent increases.
But they warned of transition risks and cost pressures as companies reassess their manpower planning and strategies.
From 2027, bosses looking to hire foreign employees will face higher manpower costs
The higher salary threshold was announced by Prime Minister and Finance Minister Lawrence Wong in his Budget statement
The Singapore National Employers Federation said that while it recognises the intent to maintain a high-quality and complementary foreign workforce, many employers will be concerned about the cumulative impact on business costs.
“We hope the Government will review prevailing economic conditions closer to implementation and consider the implementation timing accordingly,” it said.
The federation reiterated its request for the Government to consider additional leeway for employers with progressive employment practices
The Singapore Manufacturing Federation said the adjustments will “undoubtedly add” to the cost pressures for manufacturers, 66.7 per cent of whom are already grappling with wage inflation.
“We are concerned that the increase in costs may affect our long-term competitiveness,” it said, noting that manpower and talent development remain the top challenge for 57.9 per cent of manufacturers surveyed by the federation.
More selective approach
In response to the cost adjustments, HR leader in the tech industry Khairil Baharudin said this means companies – especially tech firms – have to be “much more intentional” about foreign hiring and workforce design.
“The bigger pressure is on mid-tier roles, contract renewals and salary-band compression, where organisations may need to adjust compensation architecture earlier than planned,” he said.
It is not just about firms having to pay more, but upgrading roles and lifting productivity, said Mr Khairil, a senior professional certified by the Institute for Human Resource Professionals.
Mr Kevin Chan, chief executive of HR technology company Epitome Global, said a more deliberate tack to workforce planning is needed, as the bar for foreign talent rises.
Rather than relying on headcount expansion, he said, businesses will benefit from having sharper visibility into the capabilities of their existing teams and investing in targeted development where needed.
Meanwhile, Mr Rick Chan, managing partner of Forvis Mazars Singapore and head of audit and assurance for Asia-Pacific, said that the tightening of EP and S Pass criteria could widen cost disparity, creating a critical inflection point.
To maintain growth, he pointed out, leadership teams must recalibrate their expectations, and move beyond traditional profiles to “aggressively integrate” mid-career professionals and reskilling mature workers.
Impact on financial services sector
Among a series of updates made to foreign workforce policies in Budget 2026 is an increase in the minimum qualifying salary for EP applicants in the financial services sector, which will be raised to $6,600 from the current $6,200, as the sector has higher salary norms.
The minimum qualifying salary for candidates aged 45 and above will also rise to up to $11,500, and to up to $12,700 for those in financial services.
Institute of Singapore Chartered Accountants council member Lee Eng Kian noted that the higher salary thresholds and adjustments to work permit levies will raise foreign manpower costs at the margin, particularly for more junior roles.
In financial services, he noted, the immediate impact is likely to be felt more in support and early-career positions than in senior or specialist roles, as many professionals’ salaries are already above the new thresholds.
“Finance and HR teams, advised by accountants, will need to review cost structures, model different scenarios and ensure compliance with the new rules, while keeping an eye on how these moves interact with other Budget 2026 measures on skills and artificial intelligence adoption,” he said.
Industry players affirmed the key role employers play in building a balanced workforce strategy that involves investing more in local hires, more selective global hiring for higher-value roles and role restructuring to enhance competitiveness.
A spokesperson for global fintech firm Revolut told The Straits Times it remains committed to hiring and developing local talent, while selectively bringing in specialised global expertise where needed to support its long-term growth in Singapore.
“To solve increasingly complex and novel problems, and to build integrated financial products and solutions for our customers, we need strong talent across functions such as engineering, risk, compliance and product.”
These adjustments reflect Singapore’s evolving wage norms, particularly in the financial services sector, said the company spokesperson.
Impact on smaller firms
Mr Khairil noted that smaller or fast-scaling firms may face cost strains and may offshore execution work if they cannot absorb the new salary thresholds.
Mr Chan of Forvis Mazars Singapore said that as overheads climb and firms look towards offshore centres, Singapore’s appeal relies on the fitness of its talent ecosystem.
“This requires an education-to-industry alignment that produces graduates who are fit for purpose, alongside a cost environment that ensures business sustainability for the multinational corporations anchoring our economy.”
The higher salary thresholds will have “some pockets of impact” on small and medium-sized enterprises (SMEs), said Ms Juliet Tan, founder of HR consultancy firm Emplifi, which specialises in SMEs.
On EP holders in the $5,000 to $6,000 salary range, she said: “By and large, we would try to hire locals in these positions as we need the local headcount to meet the local qualifying salary to increase quota for work permit holders. Hence, at this salary range, SMEs hire locals.”
She added that the cost increase for work permit and S Pass holders is more significant for SMEs, as most foreign hires are from these categories.
Work permit levies will also be raised, although changes will take effect from 2028 to give businesses time to adjust, PM Wong said. For the marine shipyard sector, monthly levy rates for basic-skilled work permit holders will increase by $100 to $600. For the process sector, monthly levy rates for basic-skilled work permit holders will increase by $150 to $600 or $800. There will be no change to the monthly levy rates for higher-skilled work permit holders.
Ms Tan suggested that companies send their work permit holders for training and courses to upgrade them from “basic-skilled” to “higher-skilled”, reducing the monthly levy per worker.
Impact on rental market
Real estate companies highlighted the potential impact on rental demand in Singapore.
Chief executive of property firm Huttons Asia Mark Yip flagged that the increase in qualifying salaries for EP and S Pass holders may influence the hiring of foreigners, which may have a knock-on impact on tenant demand for both HDB flats and private residential properties.
He said: “This comes at a time when the supply of HDB flats fulfilling the five-year minimum occupation period and completed private residential properties is on the uptrend.
“The supply of private residential homes will rise to 8,354 units in 2027 from 6,067 units in 2026, an increase of 37.7 per cent. This will further increase to 9,687 units in 2028.”
He added that if demand fails to keep up with supply, rents of HDB and private residential properties may face downward pressure of up to 3 per cent in 2027 and 2028.
Mr Marcus Chu, chief executive of real estate firm ERA Singapore, said even though the latest revision to qualifying salary benchmarks may not have an immediate effect on Singapore’s rental market, it could still weigh on sentiment among foreign workers.
“Landlords and property agents may also see more cautious inquiries, with some tenants potentially re-evaluating their housing choices or delaying rental decisions,” he said.
But rather than a sudden shift, a gradual adjustment in sentiment is expected given the phased implementation timeline from 2027 and the continued need for foreign manpower in key sectors, he noted.
“Overall, Budget 2026 reinforces a shift towards a more location-driven and skills-led property market, where infrastructure and workforce strategy increasingly shape housing demand patterns.”
