SINGAPORE - The foreign worker quota for S Pass workers in the construction, marine shipyard and process sectors will be cut.

S Pass workers, which are a subset of the foreign workforce, 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 firm can employ - will be phased in two steps.

The first will tighten the sub-DRC for S Pass workers from 20 per cent to 18 per cent on Jan 1, 2021.

The second step will cut this further to 15 per cent on Jan 1, 2023.

Finance Minister Heng Swee Keat said: "These are skilled jobs, many of which can be done by locals, such as polytechnic diploma holders.

"We created the S Pass category because despite our best efforts, we are not producing enough of such skilled locals. S Passes enable enterprises to top up their workforce with more skilled workers, and to recruit workers with particular skills that locals may lack.

"But S Passes should not be a means by which enterprises hire low-cost foreign workers when qualified locals are available."

He noted that the number of S Pass holders in the construction, manufacturing, marine shipyard, and process sectors has been growing by 3.8 per cent a year over the past two years.

This number could also increase significantly over the next few years as the construction and marine shipyard industries recover and the process sector begins work on projects in the pipeline.

"The growth in S Pass holders must be sustainable. The Government has been working closely with industry and educational institutions to build up a pipeline of local manpower, including mid-career workers. We want them to have fair opportunities to grow, while supporting the manpower needs of enterprises," Mr Heng said.

The announcement of the cuts is made a year in advance to give the sectors time to adjust.

The manufacturing sector will not face these cuts now due to economic uncertainties.

"But we do want manufacturing companies to make the effort to recruit local skilled workers and technicians too. Therefore, when conditions allow, we intend to tighten the S-Pass sub-DRC for manufacturing too," Mr Heng said.

Companies that need help finding local graduates or even older workers finding new careers can work with SkillsFuture Singapore and Workforce Singapore.

Enterprises with specific needs can also continue to apply for additional manpower flexibilities through initiatives such as the Lean Enterprise Development Scheme.

Last year, the foreign worker quota was cut for the services sector.