The Dependency Ratio Ceiling (DRC) for the services sector will be reduced from 40% to 38% from 1 January 2020 and to 35% from 1 January 2021, while S-Pass Sub-DRC will be reduced from 15% to 13% from 1 January 2020 and to 10% from 1 January 2021.
Employing a more balanced approach
The services sector remains labour intensive, with the number of foreign workers employed on an uptrend. These changes signal a drive to reduce reliance on foreign workers. Businesses now have to upgrade their capabilities and the skills of local workers in order to complement the skillsets of foreign workers.
A call to transform our workforce
The reduction of the foreign worker quota, together with the enhanced support for businesses to improve business and workers’ capabilities, provides a clear and strong incentive for businesses to upgrade their operations, train their local workers and reduce their reliance on lower skilled foreign workers.
Plan now to avoid a resource crunch later
The tightening of regulations surrounding foreign manpower in the services sector is perhaps timed to address the economic uncertainties in the near future. It is therefore critical for businesses to take advantage of the one year headstart to proactively look into their existing resources and plan ahead.
Put in the work to rework business processes
Amid a shrinking local workforce and labour crunch, it is imperative for the services sector, especially the food and beverage and retail businesses, to accelerate integration of technologies and re-engineering of their business processes within this short window of time. The measures to reduce reliance on foreign workers include the adoption of digital technologies and skills training programmes to build enterprise capabilities.
Services sector may be just the beginning
While the foreign worker quota is currently limited to the services sector, there is a possibility that similar restrictions may be extended to other sectors. Businesses should start putting measures in place to cope with any reduction in foreign manpower.