'This increase ensures we keep pace with wage growth'
The Singapore government will raise the Local Qualifying Salary (LQS) for businesses to $1,600 starting July 1, up from the current $1,400.
Deputy Prime Minister Lawrence Wong said in his Budget 2024 speech this month that the minimum hourly rate of full-time workers will be hiked from $9 to $10.50 an hour.
"This increase ensures we keep pace with wage growth," Wong said in his speech.
The LQS determines the number of local employees who can be used to calculate a firm's Work Permit and S Pass quota, according to the Ministry of Manpower (MOM).
"All local employees at companies that hire foreign workers must be paid at least the LQS," Wong said.
According to MOM, the LQS ensures that local employees are "employed meaningfully," rather than on "token salaries" so firms can be allowed to hire foreign workers.
Further manpower costs for businesses
The Singapore National Employers Federation (SNEF) agreed that the hike will help uplift the wages of lower-wage employees.
"However, the new wage requirement will also add on to the manpower costs for employers," the SNEF said in a statement.
Employers have been calling for the government's help in addressing rising manpower costs, which they named as one of their top challenges.
To address wage-related woes, Wong said the government will raise to 50% its co-funding levels in the Progressive Wage Credit Scheme (PWCS) for this year.
"I know employers are concerned with rising business costs in today's economy. And so, the government will do its part to help," Wong said.
"I will also raise the PWCS wage ceiling from$2,500 to $3,000 in 2025, in tandem with the increase in the qualifying income cap for Workfare."
These measures are among the recently announced string of changes coming to workplaces in Singapore's 2024 Budget.
Wong previously said the government will help mid-career workers upskill and reskill through a $4,000 top-up in their SkillsFuture Credit.
He added that a temporary financial support scheme is underway for laid off employees in Singapore.
