SINGAPORE — Small and medium enterprises (SMEs) hamstrung by the tight labour market have been given a lifeline, under a two-year pilot announced today (Aug 19) that gives them more leeway in hiring and retaining foreign workers — provided they commit to becoming more manpower-lean, developing their workers, and building a stronger Singaporean core eventually.

Starting from October, the Ministry of Manpower’s (MOM) new Lean Enterprise Development (LED) scheme will accord companies some temporary manpower policy adjustments, such as allowing them to reduce the number of work permit holders without affecting their quota for S Pass holders.

The firms may also employ temporary foreign workers while recruiting and training Singaporeans to take on better jobs when new business models have stabilised, and pool foreign sources of expertise - such as master craftsmen - at the industry level to help transfer know-how to the local workforce. MOM said the objective was to support SMEs seeking to be “pioneers and early adopters of change”. “This will help create stronger business growth, and offer better jobs and careers to Singaporeans,” the ministry said.

Manpower Minister Lim Swee Say added: “It’s important to note that we’re not changing the ratio and the company is not getting more foreign workers. We allow them to reduce their work permit holders first and then reduce the S Pass holders later, but this must both be within the transitional period.”

Applications for the scheme opened today, and firms could submit proposals to a cross-agency taskforce, led by the Singapore Workforce Development Agency and Spring Singapore. Priority will be given to projects which have the potential to be scaled up to “create transformational change for their respective industries”, said MOM.

Proposals which involve groups of companies and/or are endorsed by the relevant industry association or union will also be given priority, the ministry added. There is no cap on the number of companies that would benefit from the scheme.

Proposals should be “impactful, scalable, and have the potential to transform industry practices, within a two to three year timeframe”, MOM said. The transitional manpower support for each SME project will be reviewed annually and renewable for up to a maximum of three years. “If we sense that they’re not fully committed to this shared target, then obviously the transitional support will be reviewed,” Mr Lim said.

In recent years, the Government has been tightening its foreign labour regime. Levies have been raised gradually, while dependency ratio ceilings – which specify the ratio of local and foreign workers within a company – have been reduced.