At the Ministry of Manpower’s (MOM) Committee of Supply Debate on 3 March 2026, Minister for Manpower Dr Tan See Leng announced that MOM will streamline the Work Permit levy framework for Work Permit Holders (WPHs). This is the first step in a longer-term simplification effort, and it follows years of the framework accumulating complexity: according to MOM’s own factsheet, the levy framework has evolved over time into 24 different levy rates today.

For employers who rely on Work Permit holders across Manufacturing, Services, Marine Shipyard, Process and Construction sectors, this announcement has real implications for future levy bills, even though the changes only take effect from 2028. This article sets out exactly what MOM has confirmed, which sectors are affected, the new rates where they have been published, and what employers should and should not expect to change in the interim.

As with any multi-year policy rollout, some elements remain subject to further refinement. This article distinguishes clearly between the rates and timelines MOM has already confirmed in its official COS 2026 materials, and the progressive streamlining MOM has said will follow but has not yet detailed.

Why MOM Is Simplifying the Levy Framework

The Work Permit levy system exists to manage the number of Work Permit holders in Singapore, encourage employers to hire higher-skilled foreign workers, and channel WPHs toward more productive firms and sectors. Over the past five years, Work Permit numbers in Construction have grown by 36 percent as projects resumed post-pandemic, and across all sectors, Work Permit numbers have increased by 186,000, or 27 percent. MOM has framed the levy simplification as a response to this growth, aimed at making the system easier for businesses to understand and plan around, while continuing to incentivise the hiring, training and retention of higher-quality WPHs.

MOM has been explicit in its own frequently asked questions that this is a first step, not a complete overhaul. As the factsheet puts it, the changes announced are a first step towards streamlining the levy framework, with further progressive streamlining to follow over time. Employers should therefore expect this to be an ongoing process rather than a single, one-off adjustment.

What Is Actually Changing: Manufacturing and Services

The most significant structural change is in the Manufacturing and Services sectors, where MOM will reduce the number of levy tiers based on a firm’s reliance on Work Permit holders from three tiers down to two. Previously, both sectors had three dependency ratio utilisation tiers, each with its own rate for Higher-skilled (R1) and Basic-skilled (R2) workers. Under the new structure, the bottom two tiers are combined into a single tier, while the top tier is left unchanged.

Services Sector Rates

For the Services sector, the new combined bottom tier, covering firms with Work Permit holders making up to 25 percent of their total workforce, will have a monthly levy rate of S$400 for Higher-skilled (R1) workers and S$600 for Basic-skilled (R2) workers. This replaces the previous two separate tiers of S$300/S$450 (up to 10 percent) and S$400/S$600 (10 to 25 percent), effectively setting the new combined rate at what was previously the second tier’s rate. The top tier, for firms with Work Permit holders making up 25 to 35 percent of their workforce, remains unchanged at S$600 (R1) and S$800 (R2).

Manufacturing Sector Rates

For Manufacturing, the new combined bottom tier, covering firms with Work Permit holders making up to 50 percent of their workforce, will have a monthly levy rate of S$300 for Higher-skilled (R1) workers and S$470 for Basic-skilled (R2) workers, again matching what was previously the second tier’s rate (the two merged tiers were previously S$250/S$370 up to 25 percent, and S$300/S$470 from 25 to 50 percent). The top tier, for firms with Work Permit holders making up 50 to 60 percent of their workforce, remains unchanged at S$550 (R1) and S$650 (R2).

In practical terms, this means employers who previously sat in the lowest dependency ratio tier in either sector will see their levy rate rise to match the former middle tier, since the two tiers are being merged at the higher of the two previous rates. Employers already in the former middle tier will see no change, and those in the top tier are unaffected. MOM has stated that the highest levy tier rates will remain unchanged in both sectors, to ensure firms with the greatest reliance on Work Permit holders continue to pay proportionately higher rates.

What Is Changing: Marine Shipyard and Process Sectors

Rather than a tier reduction, the Marine Shipyard and Process sectors will see their Basic-skilled (R2) levy rates gradually aligned with those in the Construction sector, which are generally higher. According to MOM’s factsheet, the monthly levy rate for Basic-skilled Work Permit holders will rise by S$100 in the Marine Shipyard sector and by S$150 in the Process sector. There is no change to the levy rates for Higher-skilled (R1) workers in either sector.

Specifically, the Marine Shipyard sector’s Basic-skilled rate will rise from S$500 to S$600 a month, while its Higher-skilled rate stays at S$350. In the Process sector, Basic-skilled rates will rise from S$450 to S$600 for the Malaysia, North Asian Sources and PRC nationality category, and from S$650 to S$800 for the Non-Traditional Sources category, with Higher-skilled rates remaining at S$200 and S$300 respectively. MOM has framed this as a step to nudge these sectors toward reducing their reliance on Work Permit holders and hiring more higher-skilled workers, consistent with the direction already set for Construction.

The “24 to 20” Simplification, in Context

Industry coverage of this announcement has widely described the change as reducing the levy framework from roughly 24 different rate and tier combinations down to about 20, as a first step, with further progressive streamlining planned. This is a reasonable shorthand for what is happening: MOM’s own materials confirm 24 different levy rates exist today, and the confirmed first step, reducing Manufacturing and Services tiers from three to two each, mechanically reduces the total count of distinct rate combinations across the whole framework. However, MOM’s own factsheet does not itself state the precise resulting total of 20; that figure is a derived, reported summary rather than a number MOM has published outright. Employers should treat the 24-to-20 figure as directionally accurate rather than a formally gazetted number, and should rely on the sector-specific tables above, which are drawn directly from MOM’s official factsheet, for their actual levy planning.

What MOM has said explicitly is that this is a first step towards streamlining, and that MOM will work with industry to strengthen frameworks for identifying higher-skilled workers eligible for lower levies over time. The scope, timing and mechanics of further streamlining beyond 2028 have not yet been announced, so employers should not assume any particular further reduction in tiers or rates beyond what is set out in this article.

Timeline: When Employers Will Actually See These Changes

All revised levy schedules described above will take effect from 2028, giving employers roughly two years of advance notice from the March 2026 announcement. This lead time is deliberate: MOM’s stated rationale, consistent with its approach to the parallel Employment Pass and S Pass qualifying salary increases announced at the same COS 2026 sitting, is to give businesses time to plan and adjust their hiring, training and retention strategies before the new rates apply.

Employers should note that nothing changes to current levy bills between now and 2028. The rates published in MOM’s factsheet, and reproduced in this article, are the rates that will apply from 2028 onward, not rates that apply immediately. Businesses budgeting multi-year manpower costs, particularly those with Work Permit holders concentrated in the lowest dependency ratio tier in Manufacturing or Services, or Basic-skilled workers in Marine Shipyard or Process, should factor these confirmed 2028 rate increases into their forward planning now, even though no immediate action is required.

What Employers Should Actually Do Now

Given the two-year runway before implementation, the most useful step for employers is to model the impact of the 2028 rates against their current Work Permit headcount and dependency ratio, rather than waiting until closer to the effective date. Firms currently in the lowest dependency ratio tier in Manufacturing or Services should expect their levy costs for that portion of their workforce to rise to the former middle-tier rate, and should factor this into hiring and workforce planning decisions made between now and 2028, including decisions about upgrading toward higher-skilled worker categories where MOM has indicated it will strengthen the identification framework for eligibility.

Employers in Marine Shipyard and Process should likewise budget for the confirmed S$100 and S$150 increases to Basic-skilled levy rates respectively, and should consider whether shifting toward Higher-skilled worker classifications, where rates are unchanged, is commercially viable ahead of 2028. Businesses should also watch for MOM’s promised guidance on the framework for identifying higher-skilled workers eligible for lower levies, since this could materially affect which levy tier a firm’s existing workforce falls into once implemented.

Finally, this levy reform sits alongside the separately announced expansion of the Non-Traditional Source Occupation List from September 2026, and the wider set of foreign workforce measures covered in our guide to the Work Permit eligibility, quota and levy framework. Employers reviewing their foreign workforce strategy for the next two to three years should treat these as one coordinated set of changes rather than isolated announcements, and should also ensure ongoing compliance with existing obligations, including those under the Fair Consideration Framework where relevant, and proper procedures for cancelling a work pass when a Work Permit holder’s employment ends. Businesses planning new Work Permit intake ahead of the 2028 changes, or restructuring their existing headcount toward higher-skilled categories, may find it useful to work with a licensed employment agency to manage the practicalities of sourcing and hiring compliantly.

Conclusion

MOM’s Work Permit levy simplification is a genuine, if partial, response to a framework that had grown into 24 different rates over time. The confirmed first step, merging the bottom two dependency ratio tiers in Manufacturing and Services, and raising Basic-skilled rates in Marine Shipyard and Process to align with Construction, will only take effect from 2028, giving employers time to plan. What remains open is the pace and shape of further streamlining beyond this first step, and the detail of how MOM will help industries identify higher-skilled workers eligible for lower levies. Employers who model these confirmed 2028 rate changes against their current workforce now, rather than waiting, will be best placed to manage the transition without surprises. Company directors managing this alongside broader business and personal financial planning should build the 2028 levy changes into their multi-year budgeting now. For the latest Singapore business news and regulatory updates, there are useful resources for directors and business owners tracking how these foreign workforce reforms interact with wider regulatory change.

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The Editorial Team, Raffles Corporate Services