Recruitment and strategic workforce planning in Singapore: Solutions for an era of rapidly evolving labour laws

The Landscape

1. A time of big demographic shifts

Big demographic forces are at play in Singapore today, which have important ramifications for the labour market now, and in the future. In 2024, the Singapore birth rate reached an historic low, with the Total Fertility Rate (the number of children a woman is predicted to have) dropping to 0.97. Population replacement level is 2.1.

Singapore, a city state of some 6.04 million people, currently has 1.86 million non-residents made up of foreign workers, their dependants and students. With a low birth rate, an ageing population, and a trend for local talent to study and then work overseas, there is a strong need for foreign workers.

However, the presence of these overseas workers – particularly in more highly-skilled positions – has created tension with Singaporeans. Many feel that expats take an unfair proportion of more highly paid roles. This feeling is exacerbated by the fact that government sector jobs, which are not as highly paid as some private sector roles, have much stricter citizenship criterion, and are generally filled by Singapore nationals.

2. A rapidly evolving labour law landscape

Maintaining a diverse workforce that enables Singapore’s varied economic landscape to flourish, but also ensures the local populace have rich career development opportunities is a complex balancing act.

An important lever employed by the Ministry of Manpower (MOM) to try to achieve this balance has been the steady increase of the minimum salary thresholds for foreign nationals seeking employment. These rates are about to rise again.

On September 1^st, 2025, the S pass, designed for mid-skilled professionals and technicians, will rise to a minimum of S$3,300, increasing progressively with age to a maximum of S$4,800 for workers of 45 or over. Financial Services rates are even higher, beginning at S$3,800 for younger workers, and rising to S$5,650.

In January 2026, the rates for the renewal of the Employment Pass (the work visa for the managerial and executive level workers) will also be raised from its current minimum level of S$5,000, to S$5,600, increasing progressively from age 23 up to S$10,700 at age 45 and above. Again, the Financial Services sector has higher rates, with a range from S$6,200 to S$11,800, dependent on age. This comes on top of the introduction in 2024 of the points-based system, COMPASS for all Employment Pass applicants, further constricting the eligibility criteria.

In addition, only 35% of any company’s roles can be filled by foreign workers, and in a range of key sectors only 10%-15% of S pass type workers can come from overseas.

3. A less attractive offering for expat workers

This constriction in the number of expats allowed to work in Singapore, coupled with the increased salary thresholds for employer passes has made it more difficult for organisations to hire foreign workers – and to attract the diverse range of skilled talent they need to thrive. The COVID-19 pandemic exacerbated this skills scarcity problem, as many expats left Singapore to return home at this time. In addition, the increase in the cost of living in Singapore, including sharply rising rental costs, means some expat packages are not as attractive as in previous times.

4. More volatile economic conditions

With the exact nature and duration of the liberation day tariffs from the US uncertain, there is also potential for an economic downturn, particularly in the manufacturing and electronic sectors. Figures show employment growth in Singapore down from 7,700 new jobs in Q4 2024 to 2,400 in Q1 2025. Meanwhile, unemployment rose slightly to 2%, whilst job vacancies increased from 77,500 to 81,100, suggesting organisations are having difficulty sourcing talent with the required skills. Sectors including health and financial services are still seeing an uptick in hiring levels, but hiring in manufacturing and Infocom has already started to slow.

Evolving talent attraction and development strategies

In this complex landscape, strategic workforce planning is more important than ever. Businesses across Singapore are developing talent strategies that build on three key priorities.

1. Strategic offshoring

The high costs in Singapore, particularly workforce expenses, are driving companies to explore lower-cost countries for operations functions. Manufacturing, back-office investment banking roles and shared services such as HR are increasingly moving overseas. Malaysia (especially the state of Johor), Thailand (particularly Bangkok), Indonesia, and India are all important offshoring locations for Singapore. Of course, it’s not just labour that is cheaper and more plentiful. Space for developing new offices and manufacturing plants is also much more affordable.

Companies in areas from finance and technology to life sciences and logistics are deciding to retain senior, strategic and sales roles in Singapore while other functions are offshored. As they do so, they are looking for partners with workforce planning expertise and ASEAN-wide talent attraction experience to help them devise and execute these major change projects.

2. Building skills in the domestic workforce

This is a medium to long-term strategy – but a vital one. On a country wide level, the Ministry of Manpower has launched SkillsFuture, a national movement which aims to provide skills and opportunities for individuals to develop their potential and stay relevant in the changing job market.

Internally, companies are going back to the drawing board to ask exactly what skills they need for future growth. By revisiting their organisational structure, team composition, and even role types, they can develop a workforce plan which highlights the training needed to develop the talent they have – and pinpoints the skills gaps for which they need to recruit.

3. Attracting the right mix of highly skilled foreign national professionals

Despite the increased restrictions on this type of labour, highly skilled foreign national workers are still an essential piece of the puzzle, providing skills that cannot be accessed in other ways in the short or medium term. Workforce analysis that defines exactly which skills and roles can only be acquired by hiring foreign nationals will ensure that your business can make the most of its foreign hire quota and optimise the advantages that this talent base can bring for your business.

Developing a robust workforce plan to build a diverse workforce is essential to future-proof your business. It needs to encompass the full range of talent attraction, development and organisational restructuring to optimise success.