At Committee of Supply 2026, the Ministry of Manpower announced that it will streamline the Foreign Worker Levy framework for Work Permit holders from 2028, a change that will directly affect how much employers in Manufacturing, Services, Marine Shipyard and Process pay for their foreign workforce. The headline move: MOM will reduce the number of levy tiers in Manufacturing and Services from three to two by merging the bottom two tiers, while raising Basic-Skilled levy rates in Marine Shipyard and Process as a first step toward aligning them with Construction sector rates. The highest levy tiers in each sector are left untouched.
For employers, this is not simply an administrative tidy-up. Merging the bottom two tiers means that companies with relatively low reliance on foreign labour, previously enjoying the cheapest levy tier, will in 2028 be shifted onto what is currently the second-tier rate. That is a real cost increase for exactly the employers MOM’s framework was designed to reward for keeping foreign worker dependency low. Understanding the mechanics now, two years ahead of implementation, lets finance and HR teams budget accurately and reconsider headcount and quota strategy before the change lands.
This article sets out what MOM has confirmed, what remains to be detailed, and how Singapore employers should start planning. It complements our existing guide to current Foreign Worker Levy rates and calculation, which covers the levy structure as it stands today rather than the 2028 changes described here.
What MOM Announced at Committee of Supply 2026
According to MOM’s factsheet on foreign workforce policy announcements at COS 2026, the levy framework for Work Permit holders has evolved over time and now has 24 different levy rates. MOM described the changes below as a first step toward streamlining that framework, so that it is easier for businesses to understand and plan how they hire, train and retain Work Permit holders, and so that levies work more effectively to manage headcount, raise workforce quality and steer hiring toward more productive firms and sectors.
Two distinct changes were announced, both taking effect from 2028:
First, in Manufacturing and Services, MOM will reduce the number of levy tiers based on a firm’s dependency ratio utilisation from three to two. The practical effect, as set out in MOM’s Annex C tables, is that the current bottom two tiers merge into a single new bottom tier, priced at what is currently the middle tier’s rate. The current top tier is unchanged.
Second, in the Marine Shipyard and Process sectors, MOM will raise the monthly levy rate for Basic-Skilled (R2) Work Permit holders by $100 and $150 respectively, with no change to Higher-Skilled (R1) rates. MOM has been explicit that this is intended as “a first step towards aligning the levy rates of Marine Shipyard and Process with those in Construction sector in the longer-term”, though it has not yet published a timetable or the eventual quantum for full alignment with Construction. Employers in these sectors should treat further increases beyond 2028 as likely, even though MOM has not confirmed specifics.
The Levy Tiers Are Merging: Manufacturing and Services
The tier merger is the change with the widest reach, since it touches every Manufacturing and Services employer, not just those in specialised sectors. The table below sets out the current three-tier structure against the two-tier structure that MOM has confirmed will apply from 2028.
Manufacturing sector
Manufacturing currently has three dependency ratio ceiling (DRC) tiers. From 2028, the tier for firms with up to 25% foreign worker reliance and the tier for firms between 25% and 50% merge into a single tier covering 0% to 50%, priced at the current second tier’s rate. The top tier, covering 50% to 60% reliance, is unchanged.
Services sector
Services follows the same pattern. The current tier for firms up to 10% reliance and the tier for firms between 10% and 25% merge into a single tier covering 0% to 25%, again priced at the current second tier’s rate. The top tier, covering 25% to 35% reliance, is unchanged.
| Sector and tier | Dependency ratio band | Current monthly levy (R1 / R2) | From 2028 (R1 / R2) |
|---|---|---|---|
| Manufacturing, current Tier 1 | Up to 25% | $250 / $370 | Merged Tier 1: $350 / $470 |
| Manufacturing, current Tier 2 | Above 25% to 50% | $300 / $470 | |
| Manufacturing, Tier 3 (unchanged) | Above 50% to 60% | $550 / $650 | $550 / $650 |
| Services, current Tier 1 | Up to 10% | $300 / $450 | Merged Tier 1: $400 / $600 |
| Services, current Tier 2 | Above 10% to 25% | $400 / $600 | |
| Services, Tier 3 (unchanged) | Above 25% to 35% | $600 / $800 | $600 / $800 |
Read the table carefully: it is the current lowest-tier employers, those with the least reliance on foreign labour, who see their levy bill rise. Firms already in the current second or third tier see no change from this particular move. That is a deliberate policy choice: MOM’s framework has always used lower levy rates for low-dependency firms as an incentive, and folding that lowest tier into the middle tier narrows the reward for staying below the old first threshold.
Marine Shipyard and Process: A First Step Toward Construction-Level Rates
The Marine Shipyard and Process sectors face a more direct rate increase, targeted specifically at Basic-Skilled (R2) Work Permit holders. Higher-Skilled (R1) rates are untouched.
| Sector / source | Current R1 | Current R2 | From 2028 R1 | From 2028 R2 |
|---|---|---|---|---|
| Marine Shipyard | $350 | $500 | $350 | $600 |
| Process (Malaysia, North Asian Sources, PRC) | $200 | $450 | $200 | $600 |
| Process (Non-Traditional Sources) | $300 | $650 | $300 | $800 |
For Marine Shipyard, the R2 rate rises by $100 a month. For Process, the R2 rate rises by $150 a month across both source categories. MOM has framed this as the opening move in a longer-term convergence with Construction sector levy rates, which are generally higher, but has not committed to a specific end-state schedule beyond 2028. Employers with large Basic-Skilled headcounts in these sectors should expect this direction of travel to continue and should not assume the 2028 rates are the final word.
Worked Cost Scenarios
The percentage increases understate how these changes feel in dollar terms once multiplied across a real workforce. A few illustrative scenarios, using MOM’s confirmed rate changes:
Manufacturing SME, 15 Basic-Skilled Work Permit holders, currently in the lowest tier (under 25% dependency). Current levy: $370 x 15 = $5,550 a month, or $66,600 a year. From 2028, the same firm sits in the merged tier at $470 a month per worker: $7,050 a month, or $84,600 a year. That is an $18,000 annual increase with no change in headcount or dependency ratio.
Services firm, 10 Basic-Skilled Work Permit holders, currently in the lowest tier (under 10% dependency). Current levy: $450 x 10 = $4,500 a month, or $54,000 a year. From 2028: $600 x 10 = $6,000 a month, or $72,000 a year, an $18,000 annual increase, a 33% rise for a firm that was deliberately keeping its foreign worker reliance low.
Marine Shipyard operator, 30 Basic-Skilled Work Permit holders. Current levy: $500 x 30 = $15,000 a month, or $180,000 a year. From 2028: $600 x 30 = $18,000 a month, or $216,000 a year, a $36,000 annual increase.
Process sector employer, 20 Basic-Skilled Work Permit holders from Non-Traditional Sources. Current levy: $650 x 20 = $13,000 a month, or $156,000 a year. From 2028: $800 x 20 = $16,000 a month, or $192,000 a year, a $36,000 annual increase.
These figures assume no change in headcount, sector or dependency ratio band between now and 2028. In practice, most employers will also be managing separate cost pressures from the EP and S Pass qualifying salary increases confirmed at the same COS 2026 session, covered in our article on EP and S Pass salary increases from January 2027. The two sets of changes should be modelled together, not in isolation, since many firms use a mix of work pass types across their workforce.
How Employers Should Plan Now for the 2028 Shift
With roughly two years’ notice, employers have a genuine planning window. Some practical steps worth starting now:
Model your 2028 levy bill against your current dependency ratio. If your Manufacturing or Services headcount currently sits in what will become the merged bottom tier, calculate the gap between today’s rate and the 2028 rate for every Basic-Skilled and Higher-Skilled worker you expect to still employ. Build that into three-year budget projections rather than treating it as a 2028 surprise.
Reassess your skills mix. Because Higher-Skilled (R1) rates are unchanged across every affected sector, firms with the flexibility to upgrade a larger share of their Work Permit workforce to Higher-Skilled status before 2028 will insulate a larger portion of their headcount from the increase. This is also consistent with MOM’s stated aim of raising Work Permit workforce quality.
Review your quota structure alongside the levy change. Dependency ratio ceilings and the Man-Year Entitlement system for Construction and Marine Shipyard, which we cover in our guide to MYE quota mechanics, interact directly with which levy tier a firm falls into. A firm considering a Work Permit headcount reduction for other reasons may find 2026 to 2027 a more efficient window to do it than after the 2028 change takes effect.
Check whether the Non-Traditional Source Occupation List expansion changes your sourcing options. MOM’s same COS 2026 package added eight occupations to the NTS Occupation List from September 2026, discussed in our NTS Occupation List expansion article. Firms in Food Services, Social Services and Air Transportation should check whether wider sourcing options reduce reliance on the levy tiers most affected by the 2028 change.
Revisit your Work Permit budget as part of the same exercise you use for the Foreign Worker Levy generally. Our Work Permit eligibility, quota and levy guide sets out the mechanics of quota calculation that underpin all of the tier changes described above, and is a useful reference point when working through the 2028 numbers for your own workforce.
What MOM Has Not Yet Confirmed
It is worth being precise about the limits of what has been announced. MOM’s COS 2026 factsheet confirms the tier merger mechanics, the specific new rates for Manufacturing, Services, Marine Shipyard and Process, and the 2028 implementation timeline. It does not yet specify implementing regulations, transitional arrangements for firms that move between dependency ratio bands during the transition period, or the eventual end-state rates for full alignment between Marine Shipyard, Process and Construction, which MOM has described only as a longer-term direction. Employers should treat the 2028 figures in this article as the confirmed first step, and expect further detail, and possibly further changes, to be published closer to implementation. The levy itself remains a statutory charge under the Employment of Foreign Manpower Act 1990, and any subsidiary legislation giving effect to the 2028 rates will be made under that Act.
Getting Ready
A two-year runway before a levy change takes effect is unusual, and MOM has said as much: the point is to give businesses time to adjust. For most employers, that means treating this as a budgeting and workforce-planning exercise rather than a compliance deadline. Firms that model the 2028 numbers now, reassess their Higher-Skilled to Basic-Skilled mix, and review their dependency ratio positioning ahead of time will be far better placed than those that wait for the change to arrive. If you are unsure how the 2028 tiers will affect your specific headcount and sector mix, it is worth working through the calculation with your corporate services or HR advisor well before the transition begins. MOM’s factsheet on the COS 2026 foreign workforce announcements, available on mom.gov.sg, remains the primary reference for the confirmed rates cited above.
The Editorial Team, Raffles Corporate Services