The Local Qualifying Salary (LQS) is one of the most important numbers in Singapore workforce planning, yet it is often misunderstood. It is not a minimum wage in the usual sense. Instead, it determines how many of your local employees count towards your foreign worker quota, and it sets the salary floor that firms hiring foreign workers must pay their locals. From 1 July 2026, the LQS rises, so every employer that hires, or plans to hire, Work Permit and S Pass holders needs to understand the change.
This guide explains what the LQS is, the new 2026 figures, how the full-count and half-count rules affect your quota, and the practical steps to stay compliant. If your headcount planning depends on foreign manpower, small changes to the LQS can have an outsized effect on how many foreign workers you are allowed to employ.
What Is the Local Qualifying Salary?
The LQS is the salary a local employee (a Singapore citizen or permanent resident) must earn for the employer to count that worker towards its Work Permit and S Pass quota entitlement, known as the Dependency Ratio Ceiling (DRC). It also serves a second purpose: companies that employ foreign workers must pay all their local employees at least the LQS. In other words, the LQS is both a quota-counting yardstick and a wage floor tied to the privilege of hiring foreign manpower.
The 2026 LQS Figures
From 1 July 2026, the full-time LQS increases from S$1,600 to S$1,800 per month. Part-time local employees must earn at least S$10.50 per hour. The increase was announced at Budget 2026 and reflects Singapore’s continued push to uplift lower-wage workers. The Ministry of Manpower sets and updates the LQS, with the figures confirmed through the national Budget published by the Ministry of Finance.
| Measure | Before 1 July 2026 | From 1 July 2026 |
|---|---|---|
| Full-time LQS (per month) | S$1,600 | S$1,800 |
| Part-time LQS (per hour) | S$10.50 | S$10.50 |
How the LQS Affects Your Foreign Worker Quota
Your quota depends on how many local employees you have, but not every local worker counts equally. The counting rules work like this:
Full Count
A local employee earning at least the full LQS (S$1,800 per month from July 2026) counts as one local worker for quota purposes.
Half Count
A local employee earning at least half the LQS but below the full LQS counts as half a local worker. From July 2026, that band is S$900 up to S$1,799 per month.
No Count
A local employee earning below half the LQS does not count towards your quota at all.
The practical consequence is important. If you have staff currently earning between S$1,600 and S$1,799 and you do not raise them to at least S$1,800, they will drop from a full count to a half count on 1 July 2026. That directly shrinks your Work Permit and S Pass headroom, potentially forcing you to reduce the number of foreign workers you employ. Employers should model this now rather than discover the shortfall at renewal.
LQS, S Pass and Work Permit: How They Fit Together
The LQS sits alongside the other levers that govern foreign hiring. The S Pass and Work Permit regimes each carry their own qualifying salaries, quotas and levy tiers, and the Foreign Worker Levy is charged on each foreign worker you employ. The LQS determines the size of the local base against which your foreign quota is calculated. Getting all of these right at once is what keeps your workforce plan compliant.
For lower-wage local employees, the LQS also intersects with the Progressive Wage Model, which sets sector-specific wage ladders. Where a Progressive Wage requirement applies, it may exceed the LQS, so employers in covered sectors should apply the higher of the two.
Support: The Progressive Wage Credit Scheme
Raising wages to meet the new LQS has a cost, but the Government co-funds part of it. The Progressive Wage Credit Scheme (PWCS) co-funds a portion of qualifying wage increases for lower-wage Singaporean employees. Co-funding is set at 30% for 2026, and the scheme has been extended through 2028. Employers who plan their July 2026 wage adjustments carefully can time them to maximise the co-funding they receive.
Action Checklist for Employers
Before 1 July 2026, review your payroll and identify any local employees earning between S$1,600 and S$1,799, then decide whether to raise them to S$1,800 to preserve your quota. Recalculate your Work Permit and S Pass headroom under the new counting rules, factor in the PWCS co-funding, and update your payroll records. Our Singapore Payroll and CPF guide sets out the wider payroll obligations that go hand in hand with these changes. For a plain-English walkthrough aimed at hiring managers, the friendly resource at Singapore Employment Agency is a helpful companion.
A Worked Example
Suppose a manufacturing company employs 40 local staff and relies on that headcount to support its Work Permit and S Pass quota. Ten of those locals currently earn S$1,700 a month. Today, each of those ten counts as a full local worker. From 1 July 2026, because S$1,700 falls below the new S$1,800 LQS, each of the ten drops to a half count unless the company raises their pay.
The effect is that the company’s counted local base falls from 40 to 35 (the ten at S$1,700 now count as five between them). Since the Work Permit and S Pass quotas are calculated as a proportion of the counted local base, that reduction directly shrinks how many foreign workers the company may keep, potentially forcing it to let some go at renewal. By contrast, raising the ten workers to S$1,800, partly offset by Progressive Wage Credit Scheme co-funding, preserves the full local base and the quota. This is why modelling the change now, rather than at renewal, is so important.
How Raffles Corporate Services Can Help
Workforce planning around the LQS touches payroll, quota management and foreign worker levies all at once. Raffles Corporate Services helps employers model the impact of the July 2026 LQS increase, adjust payroll compliantly, and keep their foreign worker quota intact. Speak to us early so the change works in your favour rather than catching you out at renewal.
The Editorial Team, Raffles Corporate Services