Key Changes Regarding Singapore Foreign Worker Levy Employers Need to Budget for by 2028

The cost impact can look small at first glance, but it compounds quickly as the business scales. A $100 monthly increase for a marine shipyard R2 worker, or a $150 increase in the process sector, works out to $1,200 and $1,800 per worker annually. For a process plant employing 200 R2 workers, that is roughly $360,000 in additional annual levy if the current skill mix stays the same.

The R1-versus-R2 skill mix becomes a more consequential factor as a result. Since R1 rates remain steady while R2 rates climb, the cost gap between the two skill tiers keeps widening. This raises the case for upskilling in a way it hadn’t carried before this announcement.

For Manufacturing and Services employers, the tier merger changes the DRC equation rather than the levy per worker directly. Businesses that are currently in the lowest DRC tier could move into a higher effective levy bracket once the bottom two tiers are merged, even if their workforce size remains unchanged. Businesses should review their current headcount against the upcoming two-tier structure now, rather than waiting until 2028, to identify any impact on quota cost well in advance.