16 December 2025 

The Singapore National Employers Federation (SNEF) has submitted our Budget 2026 recommendations to support employers in managing manpower and cost pressures while accelerating business and workforce transformation in an uncertain global economic environment. While the Ministry of Trade and Industry upgraded its 2025 GDP growth forecast to “around 4.0%”, the business outlook remains uneven across industries. About three in four employers expect uncertain business prospects in 2026¹, which could weigh on hiring and wage growth. Against this backdrop, SNEF’s recommendations are aligned to the broader national objectives by strengthening business competitiveness, developing new capabilities, and building an adaptable, future-ready workforce for a rapidly changing economy. 

Advancing Business Competitiveness and Managing Costs 

2   To stay competitive in an increasingly challenging global environment, employers must have access to a highly skilled workforce for sustained productivity growth. SNEF recommendations aim to help employers better manage manpower and cost pressures while sustaining investments in productivity and transformation. 

Recommendation 1: Enhance access to complementary, skilled foreign workforce  

3   SNEF recognises that Singapore’s foreign manpower policies must strike a careful balance between ensuring access to essential skills and safeguarding employment opportunities for locals. However, employers face the dual pressures of sustaining business operations and driving transformation amid slowing workforce growth. Greater flexibility in foreign manpower policies will be key to supporting transformation without compromising operations.  

4   Employers have highlighted difficulties in filling key roles amid tighter foreign manpower policies, rising qualifying salaries, and persistent local manpower shortages. As such, SNEF recommends: 

• Additional foreign manpower flexibilities to employers that adopt progressive employment practices (e.g. structured flexible work arrangements, caregiving leave that exceeds mandatory minimum, and programmes to hire and retain senior workers). This would create a “win-win” outcome, helping companies meet operational needs while supporting the needs of local workers.  

• Greater flexibility in foreign manpower policies to support firms undertaking productivity or restructuring projects through temporary quota adjustments or cross-deployment arrangements under the Manpower for Strategic Economic Priorities scheme, to encourage employers to pursue business transformation.
  
• Easing hiring bottlenecks by expanding approved source countries for Work Permit holders, adopting a more sector-differentiated approach for sub-quotas in industries facing acute manpower shortages, and moderating the pace of qualifying salary increases for S Pass and Employment Pass holders to ensure that rising manpower costs are manageable.  

Recommendation 2: Supporting an ageing workforce and sustaining senior employment 

5   With Singapore’s resident workforce ageing rapidly, employers are managing higher manpower and healthcare-related costs arising from employing mature and senior workers. Employers have shared that these additional costs can be significant, particularly for SMEs. SNEF recommends:   

• Extending the Senior Employment Credit (SEC) beyond 2025, with tiered co-funding or enhanced support for SMEs hiring lower-wage and senior workers.  

• Continuing the CPF Transition Offset (CTO) beyond 2026 to mitigate cost increases arising from higher CPF contribution rates for senior workers. The cost of complying with higher CPF contributions in January 2026 remains a key concern of employers.   

• Strengthening grants that support workplace redesign and age-friendly technology adoption, alongside employer capability-building initiatives such as Structured Career Planning, to help manage multi-generational teams and support career longevity. 

Recommendation 3: Accelerating Digital Transformation and Artificial Intelligence (AI) Adoption 

6   Employers recognise that digitalisation, automation, and AI are critical to productivity growth. However, businesses, particularly SMEs, have shared that while they are excited about AI, many are unsure where to start. SNEF seeks to partner government agencies to enhance the reach and relevance of existing programmes and recommends strengthening support for:

• Access to ready-to-deploy, simple, “plug-and-play” AI tools that SMEs can adopt quickly and affordably.  

• Expand AI adoption subsidies and grants to cover employee training, reskilling, and change management components that help to strengthen AI literacy, technical capabilities and the responsible use of AI across the workforce.  

• Development of more structured AI training and certification pathways, in partnership with Institutes of Higher Learning and industry leaders, to build new capabilities. 

Recommendation 4: Continued support to manage business costs 

7   More broadly, employers continue to face rising business costs from wages, CPF contributions, rentals, and utilities. SNEF recommends continued broad-based cost relief, including targeted support for rental and utility expenses, particularly for SMEs, to enable firms to focus resources on productivity, innovation, and workforce development. 

Securing Good Jobs: Workforce Transformation 

8   Workforce transformation is a top priority for employers with more than half of SNEF’s survey respondents recognising that continuous upskilling and reskilling are essential to business competitiveness. SNEF recommendations aim to enable employers to build a skilled, adaptable workforce by reducing training and development barriers. 

Recommendation 5: Enhancing workforce transformation and leadership capabilities   

9   Employers have shared that the scale, duration, and cost of training often pose significant operational challenges, particularly for SMEs operating with lean teams. To encourage more employers to invest in skills development, support measures must address the practical constraints businesses face. As such, SNEF recommends: 

• Extending the duration of support for Career Conversion Programmes when employees undergo structured training, to strengthen the pipeline of job-ready mid-career talent for emerging roles. This would also give greater incentive for employers to release these workers for more intensive training.  

• Providing absentee payroll (AP) funding or study leave reimbursement to better tie skills upgrading to employment outcomes and incentivise an employer to release employees to undertake more intensive upgrading programmes to contribute in higher value-add roles upon completion of upgrading.  

• Providing support for leadership and management courses, including co-funding the development of these in-house frameworks and higher subsidies for leadership and management courses. This would be particularly beneficial for SMEs in strengthening their succession pipelines and developing the next generation of leaders.
  

Uplifting Singaporeans to Progress Together: Inclusive and Sustainable Workplaces 

10   While employers remain committed to national priorities in strengthening marriage and parenthood outcomes so as to bolster Singapore’s workforce growth, these initiatives have added to business costs and operational demands. SNEF recommendations aim to support employers’ human resource management capabilities. 

Recommendation 6: Sustaining progressive employment practices  

11   Employers have shared that they require additional assistance to support the sustainable adoption of workplace safety and health, mental well-being, and implementation of workplace fairness practices and FWAs, particularly in sectors with less operational flexibility. As such, SNEF recommends: 

• Expanding avenues for short-term staffing support to help employers maintain operational continuity during employees’ periods of absence due to statutory and non-statutory leave. This enables employers to maintain service levels without overburdening existing staff.  

• Enhancing support to strengthen workplace systems and the broader ecosystem for implementation of FWAs, including shared resources, job redesign support, workforce scheduling tools, and training for line managers.  

• Providing targeted support to promote workplace mental well-being and fair employment practices, to build resilient and inclusive organisations.  

Recommendation 7: Ensuring sustainable uplift of lower wage workers  

12   SNEF supports tripartite efforts to uplift lower-wage workers but notes growing cost pressures arising from the expansion of the Progressive Wage Model and higher wage floors. To sustain these efforts, SNEF calls on the Government to enhance and extend the Progressive Wage Credit Scheme beyond 2026 to support employers and enable them to uphold wage commitments sustainably, without compromising on productivity investments or job redesign efforts. 

Conclusion 

13   SNEF appreciates the Government for accepting our earlier recommendations, including the extension of the SEC and CTO schemes. Additionally, the introduction of the Enterprise and Workforce Transformation Package and Enterprise Compute Initiative have also provided meaningful support to employers in driving business transformation and addressing manpower challenges. 

14   Mr Tan Hee Teck, President of SNEF, said, “Our Budget 2026 recommendations are focused on easing manpower and cost pressures while helping businesses adapt to a more digital and AI-enabled economy. We are calling for stronger support in workforce transformation, skills upgrading, and technology adoption so that employers can stay competitive and workers can progress. Together with our tripartite partners, SNEF remains committed to shaping pro-business and pro-worker policies that sustain growth and strengthen resilience.” 

¹ Survey by the Singapore National Employers Federation – Business Sentiments Dip with Poorer Hiring and Wage Outlooks – SNEF

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About Singapore National Employers Federation  

The Singapore National Employers Federation (SNEF) is a trade union of employers. Our mission is to advance tripartism and enhance labour market flexibility to enable employers to implement responsible employment practices for sustainable growth. SNEF has a membership of more than 3,900 companies with around 870,000 employees. For more information, please visit www.snef.org.sg.