More businesses name foreign manpower policy changes as top challenge

Policies that increase business costs have the most negative impact.

Foreign manpower policies that raise costs (47%) are now the second most cited manpower challenge after rising manpower costs, according to Singapore Business Federation (SBF)'s National Business Survey 2026.

This is an increase of two percentage points from 2025, moving it from third to second.

Amongst the foreign manpower policy changes, increases in S Pass and Employment Pass qualifying salaries for new and renewal applications were viewed as having the most negative impact on businesses.

The impact is particularly pronounced in sectors reliant on foreign manpower and skilled foreign talent. Hotels, Restaurants & Accommodations, IT & Related Services, Professional Services and Real Estate Activities sectors were amongst the sectors reporting the greatest negative impact from higher S Pass and Employment Pass qualifying salaries.

To manage the impact, 39% of businesses are strengthening and expanding their local hiring, with 29% increasing wages to make it more attractive for locals. 31% are redesigning their business processes by adopting AI and automation to reduce needed manpower. 31% redesign jobs and task mix so employees can work alongside digital or AI tools.

Meanwhile, 29% outsource some of the functions to third-party contractors in Singapore.

Some have reduced manpower (28%) without significant change to business processes, whilst 26% have decided to delay business expansions. 24% are retraining or redeploying existing employees.

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