100 employers penalised for inflating foreign worker quotas through ‘phantom workers’: Tan See Leng

SINGAPORE: Around 100 employers have faced enforcement action for fraudulently inflating their foreign worker quotas through so-called “phantom worker” arrangements between 2024 and 2025, Manpower Minister Dr Tan See Leng said on 3 March.

Tan was responding to a question from Workers’ Party MP Kenneth Tiong, who asked whether the Ministry of Manpower (MOM) had assessed the extent of quota circumvention through such schemes.

Phantom worker arrangements involve employers making false Central Provident Fund (CPF) contributions for locals who do not in fact work for the company. This artificially boosts a firm’s entitlement to hire foreign workers.

In a written reply, Tan said MOM investigates such cases based on complaints as well as through proactive on-site inspections. These efforts led to enforcement action against about 100 errant employers over the past two years.

He had earlier said, in response to a separate parliamentary question, that employers found guilty may be fined up to S$20,000 for each work pass application made using an inflated quota. They may also be barred from hiring foreign workers.

Individuals who collude with employers by acting as phantom workers may likewise face enforcement action for abetting the offence.

Government rejects call to scrap quota system

Tiong also asked whether MOM would consider removing nationality-based quotas — known as Dependency Ratio Ceilings (DRCs) — and replacing them with a flat per-worker tax channelled towards local upskilling.

Tan rejected the proposal, saying that a purely price-based mechanism would not be sufficient to regulate the size of the foreign workforce.

He noted that reservation wages in neighbouring labour-supplying economies are significantly lower than the wages of resident non-PMETs (professionals, managers, executives and technicians) in Singapore. As such, levies would have to be raised substantially to achieve the same effect as quotas.

This, he said, would increase business costs and affect Singapore’s competitiveness.

Tan added that the DRC framework serves a structural function by linking a firm’s entitlement to hire foreign workers to the size of its local workforce. This ensures companies maintain a strong local core while deploying foreign workers in roles that fewer locals are willing to take up.

The system also strengthens workforce resilience during major disruptions, such as the Covid-19 pandemic.

Nevertheless, Tan noted that the Government has progressively tightened DRCs over the years, taking into account the potential for automation and localisation across sectors.

This is intended to encourage employers to reduce reliance on foreign manpower by improving productivity and redesigning jobs to better attract local workers.