The Government's move to delay levy hikes for foreign workers has bought time for companies, but many said it will not solve the problem of attracting locals to certain jobs

Ho Nyok Yong, president of the Singapore Contractors Association, said the current monthly levy of $550 for a construction worker with basic skills already accounted for a quarter of the total cost of hiring him. Had the hike kicked in, the levy would have risen to $650 a month.

Manufacturers got a bigger break than most as the levy hikes for work permit holders in the sector were pushed back two years. But Jackie Lau, managing director of Seng Heng Engineering, sees this only as a "buffer" period to revamp his bolts- and nuts-making business for the "new norm" of high foreign labour costs.

"There's no point hoping that (the levies) will decrease," he added. Mr Lau suggested using some of the levy revenue to offset salaries for hiring new local staff.

"SMEs have a hard time hiring local staff because we don't pay as well as multinationals," he said. So, a new approach had to be taken to help SMEs find local workers, he felt.

Mr C. K. Wong, managing director of oilfield equipment manufacturer HME Technologies, also agreed that the broad budget measures did not address the deeper issue of how to get locals to join his industry.

"The levies are meant to get you to look for locals. Our problem is employing locals - and we have not solved that problem," he added.

While being spared foreign worker levy hikes this year, the services sector will still have to comply with stricter quotas when their existing workers seek to renew work permits.

Loo Pei Fen, the head of marketing for tech retailer Challenger, had hoped for incentives that would draw currently-inactive locals back to the labour force.

"I would've liked to see some measures in place to encourage stay-at-home mothers to rejoin the workforce, either on a part-time or full-time basis," she added.

"In this tight labour market, we need as many Singaporeans and permanent residents as possible to contribute to the labour force."

Nevertheless, Ms Loo said that Challenger's recruitment policy "has always been to hire Singaporeans and permanent residents first", and the tighter quota will reinforce this.

The company has 179 foreign workers and 273 Singaporeans or permanent residents on its payroll.

The temporary freeze on levies will help offset rising business expenses such as rentals and operating costs, she added.