ERRANT employers who try to get around government efforts to tighten the foreign labour supply now face stiff penalties.

Parliament yesterday gave the nod to changes to the Employment of Foreign Manpower Act. These will help level the playing field for honest employers and protect Singaporeans from unfair job competition, Acting Minister for Manpower Tan Chuan-Jin said.

"Singaporeans ultimately suffer when employers fail to pay the true costs of hiring foreign manpower," he said.

Since 2010, the Government has sought to slow foreign worker inflows by raising levies and tightening quotas, in response to Singaporeans' unhappiness over congestion on public transport and competition from foreigners for jobs and housing.

However, the tightening has led to a labour shortage that has hit local businesses and consumers. MPs surfaced issues such as small firms' struggles and a shortage of cleaners at food centres.

Some errant employers have responded with "creativity" in breaking rules on the hiring of foreigners. That is why the Manpower Ministry has tightened the law. Changes allow the ministry to act swiftly by imposing financial penalties - of up to $20,000 in some cases - and barring them from hiring foreign workers.

The setting up of shell businesses to illegally bring in foreign workers on real work passes, without giving them jobs, is now an offence. It attracts the same penalties as for employing illegal immigrants: a fine of up to $6,000 and a jail term of at least six months and up to two years.

Those who hire more than five workers this way will be caned.

Other offences include forging educational qualifications to meet work pass requirements, collecting money from foreign workers in return for giving them a job, and getting around quotas by pretending to have local "phantom workers" on staff.

MPs from both the PAP and the opposition cheered the changes, but stressed the need for effective enforcement.

Some looked forward to the next round of changes to the Act, aimed at "an equitable balance of rights and responsibilities between employers and workers".

Describing yesterday's changes as "in keeping with our values as a society", Mr Tan said: "We believe all our workers should be treated fairly, decently and with respect regardless of their nationality."