What is the Local Qualifying Salary (LQS) in 2026?

The LQS is the salary a local employee must earn to count toward a company's foreign-worker quota. It is set to rise to around S$1,800 from July 2026. Confirm the exact figure with the Ministry of Manpower, as it changes periodically.

How does the LQS affect my foreign worker quota?

Your local headcount determines how many S Pass and Work Permit holders you can employ. Because the LQS decides who counts as local, raising it can reduce your effective quota even if your headcount is unchanged, as some lower-paid or part-time locals may no longer count fully.

How can an SME reduce foreign worker costs?

The main levers are redesigning roles rather than adding headcount, raising productivity per person through better process and tools (which can be grant-funded), using workforce and productivity grants, and planning local hiring to protect quota headroom.

What grants help with manpower and productivity?

Productivity and workforce transformation projects can draw on the Productivity Solutions Grant, the Enterprise Development Grant and the SkillsFuture Enterprise Credit, depending on the project. A diagnosis identifies which fits.

Foreign Worker Costs in Singapore 2026: What the New LQS, S Pass and Levy Rules Mean for Your SME

Manpower is the single biggest cost pressure for most Singapore SMEs, and 2026 turns the dial up again. Here is what is changing and how to stay ahead of it.

Note on accuracy: salary floors, levies and quota rules are set by MOM and change regularly. The figures below reflect what has been announced for 2026 — confirm the current numbers on the Ministry of Manpower website before you plan around them.

What is changing in 2026

Local Qualifying Salary (LQS) rises to around S$1,800 from July 2026. The LQS is what a local employee must be paid for them to count toward your foreign-worker quota.
S Pass minimum qualifying salary and levies continue to step up, with a higher floor for financial services and a levy that has been climbing over recent years.
Employment Pass minimum salaries have also risen, raising the cost of hiring at the professional level.

Why the LQS matters more than it looks

The LQS is not just a wage floor. It determines how many of your staff count as local for quota purposes, and your local headcount sets how many S Pass and Work Permit holders you are allowed. Raise the LQS and some part-time or lower-paid locals may no longer count fully, which can quietly shrink your quota even if nothing else changes.

The trap in 2026 is treating this as only a payroll increase. It is also a quota question — the same change can raise your wage bill and reduce how many foreign workers you can hold.

The real cost per foreign worker

Budget for the full picture: salary plus the monthly levy, not just the headline wage. As levies rise and quotas tighten, the effective cost of each foreign hire grows — which changes the maths on whether to hire, automate, or redesign the role.

What to do about it

Redesign roles before you replace them. Often the answer is not another headcount but a better-designed job, supported by process and tools.
Raise productivity per head. Automation and better process let the same team do more — the right tools can be grant-funded.
Use the funding. Workforce transformation, job redesign and productivity projects can draw on support like the PSG, the EDG and the SFEC.
Plan your local hiring deliberately so your quota headroom is protected as the LQS rises.

Manpower strategy is really a Sustainability question: building a business that runs on systems and well-designed roles rather than on ever-more headcount.

The short version

2026 raises the LQS (to ~S$1,800 from July), S Pass floors and levies. It increases both your wage bill and, via the LQS, can shrink your foreign-worker quota. Manage it by redesigning roles, raising productivity with grant-funded tools, and planning local hiring deliberately. Confirm current figures with MOM.