The Singapore National Employers Federation (SNEF), which represents over 3,900 companies employing approximately 8,70,000 workers across the nation, has called on the government to deliver targeted and sustained support in Budget 2026, warning that businesses continue to face manpower shortages and rising operational costs even as the economic outlook improves.
In recommendations submitted on Tuesday, SNEF highlighted a disconnect between headline growth projections and on-the-ground business sentiment.
While the Ministry of Trade and Industry has upgraded Singapore’s GDP growth forecast for 2025 to around 4%, nearly three in four employers expect business conditions to remain uncertain in 2026.
The federation said this uncertainty could dampen hiring intentions and wage growth across sectors, particularly for small and medium-sized enterprises (SMEs).
“Our Budget 2026 recommendations are focused on easing manpower and cost pressures while helping businesses adapt to a more digital and AI-enabled economy,” said SNEF president Tan Hee Teck.
Adding, “We are calling for stronger support in workforce transformation, skills upgrading, and technology adoption so that employers can stay competitive and workers can progress.”
Greater flexibility in foreign manpower
A key pillar of SNEF’s proposals is increased flexibility in foreign manpower policies. The federation recommended temporary quota adjustments for companies undertaking productivity improvements, particularly those adopting progressive employment practices such as structured flexible work arrangements and enhanced caregiving leave.
It also proposed expanding approved source countries for Work Permit holders and moderating the pace of qualifying salary increases for S Pass and Employment Pass holders, arguing that abrupt cost escalations could strain business sustainability.Supporting an aging workforce
With Singapore’s workforce aging rapidly, SNEF urged the government to extend the Senior Employment Credit beyond 2025 and continue the CPF Transition Offset beyond 2026.
These measures, it said, would help employers manage higher wage costs arising from increased CPF contribution rates for senior workers, which are set to take effect in January 2026.
Without continued support, SNEF warned that some employers may struggle to retain older workers despite broader national efforts to promote longer employability.
Accelerating AI and digital adoption
SNEF also pressed for stronger support to accelerate digital transformation and artificial intelligence adoption, particularly among SMEs. It recommended providing businesses with access to ready-to-deploy AI tools, alongside expanded subsidies that cover not just technology purchases but also employee training and change management.
“While they are excited about AI, many are unsure where to start,” the federation noted, pointing to capability gaps that could slow adoption without structured guidance and funding.
Workforce development and leadership pipelines
On workforce development, SNEF proposed extending support durations for Career Conversion Programmes and introducing absentee payroll funding to encourage employers to release workers for intensive training without operational disruption.
It also recommended co-funding the development of leadership and management courses, which it said would be particularly valuable for SMEs seeking to strengthen succession pipelines amid tighter labour markets.
Sustaining progressive wage commitments
The federation called for the enhancement and extension of the Progressive Wage Credit Scheme beyond 2026, as employers face higher wage floors and expanding coverage under the Progressive Wage Model.
While reaffirming support for tripartite efforts to uplift lower-wage workers, SNEF cautioned that rising cost pressures make continued government assistance essential to ensure productivity investments can keep pace with wage increases.
SNEF also acknowledged the government’s acceptance of several earlier recommendations, including the extension of the Senior Employment Credit and CPF Transition Offset schemes, as well as the introduction of the Enterprise and Workforce Transformation Package.