Local Qualifying Salary Rises
What It Means for Your Foreign Worker Quota
If you employ foreign workers in Singapore, a change came in on 1 July 2026 that could quietly shrink the number of Work Permit and S Pass holders you're allowed to keep. The Local Qualifying Salary is rising, and it affects your foreign worker quota whether or not you've given anyone a pay rise.
This affects SMEs the hardest, particularly firms with even one or two local staff sitting in the $1,600 to $1,799 range, since it's exactly that group whose quota contribution has now changed.
Below is what's changing, what it costs and what to do now that it's taken effect.
What Is the Local Qualifying Salary
The Local Qualifying Salary (LQS) is the minimum monthly salary a Singapore Citizen or Permanent Resident must earn to be counted as a full local employee for quota purposes. It's set and reviewed by the Ministry of Manpower (MOM), the government body that governs employment passes and workplace regulations in Singapore.
Your local headcount determines your foreign worker quota, meaning your entitlement to hire Employment Pass and Letter of Consent holders, Work Permit, and S Pass holders. Pay your local staff below the LQS threshold and they count for less than a full head. Fewer full heads means a smaller foreign worker quota.
MOM's stated aim is to stop firms hiring local staff at minimal cost purely to unlock foreign worker headcount, so the Local Qualifying Salary keeps the local hire meaningful rather than symbolic.
What Changed on 1 July 2026
From 1 July 2026, the full-time Local Qualifying Salary increased from $1,600 to $1,800 gross per month. This isn't a one-off adjustment. MOM reviews the Local Qualifying Salary periodically to keep it in step with wage growth, and employers should expect further increases over time rather than treating this as a single event.
Any full-time local employee earning less than $1,800 will no longer count as a full head towards your quota calculation from 1 July 2026. Employers who haven't already adjusted payroll need to do so with immediate effect to bring their quota calculations into line.
Who This Applies To
The rule applies to any firm employing Work Permit, S Pass or EP holders. Every local employee must be paid at least the LQS, unless they're already covered under a Progressive Wage Model rate (a separate, sector-specific minimum wage schedule that applies to certain job roles instead of the LQS).
That includes small teams as much as large ones. A single local employee sitting below $1,800 can be enough to tip your work permit quota or S Pass quota calculation.
The Risk If You Don't Adjust the Local Qualifying Salary
This is where the Local Qualifying Salary increase can bite. A local employee paid below $1,800 counts as only a partial head, not a full one, towards your local workforce count.
A smaller local headcount means a smaller foreign worker quota. This can:
Reduce the number of Work Permit and S Pass holders you're allowed to employ, since your entitlement is calculated directly from your local headcount
Block new Employment Pass and Letter of Consent holders, Work Permit, and S Pass holder applications, as MOM assesses these against your current quota at the time of application, not the quota you had when you first hired
Block renewals for passes you already hold, for the same reason, meaning an existing pass can become unrenewable if your headcount has dropped since it was issued
For a fuller picture of how work passes fit together, see our guide to work passes in Singapore for employers and employees.
The Hidden Cost is CPF contributions
Raising a local employee's salary to meet the new Local Qualifying Salary threshold has a knock-on cost. Higher gross salary means higher CPF contributions, the mandatory retirement and savings scheme for Singapore Citizens and Permanent Residents.
For employees under 55, employer's CPF contributions are currently up to 17% of gross wages, so raising a salary from $1,600 to $1,800 adds not just the $200 difference but a further employer CPF cost on top of it. Companies need to ensure they have budgeted for both.
Companies need to ensure they have budgeted for both. The salary increase is only part of the cost. The CPF contributions increase that comes with the salary increase needs to be in your payroll projections.
If your EP-holding staff are affected by related quota mechanics, our COMPASS framework guide explains how points-based EP assessment works alongside these changes.
What to Do Now
Treat this updating process as two separate exercisesFirst, get payroll compliant by identifying and adjusting any affected salaries. Second, recalculate your quota position, to ensure your Work Permit or S Pass numbers still hold.
Audit current local salaries against the $1,800 threshold
Identify anyone paid between $1,600 and $1,799, they are the group affected
Recalculate your work permit quota and S Pass quota based on the adjusted headcount
Budget for the increased CPF contributions, not just the wage rise
Check any Work Permit or S Pass renewals due after 1 July against the new threshold
Ensure You Are Compliant
CSLB Asia supports HR and payroll services for businesses in Singapore, so you can plan ahead and stay compliant with changes like this one. Book a free introductory call through our enquiry form and we'll walk through exactly where your quota stands.
FAQs
What is the Local Qualifying Salary?
The Local Qualifying Salary (LQS) is the minimum monthly salary a Singapore Citizen or Permanent Resident must earn to be counted as a full local employee when calculating a firm's foreign worker quota.
What changed on 1 July 2026?
The full time Local Qualifying Salary increased from $1,600 to $1,800 gross per month, as confirmed by the Ministry of Manpower.
Who does the Local Qualifying Salary apply to?
Any firm employing Employment Pass and Letter of Consent holders, Work Permit, and S Pass holders.. Every local employee must be paid at least the LQS, unless they're already covered under a Progressive Wage Model rate.
What happens if a local employee is paid below $1,800?
They no longer count as a full head towards the local workforce count used to calculate your foreign worker quota. This can reduce your work permit quota or S Pass quota.
Could this block a Work Permit or S Pass renewal?
Yes. If your local headcount has dropped below the level needed to support your existing foreign worker numbers, renewals and new applications can be affected.
What should employers do now that the change has taken effect?
Audit current local salaries against $1,800, identify anyone paid between $1,600 and $1,799, recalculate the impact on your work permit quota and S Pass quota, and confirm CPF contributions have been adjusted accordingly.