Local Qualifying Salary (LQS): Understand how the Local Qualifying Salary works

The LQS surfaced in a big way during the National Day Rally 2021, when Singapore PM Lee highlighted its role in supporting lower-wage workers. Since then, the number has slowly climbed, with another revision kicking in on 1 July 2024, raising it to $1,600 per month or $10.50 per hour.

Before we break down how this affects everyday workers and small businesses—here’s a quick look at the changes over time.

LQS Revision Timeline Summary

Year	LQS Amount	Notes
2017	$1,100	Raised from the earlier $1,000 FTE benchmark
2018	$1,200	Annual adjustment
2019	$1,300	Announced during COS 2019
2020	Adjusted again	Part of COS 2020 changes
2024	$1,600	Current rate; minimum hourly rate is $10.50

What Exactly Is the Local Qualifying Salary?

Think of the LQS as a wage threshold set by MOM.
A company can only count a local employee toward its foreign worker quota if that worker earns at least the LQS.

This stops firms from “token hiring” locals at very low pay just to unlock more foreign worker slots.

Here’s how locals count:

• 1 local worker → earns ≥ $1,600 per month
• 0.5 local worker → earns $800 to below $1,600
• Not counted → business owners or employees receiving CPF from 3+ employers

And from 1 July 2024, all firms that want to hire any foreign workers—Work Permit, S Pass, or even Employment Pass holders—must ensure all local employees meet the LQS.

Yes, even companies that only hire EP holders must follow this rule now.

Why LQS Matters to Companies Hiring Foreign Workers

Many SMEs used to rely on a mix of local and foreign staff.
Under the updated system, the LQS becomes the baseline for whether the business can:

• keep its current foreign worker quota
• renew existing WP/S Pass holders
• hire new ones

If a company has locals earning below $1,600, it risks losing access to foreign hires.

Imagine a small eatery with nine local staff.
Seven earn above LQS, two earn below.
If they want to renew their dishwasher’s Work Permit, they now have two choices:

1. Raise the two locals’ salaries to at least $1,600, or
2. Let the two locals go or switch them to part-time at $10.50 per hour

This creates real tensions for some smaller outfits, especially those in food services, minimarts, and other heartland shops where margins are tight.

Does LQS Apply to Companies That Only Hire Singaporeans?

No.
If a business chooses to employ locals only, LQS doesn’t come into play.

But here’s the catch—market pressure usually forces wages higher anyway. Even if a minimart isn’t bound by LQS, Uncle won’t find staff if he offers $1,000 a month today.

This applies to roughly 6% of lower-wage workers, mostly in heartland retail and smaller family-run shops.

Is LQS Based on “Real” Wage Benchmarks?

Not really.

When the LQS was first set at $1,000, the actual 10th percentile income was already higher.
Today, the 20th percentile income is around $3,026, suggesting that the LQS is still well below what many workers in the lower ranges earn.

For comparison:

• ComCare Long-Term Assistance (4-person household income cut-off): $2,230
• Workfare Income Supplement cap in 2025: $3,000

So the LQS isn’t pegged to a living wage standard—it’s designed more as a lever to shape hiring behaviour.

When LQS May Not Work as Intended

Here’s the thing: LQS only affects companies that mix local and foreign workers.

And that creates some loopholes:

1️⃣ Some firms may reduce local staff

If paying two locals $1,600 doesn’t make financial sense, an employer might shift to more foreign hires instead.

2️⃣ Some might switch locals to part-time

The hourly LQS equivalent is $10.50/hour.
This could prompt companies to restructure roles rather than raise pay.

3️⃣ Firms not fully using their quota may start doing so

Ironically, LQS may push companies to rely more on foreign workers, not less.

These scenarios don’t apply everywhere, but they’re real considerations for SMEs.

So… Is LQS a Minimum Wage?

Short answer: No.

But it does nudge wages upward for a big segment of lower-income workers.

Here’s how:

• 35% of lower-wage workers benefit directly from LQS
• 47% benefit from the Progressive Wage Model (PWM)
• Together, about 80% experience some form of uplift

For the remaining group, the Progressive Wage Mark and general market forces help raise baseline pay.

LQS isn’t the final answer to wage inequality, but it makes the government’s long-standing foreign manpower rules more transparent. Instead of a hidden threshold, we now have a clear wage floor shaping how companies hire.

FAQs

1. Is the Local Qualifying Salary the same as a minimum wage?

No. A minimum wage applies across the whole workforce. LQS only affects firms wanting to hire foreign workers.

2. Do companies with only EP holders need to follow LQS?

Yes. Since 2022, all companies hiring any type of foreign worker must pay their local staff at least the LQS.

3. Can companies hire locals below LQS?

Yes, but they lose the ability to hire or renew foreign workers.

4. What happens if an employer doesn’t meet the LQS requirement?

They risk losing quota access and cannot renew existing WP or S Pass holders.

5. Does LQS guarantee wage growth long-term?

Not by itself, but paired with PWM and market forces, it nudges wages upward.

Article sourece is dollarsandsense.sg