Local Qualifying Salary (LQS) Hike 2026: A Roadmap for Singapore SMEs

The 10-Second Summary: 

Deadline: 1 July 2026. 

New Minimum: Local staff must earn $1,800 (Full-time) or $10.50/hr. (Part-time). 

The Risk: Paying less than $1,800 counts as half towards your foreign worker quota. 

The Support: Government co-funding (PWCS) has increased to 30% by 2026. 

 

Why the July 2026 LQS Deadline Matters 

Is your foreign worker quota at risk? Following the Singapore Budget 2026 announcements, the Local Qualifying Salary (LQS) will officially increase from $1,600 to $1,800 on 1 July 2026. 

For SMEs, this is a critical regulatory milestone. The LQS is the minimum salary a local employee must earn to be counted toward your company’s foreign worker quota. If payroll adjustments are not made, Work Permit or S Pass renewals may be affected, as your company’s foreign worker quota could be reduced.  

How the New Local Qualifying Salary (LQS) Affects Your Quota 

To keep your foreign staff, your local headcount must meet the new salary floors. Here is how MOM will calculate your headcount from July 2026: 

Monthly Gross Salary	Local Workforce Count	Impact on Your Business
$1,800 and above	1.0 (Full Count)	Maintains your full ability to hire foreign staff.
$900 to $1,799	0.5 (Half Count)	Your quota is cut in half for this employee.
Below $900	0.0 (Zero)	Does not help you hire any foreign workers.

PWM vs. LQS: Which Rate Should You Pay? 

The Progressive Wage Model (PWM) applies to specific industries (Retail, F&B, Admin, etc.). If your staff falls under a PWM sector, you must pay the higher of the two rates. 

2026 PWM Mandatory Salary Tiers 

Sector	Job Role	Monthly Gross Wage (2026)
Retail	Retail Assistant / Cashier	≥ $2,435
Food Services	Kitchen Assistant / Waiter	≥ $2,220
Administrative	Administrative Assistant	≥ $2,170
Drivers	Class 3 / Group A (Car/Van)	≥ $2,370
Security	Security Officer	≥ $2,475

Note: If your industry is NOT on the PWM list, you simply follow the $1,800 LQS rule. 

Maximizing Your 30% Government Subsidy 

The government is helping SMEs transition through the Progressive Wage Credit Scheme (PWCS). 

• Support Level: For wage increases given in 2026, the government will co-fund 30% of the raise. 

• Automatic Payout: Ensure your CPF contributions are filed accurately and on time. Payouts are automatic for qualifying firms, so accurate data is your best way to secure this "cash back." 

Compliance Checklist for Management 

• [✅] Identify the "Red Zone": Filter your payroll for any local staff earning between $1,600 and $1,799. 

• [✅] Simulate Your Quota: Use the MOM Quota Calculator to see how the "half-count" transition affects your current work pass holders. 

• [✅] Training Verification: Confirm that all PWM-eligible staff have completed the mandatory training modules required for their respective tiers. 

Securing Your Workforce Stability 

The July 2026 LQS transition is more than a payroll update; it is a vital check on your business’s operational health. CR Consultancy Pte Ltd provides the specialized advisory and tools required to navigate these shifting thresholds without the guesswork: 

• Maximizing Your Wage Credits: We manage your monthly payroll and CPF reporting with 100% precision, ensuring your business successfully captures the 30% PWCS co-funding you are entitled to. 

• Proactive Quota Safeguarding: Our team monitors your Dependency Ratio Ceiling (DRC) in real-time, catching potential headcount gaps before they affect your work pass renewals or new applications. 

• Full-Service Xero Adoption: We provide both Xero subscriptions and complete PSG grant application support (allowing you to subsidize up to 50% of your costs). We help you deploy a pre-approved solution that transforms compliance from a manual task into a streamlined, automated, and audit-proof process.
  

Ensure your business is ready before the July 1st deadline.  Contact CR Consultancy Today for a professional compliance review. We take care of the regulatory heavy lifting so you can keep your momentum.