Singapore will further restrict the inflow of foreign workers as the nation's infrastructure comes under strain and its national identity risks being eroded, the government said Friday.
The high number of foreign workers was one of the hottest issues in last year's general elections in which the ruling People's Action Party suffered its worst showing of 52 years in power.
Finance Minister Tharman Shanmugaratnam said the government would introduce a "calibrated reduction" in the ratio of foreign workers hired by companies in the manufacturing, construction and services sectors to curb dependence on them.
"Our increasing dependence on foreign workers is not sustainable," Tharman, who is also the deputy prime minister, told parliament as he announced the government's 2012 budget.
"It will test the limits of our space and infrastructure, despite our efforts to build more housing and expand our public transport system," he added.
"A continued rapid infusion of foreign workers will also inevitably affect the Singaporean character of our society."
Tharman said economic factors were also considered when restricting the influx of foreign workers.
"There is also an important economic reason: the easy availability of foreign labour will reduce the incentives for our companies to upgrade, design better jobs and raise productivity," he said.
Singapore's population totalled 5.18 million in 2011, more than a quarter of whom are foreigners.
The measures are Singapore's latest attempts at curbing the influx of cheap foreign labourers as well as skilled professionals after widespread public anger.
In August last year, Prime Minister Lee Hsien Loong pledged to tighten requirements for hiring foreign professionals and skilled workers on top of existing measures on the inflow of lower-skilled foreign labourers.
Tharman said the government would also consider further hiking foreign worker levies.
"The budget measures... reflect government concerns that the foreign workforce is growing too rapidly, at an annual pace of 7.5 percent over the last two years," said Rajiv Biswas, Asia-Pacific chief economist of IHS Global Insight.
Head of research for IG Markets Singapore Justin Harper said the reductions would not hurt the affected sectors much.
"They are minor moves to appease those calling for curbs on foreign workers," he told AFP.
"Singapore wouldn't jeopardise future GDP growth by making significant changes to cheap foreign labour, especially given GDP growth will be lower this year."
Official estimates placed Singapore's growth at 1.0 to 3.0 percent this year -- down from 4.9 percent growth in 2011 -- due to falling demand from key exports markets.