Furthermore, it raised the qualifying salary for employment pass holders to a minimum of 3,300 Singapore dollars a month, up from 3,000 Singapore dollars currently, starting in January 2014.
George McFerran, head of Asia Pacific at recruiter eFinancial Careers said the government appears to be striking a balance between ensuring that high-quality Singaporean talent is being looked at whilst making sure companies don't feel too restricted.
"It will prompt employers to look closer to home before jumping overseas. But at the end of the day, companies will hire the best people for the job," he said.
(Read more: Household debt: Singapore's 'Achilles heel'?)
"In any case, companies we speak to want to hire Singaporeans, it's much easier to hire someone locally," he added.
The government, which is facing growing public opposition to the country's liberal immigration policies, has announced a slew of measures to limit the influx of foreign workers in the past year, including lowering the foreign manpower dependency ratio for the manufacturing and services sectors in addition to steep increases in the monthly levy paid for hiring overseas employees.
The latest measures were largely welcomed by Singaporeans, in particular job seekers.
"It will be favorable for me. I can be more confident in the hiring process, knowing that I'm competing only with locals initially," said a 36-year-old Singaporean who is currently in the process of looking for a job in the financial services sector.
Others, however, expressed concerns over how it could throw Singapore's culture of meritocracy into question.
"These are good measures. But initiatives that give Singaporeans a sense of entitlement could counter efforts to boost productivity and put the theory of meritocracy into question," said 28-year-old local entrepreneur Sashi Rajendram.
(Read more: Is the worst over for the Singapore economy?)
Meanwhile, expatriates working in Singapore that CNBC spoke with said that while the measures will make the hiring process more competitive for foreigners, it's an understandable step taken by the government.
"The government is trying to balance making Singapore an internationally competitive location for work as well as ensuring local nationals get a fair representation. This happens in almost all countries I've been in so I don't consider such policy unusual," said Conan Hales, a British national that is a permanent resident in Singapore.
"Good employers hire on merit so it's up to Singaporeans to prove themselves in the internationally competitive marketplace on their ability at the end of the day. This should mean that the government should be focusing on developing skills which are in demand by industry rather than placing administrative measures on employers," the 38-year-old finance professional said.
—By CNBC's Ansuya Harjani; Follow her on Twitter @Ansuya_H