4 Questions To Ask About The Wage Criteria Increase For Foreign Employment Passes In Singapore

Amidst the ongoing COVID-19 recession, jobs and employment have become the top concerns for Singaporeans.

Aside from the Jobs Support Scheme has helped local workers to retain employment and the Jobs Growth Incentive is targeted to help local jobseekers find new employment, the government is also turning its focus towards local employment for professionals, managers, executives and technicians (PMETs) and semi-skilled workers.

As part of these measures to increase local employment, the Ministry of Manpower (MOM) announced on 27 August 2020, that the wage criteria for Employment Passes will be raised from $3,900 to $4,500 while for those in the financial services sector, it will be raised to $5,000. The wage criteria for S Passes will also be raised by $100 to $2,500.

While the policy intention is well-meant, here are some questions we should ask about the increase in wage criteria and whether it would truly boost local employment.

Read Also: Singapore Employers’ Guide To Work Permits, S Pass and Employment Pass

#1 Can Companies Hire Their Necessary Talents Without Increasing Their Cost?

Firstly, the assumption that companies can hire Singaporeans instead of foreigners to do the same job may be flawed.

Companies may not be able to hire the necessary talents from Singaporeans because they cannot find suitable Singaporeans with the necessary skills to take on the job. For example, cybersecurity and data science are relatively new sectors and many Singaporeans do not have the necessary expertise to take on the higher-level jobs in these areas. Even established sectors can face the problem of mismatch between jobs and skills. For example, in construction and manufacturing, specialist engineering skills are often required but hard to find among Singaporeans.

In a time of economic uncertainty, increasing the wage criteria for foreign employment passes would increase operating costs for the companies who are unable to hire Singaporeans due to job skills mismatch and make it harder for these companies to weather through the recession.

#2 Will It Increase Salary Disparity Between Local and Foreign Staff?

The new employment pass changes will also make it harder to renew the passes for existing foreign employees. Foreign employees who have been with the company for a long time may have to be let go, despite their long service and good performance. This could be detrimental to the company as these employees may be essential to the company’s operations and carry long institutional knowledge.

Instead, companies may be forced to increase the salaries of these foreign employees just to retain them, even if it is not in line with the company’s existing wage structure. This may cause a situation of salary disparity within the company, where for the equivalent work, a foreigner is paid more because of the mandated wage criteria, than the local.

Read Also: Should You Disclose Your Salary To Co-Workers? Pros And Cons Of Having An Open Salary Culture

#3 Will Some Industries Be More Badly Affected Than Others?

While financial services has been singled out for the higher wage criteria of $5,000, other industries will also see a significant jump from $3,900 to $4,500 in the wage criteria.

For industries that generally have lower median wages, this could make it more difficult to hire because the new wage criteria may inflate the cost of foreign employees while they may not be able to attract local employees to take on the job because of the lower wages. For example, the median wages for PMETs and semi-skilled labour in industries such as construction and logistics tend to be lower than that of other industries, leading to these industries’ reliance on foreign employees.

#4 Will It Make Singapore Less Competitive In The Global Market?

Singapore has always been regarded as one of the top countries for drawing in global talent and consistently ranked one of the top countries for expatriates. The question we need to ask is whether we will lose our ability to draw in top brand names and international companies to set up headquarters, regional and branch offices in Singapore, and thus our competitive edge in the global market by making it so restrictive to hire foreigners.

Lest we forget, four of the top ten richest in Singapore are originally foreigners who became naturalised Singapore citizens. In a way, just as Singapore started as a mixing pot of immigrants, our country’s fortunes are tied to the global economy and the foreigners we attract.

Striking A Balance To Create Win-Win Situations

While safeguarding the Singapore core and the livelihoods of our citizens is important, we should be aware that maintaining a balance between opening our borders to foreign talent and supporting our local workforce is essential for Singapore’s long-term growth.

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