Tuesday, August 16, 2011

Higher pay threshold for entry & mid-level foreign execs

SINGAPORE: Singapore's Manpower Ministry (MOM) is tightening the criteria for Employment Passes (EP) to foreigners from 1 January 2012.

It said the move is to ensure that as the salary of local workers rise, they won't be disadvantaged by Employment Pass holders coming in at lower wages.

Deputy Prime Minister and Manpower Minister, Tharman Shanmugaratnam, also assured businesses that the move is "not dramatic", and would translate to a 1-2 per cent increase in their remuneration bill, as the measures are phased in.

The announcement comes in the wake of the PM Lee Hsien Loong's National Day Rally speech where he spoke of the need to protect Singaporean workers, especially at the lower end of the job spectrum.

At the same time, Mr Lee also touched on the requirements of the small and medium enterprises (SMEs) who often need foreign workers the most.

The demand for Employment Passes has increased rapidly since the economic recovery in 2010.

From June 2010 to June 2011, the numbers doubled from 14 to 28 per cent.

At the end of last year, there were nearly 142,000 Employment Pass holders.

So the MOM is tightening eligibility requirements for those entering the lower and mid-level professional and skilled jobs.

Mr Tharman said: "If we don't make adjustments like this from time to time, what will be happening is we are opening up a wider gulf between Employment Pass holders' salaries and local salaries, and that is not good for an efficient labour market.

"There is no perfect time to implement measures for the long term. We have to move ahead now, reinforce the measures we have already taken and make sure we are not leaving big gaps in place."

So from January next year, educational qualifying requirements for Q1 Pass applicants will be tightened.

The ministry will also move away from the single qualifying salary of $2,800.

Applicants must now earn at least $3,000, with the ministry assessing qualification and experience.

Older applicants must command higher salaries and have commensurate experience and quality.

For P2 Pass holders, the qualifying salary will be $4,500, up from the current $4,000.

There will be no change in the qualifying salary for P1 Pass holders, which will remain as $8,000.

Mr Tharman said: "The policy shift really has to do with the older Employment Pass holders, those who are beyond their late 20s and early 30s, where if they are all going to be paid the same amount as the starting salaries, then we have a problem, because you get a wider and wider gap between the salaries of locals, whose salaries do move up as they gain experience and skills and track record, and the Employment Pass holders.

"That's where we are tightening up. Most Employment Pass holders will be able to fit in the new framework."

The new criteria will also affect existing Employment Pass holders. The MOM said it will phase in the new criteria for them over the next one to two years.

Those whose EPs expire before 1 January 2012 will receive a one-time renewal of up to two years, based on the criteria before July this year.

If their Employment Pass expires between 1 January 2012 and 30 June 2012, they will get a one-time renewal of up to a year, while those whose Employment Pass expire on or after 1 July 2012 will be subject to the new Employment Pass criteria.

Mr Tharman said: "At the end of the day, it is not going to mean a cutback in the overall size of the EP pass pool. It is not going to mean zero growth either. It will mean continued growth because the growing economy needs a growth in Employment Pass holders, but it will be slower growth than what we have seen.

"Make no mistake about it, we got to keep attracting bright, capable people into Singapore, young and middle aged, and the steps we are taking here are not going to impact our ability to attract good young people."

The Singapore National Employers Federation (SNEF) said it is reassured by the government's emphasis that Singaporeans should remain at the core of a diverse and globally competitive workforce.

Foreign workers make up one-third of Singapore's total workforce.