Higher salary threshold for local workers from July under rules for hiring foreigners

Higher salary threshold for local workers from July under rules for hiring foreigners

SINGAPORE: The local qualifying salary, which stipulates the minimum amount companies must pay their local workers each month if they want to hire foreigners, will be raised to S$1,300 in July.

This was announced by Manpower Minister Josephine Teo during her ministry’s Committee of Supply debate on Tuesday (Mar 5).

The rise in local wages was a factor considered by the Government when adjusting the current salary threshold of S$1,200, said Mrs Teo.

The cost impact is expected to be small, she added, based on past adjustments when the salary threshold was raised by a similar amount.

The last review was in 2017 when the Ministry of Manpower (MOM) announced a two-part increase in the local qualifying salary from S$1,000 to S$1,100 in July 2017, and to S$1,200 from July 2018.

The adjustment follows Finance Minister Heng Swee Keat’s announcement in last month’s Budget statement to cut the Dependency Ratio Ceiling (DRC) – which sets out the maximum permitted ratio of foreign workers to the total workforce that a company is allowed to hire – and the S Pass Sub-DRC for the services sector.

READ: Salary threshold raised for local workers under rules for hiring foreigners

READ: Budget 2019: Foreign worker quota in services sector to be cut to 35% by 2021

Mrs Teo said this decision for a tighter foreign worker policy was carefully considered, with the Government avoiding “sweeping changes”.

“First, it is in the services sector where most restructuring is needed. Second, beyond moves already set in motion, we are not making further changes to quotas in other sectors and levies this year," Mrs Teo added.

With the changes spread out over two steps until 2021, employers are also given more time to adjust compared to previous rounds of tightening, she added.

Mrs Teo acknowledged the concerns raised by several Members of Parliament (MPs) on how some services sub-sectors may find it difficult to adjust given their challenges in recruiting locals. 

“There’s no question in my mind (that) we will continue to need foreign manpower in services but over-reliance carries risks and is not sustainable," she said.

"As their home countries develop, will all the foreign workers today always be willing to take up these jobs in Singapore? More critically, should we as a society accept that many jobs in Services are unattractive to locals?

“Should we not invest effort to uplift some of these jobs to be more appealing to locals?”

Help is on hand for firms to navigate the changes, such as the Lean Enterprise Development scheme, as well as extensions to the Enterprise Development Grant and Productivity Solutions Grant, Mrs Teo said.

Source: CNA/sk(mi)

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