Stiffer rules for hiring foreigners with hikes in local qualifying salary and EP minimum pay

Stiffer rules for hiring foreigners with hikes in local qualifying salary and EP minimum pay

The local qualifying salary, which stipulates the minimum amount companies must pay their local workers each month if they want to hire foreigners on work permits and S Passes, will be raised by S$100 to S$1,400 in July. Cheryl Lin reports.

SINGAPORE: The local qualifying salary, which stipulates the minimum amount companies must pay their local workers each month if they want to hire foreigners on work permits and S Passes, will be raised by S$100 to S$1,400 in July.

This was announced by Manpower Minister Josephine Teo during her ministry’s Committee of Supply debate on Tuesday (Mar 3).

“We have been regularly updating the local qualifying salary to ensure that it keeps pace with rising local wages at the lower end,” she said. The threshold was last adjusted in July last year with a S$100 increase to S$1,300.

The latest hike will not affect most employers of foreign workers as “they do not have workers earning below S$1,400”, said Mrs Teo.

For those affected, the extension of the Wage Credit Scheme should provide some relief, she added.

HIGHER QUALIFYING PAY FOR EMPLOYMENT PASS

Also as part of MOM’s latest review on measures related to the foreign workforce here, the qualifying salary for Employment Pass (EP) applications will be raised from S$3,600 to S$3,900 a month.

The last revision to the EP's qualifying salary was made in 2017, when the minimum threshold was increased from S$3,300 to S$3,600.

Mrs Teo said the newly announced hike is in line with improving wages of fresh graduates from local autonomous universities.

The qualifying salaries for older and more experienced EP candidates will also be raised in tandem.

“For example, an EP applicant in his early 40s will need to earn around double the new minimum qualifying salary of S$3,900,” Mrs Teo explained, noting that “this is only fair” given the skillsets these applicants are expected to have.

This helps to ensure a level playing field for experienced local mid-career professionals, managers, executives and technicians (PMETs), the minister said.

The new salary criteria will apply to new EP applicants from May 1. For renewals, it will kick in a year later from May 2021.

This staggered approach will moderate the impact on businesses, said Mrs Teo.

With these changes, the minister called on employers to continue ensuring fair and merit-based pay practices that are in line with the Tripartite Guidelines on Fair Employment Practices.

“Anecdotally, we have heard of firms that only raise salaries of the EP holders to meet new salary criteria, while freezing salaries of the local workers, even if the locals are better performers,” she said in Parliament. 

“This is wrong and not in the employer’s best interest.”

Apart from the risk of having their work pass privileges cut back by MOM, such practices undermine employers’ efforts to retain their local staff, the minister said.

CUT IN S PASS SUB-DRCS FOR THREE SECTORS

These new moves come on the back of earlier announced tighter quotas on skilled foreign labour for the construction, marine shipyard and process sectors.

Deputy Prime Minister and Finance Minister Heng Swee Keat had announced these cuts in the S Pass sub-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 – in Budget 2020.

This will be done in two steps: from 20 per cent to 18 per cent on Jan 1 next year, and to 15 per cent on Jan 1, 2023.

“As (Mr Heng) explained, S Passes should not be a means by which enterprises hire low-cost foreigners when qualified locals are available,” said Mrs Teo.

She said she is aware of concerns among affected businesses about being unable to find workers, but it is "unlikely" that locals will change their minds if work conditions do not improve.

“As long as employers are willing to make changes, we will help you,” said Mrs Teo.

For one, the SkillsFuture Work-Study Programme can help firms identify suitable graduates from polytechnics and ITEs, while defraying training costs.

Firms should also consider mid-career workers with enhanced support under the new SkillsFuture Mid-Career Support Package.

She also urged employers to get in touch with Workforce Singapore or the relevant trade associations.

"For example in the last three years, trade associations and chambers have helped more than 4,500 small- and medium-sized enterprises to recruit mid-career PMETs through the P-Max programme," she told the House.

Source: CNA/sk

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