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Wednesday 17 August 2011
New set of measurements for white-collar foreigners
Significant changes to Singapore’s employment pass (EP) framework will kick in from January 2012, further tightening the inflow of white-collar foreign workers and potentially raising businesses’ wage costs by an average of one to 2 per cent.
New set of measurements for white-collar foreigners
New employment pass criteria from Jan1 see wage bar raised but move may push up business costs
By TEH SHI NING 17 August 2011
Significant changes to Singapore’s employment pass (EP) framework will kick in from January 2012, further tightening the inflow of white-collar foreign workers and potentially raising businesses’ wage costs by an average of one to 2 per cent.
Providing details on what was first announced by the Prime Minister on Sunday, the Ministry of Manpower (MOM) yesterday said that the minimum salary level for the lowest Q1 type of EPs will be raised from $2,800 to $3,000. But unlike the last revision in March - which kicked in on July 1 - this also moves the Q1 pass criteria from a single baseline to a range of qualifying salaries. Young graduates must earn at least $3,000 a month to qualify, but older applicants must draw higher salaries that match their work experience and quality.
For the middle tier of P2 passes, the base salary level will be hiked from $4,000 to $4,500, while the highest P1 tier retains a base salary level of $8,000. The list of educational institutions whose qualifications are recognised will be tightened. Employers will be able to assess the eligibility of prospective hires using an online self-assessment tool from December.
These changes aim to ensure a more level playing field for locals vying for the same professional, managerial and executive (PME) jobs, by ensuring there is no ‘widening gulf’ between foreigners’ and locals’ pay, said Deputy Prime Minister and Minister for Manpower and Finance Tharman Shanmugaratnam.
And this will not be the last round of tweaks. Singapore will need to ensure that as local salaries rise, its workers are ‘not competing at a disadvantage or on a grossly unlevel playing field with EP holders coming in much cheaper’, so requirements will be tightened ‘from time to time’, Mr. Tharman said.
Reiterating the importance of ‘an open and diverse workforce’ with a strong Singaporean core, Mr. Tharman said ‘attracting bright, capable people into Singapore, young and middle-aged’ was key to bringing in global companies and investments too.
But surging growth in employment passes has to be slowed, lest the effectiveness of earlier tightening measures on lower-income S-pass foreign workers is compromised, he added.
The pool of employment pass holders here swelled an ‘exceptional’ 28 per cent year on year as at June on the back of economic recovery. This was double the 14 per cent growth for the year ended June 2010, itself a sharp spike from 2 per cent growth the year before.
‘Churning the existing pool so as to improve quality, that’s what this is about. And we think this is achievable,’ said Mr. Tharman. Typically, 11,000 Q1 passes are not renewed each year, so turnover is already considerable. Under the new framework, about a fifth of the current stock of EP holders, or 30,000 workers, will need to be reclassified as S-pass ones, replaced with new, higher-quality EP holders, or replaced with locals.
While lifting the minimum to $3,000 was not a policy shift but designed to keep pace with local graduates’ median starting pay (which in 2010 was around $2,900) the government did shift its policy stance towards older, experienced foreigners who compete with locals on lower pay. Entry-level EP holders’ salaries had shown significant ‘bunching’ around the base salary level, MOM said.
Industry groups are worried about the cost and manpower impact. ‘Ensuring that business costs don’t get out of hand’, particularly for the SME sector, was a key consideration in calibrating the new framework, Mr. Tharman said yesterday. While the changes will raise remuneration costs by an estimated average of one to 2 per cent across sectors, Mr. Tharman said domestic service sectors will be more affected than export manufacturing ones.
Construction, marine and offshore sectors are likely worst hit by the hikes of 7 and 12 per cent in the base salaries for Q1 and P2 passes respectively, said Singapore Business Federation chief operating officer Victor Tay.
Restaurant operators, as well as those in the logistics industry, are anxious too, said secretary-general of the Singapore Chinese Chamber of Commerce and Industry Lim Sah Soon. These have already felt the pain of earlier tightening of lower-wage foreign workers. Both Mr. Tay and Mr. Lim stressed the difficulty companies in these sectors face in hiring Singaporeans - who avoid such jobs for reasons other than pay.
Mr. Tharman stressed that these changes are not meant solely to substitute locals for foreigners, but also to replace poorer-qualified foreigners with stronger, more capable talent.
He highlighted the ‘not negligible number’ of ‘middle-aged Singaporeans who are capable, hardworking, displaced from their previous jobs but keen to get back into a good job’, which companies can tap. Firms will have to find ‘new ways of attracting Singaporeans into those sectors, which may involve redefining the jobs’, Mr. Tharman said, acknowledging the possibility of consolidation in some industries too.
Businesses have a year to adjust. EPs that expire before January 2012 can get a two-year renewal based on pre-July criteria; those expiring between January and June 2012 can get a one-year renewal based on current criteria. So the new criteria will apply to renewals only after July next year.
‘This is not a cyclical move,’ Mr. Tharman said, but part of a broader ‘move for the long term, a secular shift’ to ensure that foreigners make up no more than a third of Singapore’s workforce. In line with this, the Tripartite Alliance for Fair Employment Practices will work with the National Trades Union Congress and the Singapore National Employers Federation (SNEF) to develop guidelines for fair recruitment and employment practices.
‘Immediate manpower shortages in areas like finance, engineering and information technology’ mean foreign PMEs will be needed, but even so ‘employers must recruit on merit and give Singaporeans fair opportunities for career development’, said Stephen Lee, president of SNEF.
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New set of measurements for white-collar foreigners
New employment pass criteria from Jan1 see wage bar raised but move may push up business costs
By TEH SHI NING
17 August 2011
Significant changes to Singapore’s employment pass (EP) framework will kick in from January 2012, further tightening the inflow of white-collar foreign workers and potentially raising businesses’ wage costs by an average of one to 2 per cent.
Providing details on what was first announced by the Prime Minister on Sunday, the Ministry of Manpower (MOM) yesterday said that the minimum salary level for the lowest Q1 type of EPs will be raised from $2,800 to $3,000. But unlike the last revision in March - which kicked in on July 1 - this also moves the Q1 pass criteria from a single baseline to a range of qualifying salaries. Young graduates must earn at least $3,000 a month to qualify, but older applicants must draw higher salaries that match their work experience and quality.
For the middle tier of P2 passes, the base salary level will be hiked from $4,000 to $4,500, while the highest P1 tier retains a base salary level of $8,000. The list of educational institutions whose qualifications are recognised will be tightened. Employers will be able to assess the eligibility of prospective hires using an online self-assessment tool from December.
These changes aim to ensure a more level playing field for locals vying for the same professional, managerial and executive (PME) jobs, by ensuring there is no ‘widening gulf’ between foreigners’ and locals’ pay, said Deputy Prime Minister and Minister for Manpower and Finance Tharman Shanmugaratnam.
And this will not be the last round of tweaks. Singapore will need to ensure that as local salaries rise, its workers are ‘not competing at a disadvantage or on a grossly unlevel playing field with EP holders coming in much cheaper’, so requirements will be tightened ‘from time to time’, Mr. Tharman said.
Reiterating the importance of ‘an open and diverse workforce’ with a strong Singaporean core, Mr. Tharman said ‘attracting bright, capable people into Singapore, young and middle-aged’ was key to bringing in global companies and investments too.
But surging growth in employment passes has to be slowed, lest the effectiveness of earlier tightening measures on lower-income S-pass foreign workers is compromised, he added.
The pool of employment pass holders here swelled an ‘exceptional’ 28 per cent year on year as at June on the back of economic recovery. This was double the 14 per cent growth for the year ended June 2010, itself a sharp spike from 2 per cent growth the year before.
‘Churning the existing pool so as to improve quality, that’s what this is about. And we think this is achievable,’ said Mr. Tharman. Typically, 11,000 Q1 passes are not renewed each year, so turnover is already considerable. Under the new framework, about a fifth of the current stock of EP holders, or 30,000 workers, will need to be reclassified as S-pass ones, replaced with new, higher-quality EP holders, or replaced with locals.
While lifting the minimum to $3,000 was not a policy shift but designed to keep pace with local graduates’ median starting pay (which in 2010 was around $2,900) the government did shift its policy stance towards older, experienced foreigners who compete with locals on lower pay. Entry-level EP holders’ salaries had shown significant ‘bunching’ around the base salary level, MOM said.
Industry groups are worried about the cost and manpower impact. ‘Ensuring that business costs don’t get out of hand’, particularly for the SME sector, was a key consideration in calibrating the new framework, Mr. Tharman said yesterday. While the changes will raise remuneration costs by an estimated average of one to 2 per cent across sectors, Mr. Tharman said domestic service sectors will be more affected than export manufacturing ones.
Construction, marine and offshore sectors are likely worst hit by the hikes of 7 and 12 per cent in the base salaries for Q1 and P2 passes respectively, said Singapore Business Federation chief operating officer Victor Tay.
Restaurant operators, as well as those in the logistics industry, are anxious too, said secretary-general of the Singapore Chinese Chamber of Commerce and Industry Lim Sah Soon. These have already felt the pain of earlier tightening of lower-wage foreign workers. Both Mr. Tay and Mr. Lim stressed the difficulty companies in these sectors face in hiring Singaporeans - who avoid such jobs for reasons other than pay.
Mr. Tharman stressed that these changes are not meant solely to substitute locals for foreigners, but also to replace poorer-qualified foreigners with stronger, more capable talent.
He highlighted the ‘not negligible number’ of ‘middle-aged Singaporeans who are capable, hardworking, displaced from their previous jobs but keen to get back into a good job’, which companies can tap. Firms will have to find ‘new ways of attracting Singaporeans into those sectors, which may involve redefining the jobs’, Mr. Tharman said, acknowledging the possibility of consolidation in some industries too.
Businesses have a year to adjust. EPs that expire before January 2012 can get a two-year renewal based on pre-July criteria; those expiring between January and June 2012 can get a one-year renewal based on current criteria. So the new criteria will apply to renewals only after July next year.
‘This is not a cyclical move,’ Mr. Tharman said, but part of a broader ‘move for the long term, a secular shift’ to ensure that foreigners make up no more than a third of Singapore’s workforce. In line with this, the Tripartite Alliance for Fair Employment Practices will work with the National Trades Union Congress and the Singapore National Employers Federation (SNEF) to develop guidelines for fair recruitment and employment practices.
‘Immediate manpower shortages in areas like finance, engineering and information technology’ mean foreign PMEs will be needed, but even so ‘employers must recruit on merit and give Singaporeans fair opportunities for career development’, said Stephen Lee, president of SNEF.
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