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Minimum qualifying salary for Employment Pass holders goes up to S$4,500; higher salary criterion for financial services

SINGAPORE — In view of how the Covid-19 pandemic has weakened the job market, the Ministry of Manpower (MOM) is significantly raising the minimum qualifying salary for an Employment Pass (EP) by S$600 to S$4,500 in a bid to encourage companies to hire more locals.

  • MOM to increase the minimum qualifying salary by S$600 for Employment Pass holders, and by S$100 for S Pass holders
  • EP applicants in the financial services sector will have to meet a higher criterion from Dec 1
  • Companies also have to advertise positions that are equivalent to an S Pass on MyCareersFuture.sg first for local jobseekers
  • Manpower Minister Josephine Teo said the adjustments complement other measures to support local employment

 

SINGAPORE — In view of how the Covid-19 pandemic has weakened the job market, the Ministry of Manpower (MOM) is raising the minimum qualifying salary for an Employment Pass (EP) by S$600 to S$4,500 in a bid to encourage companies to hire more locals.

In a statement on Thursday (Aug 27), MOM also announced that, for the first time, there will be a separate salary criterion for EP holders working in financial services: The minimum qualifying monthly salary for those workers will be further raised to S$5,000 later in the year.

MOM said the sector pays generally higher salaries than others, is still hiring, and has been attracting strong interest from local applicants with good applications.

In the announcement, the ministry also said the salary criterion for S Pass applicants would be raised by S$100 to S$2,500.

Companies seeking S Pass applicants would also have to advertise job positions that are equivalent to an S Pass on the MyCareersFuture.sg first for local jobseekers.

Currently, only jobs equivalent to those of an EP holder have to meet advertising requirements under the Fair Consideration Framework (FCF), which is designed to ensure employers fairly consider local applicants.

Speaking to the media during a virtual briefing on Thursday, Manpower Minister Josephine Teo said it was “timely” to adjust the EP and S Pass criteria to complement ongoing support measures that encourage businesses to either expand or retain local employment.

She said that the Covid-19 pandemic has caused a lot of slack in Singapore’s labour market, which refers to a situation where unemployment has risen and employers don’t face difficulties in filling vacancies.

“Yes, we have reopened the economy, but we also must recognise that the resumption of activities is quite uneven. In some cases, you will find that the sectors are already experiencing shortages of manpower and they need skilled manpower in order to recover and grow more fully,” she said.

“But certainly in other sectors we have seen that the head counts have shrunk. So you have this uneven landscape. This is a set of conditions that inform the way we think about the foreign work pass policy,” said Mrs Teo.

CHANGES TO WORK PASS POLICIES

EP holders

  • Minimum salary requirements will be raised from S$3,900 to S$4,500

  • The new salary requirement will come into effect on Sept 1 for new EP applications

  • For companies renewing the EP for existing employees, the new salary criterion will come into effect from May 1, 2021

  • The qualifying salary for older and more experienced EP candidates will be raised correspondingly, that is, it has to be around double the minimum qualifying salary for the youngest applicants

  • The last time the minimum qualifying salary for EP holders was raised was on May 1, 2020, when it went from S$3,600 to S$3,900

EP holders in the financial services sector

  • For the first time, there will be a separate salary criterion for those in financial services

  • EP applicants in the sector will be subjected to the higher salary criterion of S$4,500 come Sept 1

  • Then, from Dec 1, the minimum qualifying salary for EPs in the financial services sector will be further raised to S$5,000 for new applications

  • For financial institutions renewing the EP of their existing employees, the new salary criterion will come into effect from May 1, 2021

  • The qualifying salary for older and more experienced EP candidates will be raised correspondingly, that is, it has to be around double the minimum qualifying salary for the youngest applicants

S Pass holders

  • Minimum salary requirements will be raised from S$2,400 to S$2,500

  • The new requirement will come into effect on Oct 1 for new S Pass applications

  • For S Pass renewal applications, the new salary criterion will come into effect from May 1, 2021

  • Qualifying salaries for older and more experienced S Pass candidates will also be revised accordingly

  • No changes to levies or quotas for S Pass holders

  • Previously announced tightening on quotas for S Pass holders in the services, construction, marine shipyard and process sectors will continue

FCF advertising requirements

  • From Oct 1, companies have to advertise S Pass-equivalent positions on the MyCareersFuture.sg first for local jobseekers before submitting an S Pass application

  • The position has to be advertised for at least 28 days

  • For EP-equivalent positions that companies are already required to advertise on the job portal, they must increase the advertising duration from 14 to 28 days from Oct 1

Overconcentration of foreign workforce from one source country

  • Companies which have an over-concentration of S Pass holders from one country will be subjected to greater scrutiny by MOM

  • Previously, only companies which have this problem among EP holders were scrutinised

IMPACT ON BUSINESSES

Mrs Teo said the authorities went for a differentiated approach so as to moderate the impact of these changes to businesses.

For one thing, the immediate changes affect only new EP and S Pass applications, while companies are given more time to adjust for applications to renew passes.

“That gives you time to consider whether your existing pool is the pool that you want to keep or by natural attrition of your EP and S Pass workforce, as the contract sometimes comes to an end, whether you want to right-size it,” said Mrs Teo.

She hopes that businesses will relook the total composition of locals and foreigners in their workforce and adjust the allocation in a way that brings down their manpower costs.

She reminded employers that companies that increase their local employment get strong support from the Government through the Jobs Support Scheme and Jobs Growth Incentive.

When asked why MOM decided to adjust the foreign work pass criterion by increasing the minimum qualifying salary instead of through its other two policy levers, that is, by cutting the quota or increasing levies, Mrs Teo said the authorities do not want to introduce “major shocks” to the system.

She said changes to foreign manpower quota in several sectors, like construction and services, have already been announced earlier. To introduce another change of the same nature, when these sectors already have to adjust a great deal to safe management measures to curb the spread of Covid-19, would introduce “a lot more uncertainty”.

“Companies have also made plans, business decisions on the basis of what they know of levies, so to raise it right now, I think it is something that will weigh very heavily on them,” she said.

By raising salary requirements, companies would have time to consider their hiring capacities.

“The EP or S Pass holder has not joined their workforce yet, so they still have a chance to make a decision, whereas if I were to raise levies, then whoever it is that they already have, they also have to pay a higher levy,” she added.

WAS THE GENERAL ELECTION A FACTOR?

When asked whether the recent General Election (GE) had a role to play in the decision to adjust the criteria for work pass holders, Mrs Teo said this was not the case, and rather the changed economic conditions were the main reason that MOM had made the move.

Recognising that it would be “inevitable” that some observers would link the changes to the GE and that some could claim credit for proposing these changes, Mrs Teo said preventing that from happening could not be the driving force behind the Government’s policy-making decisions.

“In order to avoid this suspicion that it has something to do with the election, (if) we delay it by another six months (and announce it in Budget 2021), is that the right thing to do? I think in terms of looking at the necessity of these moves, we made the call, we decided that we have to move now. We cannot move later,” she said.

“The reason to move is that the conditions have changed a lot since the last time we adjusted and the conditions will continue to change. There is slack in the job market already and if you choose not to move now in order to avoid that suspicion and then wait six months later to do so, have we done a better thing for Singaporeans? I think the answer is no.”

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MOM Employment Pass S Pasrr Jobs Covid-19 coronavirus

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