Adjusting Singapore’s talent thermostat

Singapore is tightening requirements for foreigners entering the country on Employment Passes (EP) yet again. Effective from January 2012, key changes include tightening the educational qualifications requirements and raising the qualifying salary for new EP applications to at least $3,000 for the Q1 Pass, and $4,500 for the P2 Pass.

While the move aims to ensure that employers who need to augment their workforce hire foreigners with the right calibre and expertise to complement an increasingly qualified local workforce, the measures are not sitting well with small and medium enterprises (SMEs), which make up 90% of companies in Singapore. They say the only certainty they have is that business costs will go up, especially at a time when they are facing an uncertain business outlook and labour crunch.

“The immediate concern of SMEs is really costs issues. They are faced with the double whammy of low business volume due to the current bleak economic climate and higher wage costs as a result of the new EP regulations,” says Association of Small and Medium-sized Enterprises (ASME) president, Lawrence Leow. “Employers also feel they are being further penalised for hiring foreign workers for jobs that most Singaporeans already shun or for which there aren’t enough local workers.”

Deputy Prime Minister, Minster for Finance and Manpower Minister, Tharman Shanmugaratnam, assured employers that the move is “not dramatic”, and would translate to a one to two per cent increase in their remuneration bill, as the measures are phased in.

“If we don’t make adjustments like this from time to time, (we will be) opening up a wider gulf between Employment Pass holders’ salaries and local salaries,” he told local media. “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.”

The new criteria will also affect existing EP holders. 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.

Although the ASME understands the government’s need to tweak the EP Framework to balance the needs of employers and local workers, it believes existing EP holders should not be included in the changes.

“People working on EP here have already acquired certain skills and experience that outweigh paper qualifications. Employers are content with the qualifications of current EP holders and see no need for them to be subjected to tightened educational qualifications requirements.”

Others such as the Singapore National Employers Federation (SNEF) welcomed the overall EP Framework changes, endorsing the government’s emphasis that Singaporeans should remain at the core of a diverse and globally competitive workforce.

Foreign talent is here to stay, making up one-third of the country’s total workforce. As PM Lee said in his National Day Rally speech last month, “We must always stay open to the world. This has attracted global winners to invest here, with diverse teams, creating jobs and prosperity for Singaporeans.”