Minister Tan: SG PMETs’ entry-level salaries stagnant over last 5 years

Minimum salaries of foreign EP holders to be raised soon

Acting Manpower Minister Tan Chuan-Jin (ST Photo).

In an interview with Business Times (BT), Acting Manpower Minister Tan Chuan-Jin said entry-level salaries for Singaporeans have been stagnant over the past 5 years, a state of affairs which cannot continue.

Mr Tan said the Govt will make an announcement soon to raise the minimum salary for foreigners to secure Employment Passes (EP), which is the pass typically applied for by foreign PMETs. This is to ensure that their lower wages do not depress the wages of young Singaporeans. At present, there are 3 kinds of sub-passes for EP:

Q1 Employment Pass

•Young foreign graduates earning at least $3,000

•Older foreign applicants would have to command higher salaries to qualify, commensurate with the work experience and quality they are expected to bring

P2 Employment Pass

•Fixed monthly salary = $4,500 and above

•Possesses acceptable qualifications

P1 Employment Pass

•Fixed monthly salary = $8,000 and above

•Possesses acceptable qualifications

Mr Tan said the Govt will raise salary requirements not only for the lowest Q1 tier, but also for the upper P2 and P1 tiers. He said that MOM will hold its “Our Singapore Conversation” in the next few months to talk about job issues as well as to shape the future workforce of Singapore.

Mr Tan admitted that the Govt has not been successful in tightening the influx of foreign manpower in the last few years. He said, “Obviously, we have not been very successful in the last few years, with the (foreign manpower) tightening.” Despite higher levies and dependency ratios, growth in the number of work permit and S-pass holders has stayed strong as economic growth meant that it still made business sense for many employers to hire foreigners. Even though the number of foreign EP holders may have dropped for the first time in a decade from 175,400 in 2011 to 173,800 last year (1% drop), Mr Tan acknowledged that more needs to be done, especially when entry-level salaries for Singaporean PMETs have remained stagnant over the last 5 years. Mr Tan pointed out that he is “not particularly happy” with this situation, given that the economy continued to grow in the meantime. He asked, “Should $3,000, for example, be the threshold where we admit in people on the employment pass?” “I think the numbers will go up … I don’t think it should be $3,000.” So will the minimum thresholds for P1 ($4,500) and P2 ($8,000) tiers of EP. He added, “I think the (P1 and P2) levels would go up. But the overall framework as well, I’m looking at refreshing it.” He said that these changes are meant “to make sure wages are moving correctly, so that Singaporeans have fair opportunities, have good, fair remuneration”.

Complaints of discrimination by nationality He said that the Govt will also address complaints of discrimination by nationality – said to be especially common in the financial services sector. During a parliamentary debate in March 2013, Mr Tan said that he and DPM Tharman, who is also the finance minister, had met senior members of the financial industry to urge them to develop a local talent pipeline. Mr Tan also told Parliament that there had been complaints of foreign managers preferring to hire their countrymen and his ministry was investigating this alleged bias. One “fairly prominent company” had its work pass privileges suspended after it advertised for workers of a certain nationality. Mr Tan: “Singaporean-first” or “Singaporean-only” system will not serve Singapore well in the long term During the interview, Mr Tan made it clear that the desired outcome is not a “Singaporean-first” or “Singaporean-only” system, as it would not serve Singapore well in the long term.

This is because competition for jobs is no longer confined to Singapore’s shores due to outsourcing, Mr Tan explained. Companies are taking advantage of lower operating and labour costs in third world countries through outsourcing. “The fact is, actually, people are competing even if they are not here,” he said. Hence the need to ensure that sectors generating good jobs are not unintentionally driven out by manpower policy changes.

“Companies don’t invest in Singapore because they love Singapore. They invest in Singapore because it makes dollars and sense,” he said. “The worry is when you lose sectors, I think you also lose the jobs and opportunities,” he said. “At least, if the foreigners are here, helping to blend the cost to some degree, at least I can get the jobs here,” he added. He said MOM will analyse the impact of various approaches to find a solution with the least unfavourable trade-offs to both businesses and Singaporeans, as changes to the EP framework will definitely impact business costs. Still, he is convinced of ‘refreshing’ the current EP framework as entry-level salaries for Singaporean PMETs cannot continue to remain stagnant.

. Editor’s note: What do you think the minimum threshold salaries for foreign EP holders should be? .