The Ministry of Manpower (MOM) announced on Aug. 26 that the salary criteria for Employment Passes (EP) and S Passes will be raised.

From Sep. 1, 2020 onwards, the minimum salary requirement for an EP would be raised to S$4,500 for all new applicants, while S Pass minimum salary requirements would be raised to S$2,500, announced Minister for Manpower Josephine Teo on Aug. 27.

The ministry said that the decision to update the criteria for the work passes was due to "weakness in the job market" and an "uncertain growth outlook".

This is not new. Singapore's Employment Pass policies have been adjusted according to the local employment situation over the years. However, the changes that have been made this year are quite starkly different from past adjustments, due to the economic impacts of the Covid-19 pandemic.

We take a look at how the government's policies about the Employment Pass have changed over the years and why.

First of all, what is an Employment Pass, and what makes it different from other work passes, such as S Passes and Work Permits?

Timeline of changes to Employment Pass regulations

So how have the Employment Pass policies changed over the years? Let's take a look at the last decade, starting from around the time of the watershed 2011 General Election.

The general trend was that the government would raise the minimum salary required for EP applicants every few years, in order to prevent Singaporeans from being undercut by foreign employees willing to accept lower salaries.

2020 has seen a stark difference from that trend, though, as it is the first time that the the minimum salary has been raised twice in one year, and by an unprecedented hike of S$900 within the course of months. These extreme measures are due to the economic crisis that has stemmed from the Covid-19 pandemic.

By raising the minimum salary for EP applicants, employers are required to make greater efforts to consider local candidates before hiring a foreign candidate, said MOM on Aug. 27.

Teo highlighted in an interview on Aug. 27 that the ministry's move to increase the minimum salary requirements was "not a call to employers to raise the salaries of their employees", but rather a way to nudge employers to be "more selective" in the current economy.

Pre-2011

There is not much government data publicly available about Employment Pass salary regulations prior to 2011, but, according to a number of websites from the 2000s, the minimum salary for an Employment Pass in the early-2000s was S$2,000.

By 2007, that appears to have been raised to S$2,500, and in 2011, the government raised the required salary to S$2,800.

Jul. 1, 2011: Higher monthly salaries required

There is only one type of EP today, but in (and prior to) 2011, there were three different tiers; the lowest was the Q1 Pass, followed by the P2 Pass, and finally the P1 Pass.

From Jul. 1, 2011, the monthly salaries that new Employment Pass applicants were required to earn were raised in order to "keep pace with the improving profile of the local workforce" and to "encourage companies to hire more qualified [foreigners] to better augment our local workforce".

Previously, foreigners applying for an Employment Pass needed to have a monthly salary of at least S$2,500 (for the lowest tier, Q1) and possess acceptable degrees, professional qualifications or specialist skills. From Jul. 1, 2011, the required salary was raised to S$2,800.

Similarly, the required salaries for the P2 and P1 Passes were raised, from S$3,500 to S$4,000 for the P2 Pass and from S$7,000 to S$8,000 for the P1 Pass.

Jan. 1, 2012: Even higher salaries and better educational qualifications required

In Aug. 2011, around one month after the new requirements were in place, MOM announced that it would be again raising the assessment criteria for Employment Passes starting on Jan. 1, 2012.

"The demand for EPs has increased rapidly since the economic recovery in 2010 and is likely to keep growing," the ministry said in a press release on Aug. 16, 2011.

In response to this increasing demand, MOM said that it would be introducing measures to tighten the eligibility for foreigners entering lower and mid-level professional, managerial and executive jobs, to require better educational qualifications and higher qualifying salaries.

This was in order to ensure that, as locals' salaries rose as they gained experience and progressed in their careers, they would not be disadvantaged by EP holders with lower wages, said MOM.

With effect from Jan. 1, 2012, the salary requirements for the EPs were changed to the following:

• Q1 Pass: From S$2,800 to at least S$3,000, with the requirements depending on the applicants qualifications and experience. Young graduates from "good quality institutions" could qualify if they earned at least S$3,000, while older applicants would have to command higher salaries to qualify, according to the work experience and quality they were expected to bring.
• P2 Pass: From S$4,000 to S$4,500.
• P1 Pass: Remained at S$8,000.

MOM noted that it would still have flexibility to consider applicants with "proven track records and exceptional skills-sets, but who may not have the qualifications required by the enhanced EP framework", on a case-by-case basis.

Jan. 1, 2014: Fair Consideration Framework introduced, EP scheme streamlined, minimum salary raised again

On Sep. 23, 2013, MOM announced the creation of the Fair Consideration Framework (FCF), which set guidelines to ensure employers fairly considered Singaporeans before hiring EP holders. FCF would come into effect on Aug. 1, 2014.

Then-Acting Minister for Manpower Tan Chuan-Jin said, "What we are doing is to put in place measures to nudge employers to give Singaporeans — especially our young graduates and Professionals, Managers and Executives (PMEs) — a fair chance at both job and development opportunities."

However, he also recognised that Singapore must still remain open to foreigners:

"Singapore has and will remain open to skills and workers from overseas. This has benefited Singaporeans because it allows firms to set up and create jobs in Singapore. But this must not come at the expense of fair HR practices."

In addition, the ministry announced that with effect from Jan. 1, 2014, the qualifying salary requirements for EPs would again be enhanced, in line with rising salaries.

There was no more mention of different tiers of EPs. Instead, they all appeared to be subsumed under one Employment Pass.

The new qualifying salary for new EP applications was raised to S$3,300, up from S$3,000 previously, with the same requirement for older workers to command higher salaries in order to qualify.

Tan clarified that the new guidelines did not mean "Hire Singaporeans First, or Hire Singaporeans Only".

"What the government is doing is to help them get a fair opportunity," he said. "Singaporeans must still prove themselves able and competitive to take on the higher jobs that they aspire to."

Jan. 1, 2017: Minimum salary raised again

On Jul. 26, 2016, MOM announced once again that it would be raising the qualifying salary for EP applicants, in order to "keep pace with rising local wages, maintain the quality of our foreign workforce and enhance their complementarity to the local workforce."

Effective Jan. 1, 2017, the ministry said that the minimum salary for new EP applicants would be raised from S$3,300 to S$3,600.

In a gov.sg post following the announcement, the government set out to answer some possible misconceptions that Singaporeans might have.

Responding to concerns that the new measures would mean that EP holders would earn higher salaries compared to the local workers, the government stated that that was not the case.

Rather, it said, the higher salary bar was a way to moderate the number of EP holders in Singapore, as it meant that less foreigners would qualify for the EP.

"A higher salary bar will also reduce the risk of employers preferring to hire EP holders over Singaporeans due to the foreigners being cheaper," the government added.

May 1, 2020: Minimum salary raised again, FCF tweaked

During the Committee of Supply Debates on Mar. 3 of this year, Teo announced that MOM would be implementing even more measures to help ensure fair hiring and competition, while providing fair opportunities and support, stating that the ministry was particularly watchful about discrimination against locals.

One of these measures was raising the minimum qualifying salary for a new EP application from S$3,600 to S$3,900, with effect from May 1, 2020.

Similar to the past adjustments, the qualifying salaries for older, more experienced EP candidates would also be raised in tandem, such that an EP applicant in his 40s, for example, would need to earn around double the new minimum qualifying salary of S$3,900.

This was to ensure a level playing field for experienced local PMETs in their 40s and 50s, said Teo.

Some of these new measures also included adjusting some of the FCF guidelines.

For example, previously, employers were required to advertise a job position for at least 14 days on MyCareersFuture.sg before submitting Employment Pass applications if they had at least 10 employees and for job positions paying a fixed monthly salary of less than S$15,000.

Teo announced that new measures would raise the required fixed monthly salary to S$20,000 instead.

Sep. 1, 2020: Minimum salary raised again, banking sector singled out

In a virtual press conference on Aug. 27, Teo announced that, with effect from Sep. 1, 2020, the minimum monthly salary for foreign professionals to qualify for an EP would be raised from S$3,900 to S$4,500.

There was noticeably less lead time in this announcement, as it was made only four days prior to when the changes would take effect, whereas past announcements were made several months before the new measures would be put into place.

The increase this time around was also higher than most past increases; a S$600 increase from S$3,900 to S$4,500, after a S$300 increase was already put into place earlier in the year.

This means that within the span of four months, the qualifying salary for EP applicants jumped S$900, from S$3,600 to S$4,500.

This huge jump reflects the difference in rationale behind these measures, as compared to the reasoning for past measures.

In the past years, the government said that raising the EP salary requirement was a way to ensure that locals were not disadvantaged by foreigners being paid lower salaries. Thus, the EP salary cut-off was raised in line with how the salaries of Singaporeans were rising.

However, this year, with the Covid-19 pandemic and the economic recession, the decision to raise the salary requirement of EP applicants stems from a slightly different rationale.

MOM said on Aug. 27 that, after the salary adjustments announced by Teo in March, the government had been closely monitoring the impact of Covid-19 on the global and domestic economy in order to see if further updates were necessary.

Thus, the ministry said that it was updating the EP and S Pass criteria in order to "suit prevailing conditions", given the "weakness in the job market and uncertain growth outlook".

In addition, the ministry also made the unprecedented move to set a minimum qualifying salary for EPs in a specific sector — the financial services sector. From Dec. 1, 2020, the required salary will be further raised to S$5,000 for new applicants, MOM announced.

Raising EP requirements part of government's support for local workers

Over the past decade, MOM has regularly updated and increased the salary requirements for EP applicants, in order to correspond with the growth of Singaporeans' salaries and careers.

These regular revisions have slowed the growth of the number of EP holders, said the ministry, despite the economy expanding, from an average of 13,000 per year in the first half of the decade to less than 3,000 annually in the second half.

The most recent announcement to increase further the qualifying salary for EP and S Pass applications, even more than they had already been adjusted earlier in the year, correspond with the government's concerns about the weak job market and uncertain growth outlook.

It complements the government's other support local employment, said MOM.

These other supports include the Jobs Support Scheme — which was extended by up to an additional seven months — and the S$1 billion Jobs Growth Incentive.

The ministry said:

"Taken together, the Government is providing a strong package of support to businesses that are in a position to retain or expand local employment, as well as comprehensive measures to help local jobseekers secure meaningful work."

In Parliament on Sep. 1, Teo tearfully reiterated the manpower ministry's dedication to Singaporeans:

"However long this storm lasts, MOM will walk the journey with you. However tough it may be, we will help you bounce back.

Our mission is to help each and every one of you emerge stronger, by never giving up hope and by working with employers in Singapore to treat you fairly, to make your hard work bear fruit."

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Top photo via ROSLAN RAHMAN/AFP via Getty Image.