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?
What to know about the Employment Pass
According to MOM's website, EPs are for foreign professionals who meet the following criteria:
- Have a job offer in Singapore.
- Work in a managerial, executive or specialised job.
- Earn a fixed monthly salary of at least S$3,900 (soon to be S$4,500), although older, more experienced candidates need higher salaries.
- Have acceptable qualifications (e.g. a good university degree, professional qualifications or specialised skills).
Meanwhile, S Passes are for mid-skilled foreign employees — such as technicians — and Work Permits are for foreign workers from approved source countries working in the construction, manufacturing, marine shipyard, process or services sectors.
The manpower ministry imposes foreign worker levies and quotas on employers for Work Permits and S Passes, but not for EPs.
According to MOM statistics, there were 193,700 EP holders in Dec. 2019, making up 13.6 per cent of the total foreign workforce of 1,427,500.
- 2010: 143,300
- 2011: 175,400
- 2012: 174,700
- 2013: 175,100
- 2014: 178,900
- 2015: 187,900
- 2016: 192,300
- 2017: 187,700
- 2018: 185,800
- 2019: 193,700
The growth in number of EP holders has slowed considerably in the past five years, rising by less than 6,000 total between 2015 and 2019.
In comparison, the previous five-year period between 2010 and 2014 saw an increase of more than 35,000 EP holders. The largest increase was between 2010 and 2011, when the number of EP holders jumped by more than 30,000 in one year alone, from 143,300 to 175,400.
The number of EP holders in 2011 and the three years following stayed relatively stable, likely due to the government's active policy decisions to slow down the influx of foreign labour.
These decisions came on the back of major pushback from Singaporeans about the government's liberal approach to foreigners, who they felt were placing a major strain on Singapore's healthcare system, transportation infrastructure, and job market, as was observed in a report published by the Institute of Policy Studies about the sentiments on immigrant integration in Singapore.
This unhappiness amongst Singaporeans was one of the key issues that led to an all-time (since independence in 1965) low GE 2011 showing for the ruling People's Action Party (PAP), with the PAP winning only 60.1 per cent of the vote, reported the Straits Times.
Government explanation for EP scheme: Singapore needs skilled foreign workers
Fast forward to today: the question of whether foreigners working in Singapore come at a cost for locals in the workforce continues to be a large topic of conversation, and was one of the most hotly-debated issues in Parliament over the course of the past week.
In July of this year, the government explained in a gov.sg article that EPs allow companies to bring in foreign professionals as a way to "plug skills gaps and supply shortages", in order to "attract and root high-value activities in Singapore".
For example, multinational corporations such as Grab, Google, and Facebook need workers with relevant skills and experience for their positions, and that there might not be enough Singaporeans with the skills and experience necessary to "anchor these global companies’ investment".
Thus, the government said that even if some of the higher-paying jobs created in Singapore go to foreigners initially, it will train Singaporeans to upgrade their skills in order to eventually take on these jobs.
Fair Consideration Framework
Another way that the government supports Singaporeans' job prospects is through the Fair Consideration Framework (FCF), which requires employers to advertise on MyCareersFuture.sg before they can make an EP application. This is in order to "make jobs accessible to Singapore citizens, and recruit fairly based on merit".
Employers that are suspected to have discriminatory hiring practices are placed by MOM on the FCF Watchlist, which means that their EP applications are "closely scrutinised" by the ministry. If employers are "uncooperative", their work pass privileges are withdrawn.
The government added that MOM regularly updates the required salary thresholds for EP applicants in relation to the salaries of locals with similar experience and seniority, in order to ensure that Singaporeans don't get their salaries undercut by foreigners.
In 2020 alone, Teo said in Parliament on Sep. 1, MOM has suspended the work pass privileges of 90 employers because of infringements under the Fair Consideration Framework (FCF).
She added that since 2016, more than 1,200 employers have been scrutinised under the FCF. These companies had not flouted any rules, but had been identified by MOM because of their "unusually high reliance" on foreigners in their PMET workforce.
Until these companies "improve", Teo said that MOM will continue to reject or hold back their work pass applications. In all, 3,200 EP applications have been rejected or withheld by MOM, or withdrawn by employers while they were being scrutinised.
Necessary to raise salary requirements to increase quality of foreign employees
Teo compared raising the salary requirements for EP holders over time to a high jump, such that when the government raises the bar, the hurdle is higher for EP holders, which requires them to have more skills and talent to cross the higher bar. This improves the quality of the foreign workforce over time.
This also means that EP holders on the lower end — or those who are unable to cross the raised hurdle — get pushed down to the S Pass-level, where there are quota controls.
In all of the past adjustments to EP salary requirements, said Teo, a "good number" were downgraded to S Passes.
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.
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.
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.
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.