PSP's 'hard cap' policy would make conditions so hostile, no foreign investor will consider S'pore: Tan See Leng

Tan added that MOM is constantly adjusting its foreign workforce policies to ensure that they complement local labour.

Matthias Ang | September 15, 2021, 09:43 PM

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The Ministry of Manpower (MOM) is providing strong support for the employment of local PMETs with its policies, Minister Tan See Leng said in Parliament on Sep. 14.

Speaking in support of the motion by Finance Minister Lawrence Wong on securing Singaporeans’ livelihoods, Tan rebutted criticisms put forth by Leong Mun Wai of the Progress Singapore Party (PSP) that the government's foreign workforce policy was too lax.

He noted:

"They (PSP) characterised our "foreign talent policy" as a "conduit for quick immigration and a source of cheap labour" and claimed that the qualifying salary of S Passes and EPs (Employment Passes) are too low.

They said there is "unfair wage competition" because employers do not have to pay the 17 per cent CPF contribution for foreigners."

MOM is constantly adjusting its foreign workforce policies to ensure that they complement local labour

The minister acknowledged that while Singaporeans were pragmatic and understood that the country needed to remain open to global talents, there were also those who felt frustrated during instances where a foreigner is hired, even if he is unable to do the job as well as a Singaporean, or has links to the hiring manager.

Tan said that MOM is aware of such cases, and is constantly adjusting its foreign workforce policies to ensure that they complement local labour, and help fight discriminatory practices.

Tan then rebutted each of the following policy suggestions put forth by the PSP in turn:

1. EP qualifying salary at S$4,500 and S Pass at S$2,500 are minimum amounts, rise with age

On Leong's claim that the qualifying salaries for S Pass and EP holders were too low, the minister posed the following question:

"I wonder whether the PSP is aware that the numbers they cited are the minimum qualifying salaries for EP and S Pass holders at the youngest ages?"

The current minimum qualifying salaries for EPs and S Pass holders are S$4,500 and S$2,500 respectively.

Tan asked if the PSP was aware that qualifying salaries rose with age so as to ensure a level playing field for older Singaporean PMET workers, such as the EP qualifying salary for foreigners in their forties being around double of the minimum qualifying salary.

He noted that there were many businesses, including SMEs, that were "already crying out" that they are could not access foreign PMETs that they needed.

Tan said, "I would like to ask, has the PSP actually consulted businesses on what they think of our current policy?"

2. CPF contributions are taken into account to maintain a level playing field

He also addressed Leong's repeated claims that foreign EPs are cheaper to hire than locals on the grounds that employers do not have to make CPF contributions.

"Foreign PMETs are not working in Singapore on a permanent basis, and we are not responsible for their retirement adequacy or home ownership needs, it does not make sense for us to extend CPF coverage and benefits to them. Fundamentally, our CPF system is designed to benefit our resident workers, not to help attract or deter foreigners."

MOM therefore takes into account CPF contributions as part of the cost to employers when it reviews the qualifying salary to maintain a level playing field, he added.

3. Ministry takes firm measures against false salary declarations

With regard to the issue of false salary declarations and kickbacks, brought up by PSP's Hazel Poa, Tan said that the ministry took "firm measures".

False declarations carry out a fine of up to S$20,000, a maximum of two years imprisonment, or both, under the Employment of Foreign Manpower Act (EFMA).

The minister highlighted:

"The fact that Ms Hazel Poa is aware of this means she is also aware that MOM has been enforcing this and publicising our efforts to stamp out these illegal practices.

At the same time, PSP’s solution is to raise the salary criteria for EP and S Pass holders significantly – does the PSP think that this underlying problem will get better with their suggestion?"

4. PSP's suggestion of imposing a S$1,200 levy will hurt search for talent: Tan

Leong proposed imposing a S$1,200 levy on all EP holders, but Tan pointed out that while such an action may sound easy, the focus is on regulating quality. As such, a levy would have the opposite effect.

Explaining that employers had finite budgets for manpower, he gave the following scenario:

"Suppose an employer has set aside $10,000 a month for a new PME hire. A levy of S$1,200 effectively reduces his budget to S$8,800. This immediately narrows the pool of EP candidates, from those willing to consider a salary of S$10,000 and below, to those willing to consider a salary of S$8,800 and below."

The minister then asked, "How would this benefit the employer or his Singaporean employees, if the intention is to seek the best talents available?"

In addition, a levy would also send contradictory signals if Singapore says that it welcomes "high-calibre global professionals" on one hand but imposes a levy on the other.

Hence, the government focuses on regulating quality through the EP qualifying salary criteria, which sets a high bar for EP holders to attain to be able to work in Singapore and raises quality over time.

5. Imposing a 25 to 30 per cent cap on work pass holders and PRs hurts Singapore's competitiveness: Tan

On this point, Tan said that the PSP should be aware that there were already quotas at the S Pass level.

The S Pass sub-dependency ratio ceilings (sub-DRC) — the proportion of S Pass holders that a company can employ — had been reduced over the past decade for the services sector, to 10 per cent from 25 per cent, with cuts in other sectors as well.

Earlier this year, Deputy Prime Minister Heng Swee Keat announced that the sub-DRC for the manufacturing industry will be reduced in two steps, once in 2022 and once in 2023.

In Budget 2020, Heng had said that S Pass sub-DRCs for the manufacturing sector were not to be reduced at that point in time "given the economic uncertainties", but added that they would be tightened when conditions allowed.

Tan then gave the following rationale for why quotas were not set at the level of work passes, saying, "There is fierce competition for global talent and worldwide shortages in areas such as technology and digital skills. And doing so would send the wrong signal that we are not welcome to such talent."

The minister added that in the early 2000s, the financing of infrastructure projects and their risk profile required expertise that was not available locally.

If a quota had been imposed earlier, Singapore might have lost out on companies like Mizuho Bank

One such company that chose to establish a project financing team in Singapore was Japanese company Mizuho Bank which had Singaporeans as 40 per cent of its workforce. This proportion has since grown to 70 per cent for a much larger office.

In questioning if such an event would have happened, had a quota been established, Tan said:

"If PSP insists on a 30 per cent quota, I would like to ask: Would you turn away a company that creates 69 high-end jobs for locals, because it needs 31 foreigners from abroad?"

Tan also noted that PSP assumed that "less foreigners means more jobs for locals" and asked:

"What would stop it (PSP) from lowering this quota further to 20 per cent or 10 per cent or zero per cent?

He had previously suggested that it is not good enough that Singaporeans make up 70 per cent of the workforce in the financial sector, but that it should be even higher at 80 per cent or 90 per cent.

In which case, how do we remain and maintain our status an international financial centre?"

6. Imposing a hard nationality cap of 10 per cent in each firm would make the environment "hostile" for foreign investors

Tan said that once a 30 per cent cap was stacked on another 10 per cent cap, the outcome of Leong's policy is to render an environment "so hostile" that no foreign investor will consider Singapore for building a new business.

"To use the example of Mizuho Bank, the effect of Mr Leong’s proposal is to tell a Japanese Bank that only 10 per cent of their workers can be Japanese nationals," he explained.

Nevertheless, MOM is also aware that tensions can arise from the domination of a foreign nationality, the minister added.

It has the Fair Consideration Framework (FCF) Watchlist which identifies firms with a high concentration of a single nationality, and subjects their work pass applications to scrutiny for potential discriminatory hiring. In addition, such firms are engaged by the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP).

Tan further highlighted that even before the FCF was introduced in 2014, the "Tripartite Guidelines on Non-Discriminatory Job Advertisements" was introduced as early as 1999, followed by the “Code of Responsible Employment Practices" in 2002.

Subsequently, TAFEP itself was established in 2006 with the entity's guidelines issued in 2007 and enhanced in 2011 to develop a Singaporean labour core.

He added, "We are exploring refinements to our EP framework to help us achieve our objectives of a strong Singaporean core, complemented by a diverse foreign workforce."

7. Ring-fencing positions in top management for Singaporeans also hurts attractiveness as an investment location

On this matter, the minister said that the government helped Singaporeans rise to the top, not by protecting them, but by enabling them. He elaborated:

"When companies first set up here, it is understandable that they will need to bring in many of their senior management to oversee the business here.

If we protect the top management jobs for Singaporeans alone, and companies decide not to invest here because of that, we would lose good jobs for our locals, and the opportunity for them to take on the higher level positions in


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