Employment Pass Quota

Imposing quotas on higher-end foreign professionals on Employment Passes (EPs) is not unthinkable, but such a move would probably be unwise, said Manpower Minister Josephine Teo on Tuesday (Sept 1).

It is much better to use salary requirements to ensure companies can access foreign professionals of the right quality while committing to build up their local staff over time, she told Parliament.

“Without such flexibility, many of the top-quality investments would have been lost to our competitors, and the job opportunities along with them,” she said.

Economic agencies also need flexibility when competing for the most cutting-edge investments and sophisticated activities to be moved to Singapore, she added.

Mrs Teo was responding to MPs in the parliamentary debate on the President’s Address, and outlined the Government’s considerations in managing the foreign workforce here as well as its efforts to support Singaporean professionals, managers, executives and technicians (PMETs), especially those in their 40s and 50s.

“We must therefore not miss the woods for the trees, by focusing narrowly on keeping foreigners out and missing the larger picture of growing the pie and giving Singaporeans the chance of the best slice,” she said.

Mr Patrick Tay (Pioneer) and Ms Foo Mee Har (West Coast GRC) on Monday suggested introducing tiered quotas for EP holders based on different pay levels or sectors, which would limit the share of a firm’s employees that can be on EPs.

Mrs Teo said that at the work permit level, the Ministry of Manpower (MOM) uses levies on top of quotas to regulate demand because the numbers of foreign workers are big – 737,200 as of last December, not including domestic helpers.

There are also quotas for foreigners on S Passes, who are those earning at least $2,400 a month.

But at the EP level where the numbers are not as big – there were 190,000 working here in June – the ministry’s key objective is to regulate quality, said Mrs Teo.

From Tuesday, the minimum qualifying salary for new EP applications is $4,500, up from $3,900. The change affects pass renewals from May next year.

Raising the salary requirements over time pushes EP holders at the lower-end down to the S Pass level, where they are subject to the quota, something which levies do not do, said Mrs Teo, adding that in all past adjustments to EP salary requirements, a good number were downgraded to S Passes.

As for employers who falsely declare salaries to meet the higher bar, and then claw back money from foreign employees under the table, Mrs Teo said the answer must be to strengthen enforcement.

In the last five years, the ministry has taken action in over 1,200 cases of false declarations or kickbacks, which led to nearly 388 convictions through prosecution, she said.

She noted the anxiety and heightened sense of insecurity about jobs, amid the severe impact of Covid-19.

Although unemployment has not reached the highs of past recessions, it is not a given that this will remain so, she said.

In the last severe economic downturn in the 2009 global financial crisis, Singapore’s GDP still managed to grow 0.1 per cent after the Government rolled out the $20.5 billion Resilience Package, and reached double-digit growth the following year.

This year, the Government has already introduced four Budgets of support costing close to $100 billion, including salary support under the Jobs Support Scheme of up to 75 per cent, compared with 12 per cent under the Jobs Credit Scheme in 2009.

Said Mrs Teo: “We are still in the middle of a storm, and it will be sometime before we see ‘green shoots’.”

With Covid-19, the number of EP and S Pass Work Pass holders have fallen by 22,000 between January and July this year.

In fact, in the last five years, the growth in the number of locals in PMET jobs grew by much more than the growth in the number of Employment Pass and S Pass holders. For every new EP or S Pass holder added in that period, about four more locals took up PMET jobs.

This is not due to an increase in permanent residents, as some have suggested, said Mrs Teo. The PR population has remained stable over the last five years, at about 500,000.

Still, said the minister, in this period of great uncertainty, middle-aged local PMETs are especially concerned about two main things: if retrenchments are inevitable, will they be targeted by employers because of their age and higher wages, especially when compared to their younger foreign colleagues? And when applying for jobs, will they be passed over, especially with employers being able to hire EP and S Pass holders?

Mrs Teo said MOM actively monitors retrenchment practices, and looks into aspects such as whether the employer tried other cost-saving measures before considering retrenchments and whether the company’s Singaporean core was weakened as a result of the retrenchment exercise.

She noted that sometimes, older workers comprise a larger share of workers retrenched by a firm because their skillsets are less relevant to core functions.

But there has generally not been a weakening of the Singaporean core in cases seen by the ministry, she said. For instance, when Resorts World Sentosa laid off workers in July, foreign employees had to meet a higher performance bar than locals to be retained.