Advance notice of the changes and relatively smaller composition of S Pass holders in the workforce compared to work permit holders said to cushion much of the effects of the increases
The first of three increases in the minimum qualifying salary for S Pass renewals kicked in on Friday, but it is expected to have a muted impact on business costs and operations.
Business players told The Straits Times that advance notice of the changes and the relatively smaller composition of S Pass holders in the workforce compared with work permit holders cushion much of the impact of the increases.
However, some businesses with a larger proportion of S Pass holders earning less than $3,000 may have to lift wages to retain this workforce, or rely more on work permit holders.
The minimum qualifying salary for S Pass renewals has gone up from $2,500 to $3,500 for those working in financial services, and $3,000 for all other sectors.
It follows a similar increase on Sept 1, 2022, for new applications.
Meanwhile, the minimum qualifying salary for new S Pass applications has gone up to $3,150, and to $3,650 for the financial sector, on Sep 1.
The stepped increases, which were unveiled in the Budget in February 2022, are meant to embed a higher skill bar pegged to the top one-third of local associate professionals and technicians.
The increases for renewals kick in a year after those for new applications to give businesses enough time to adjust.
The Tier 1 S Pass levy, which has a quota of up to 10 per cent of the total workforce, has also gone up, from $450 to $550.
These moves have been complemented by the Non-traditional Source (NTS) Occupation List, which was also rolled out on Friday.
This lists nine jobs for which employers in services and manufacturing can hire work permit holders from a wider range of locations, instead of hiring such manual workers on S Passes.
The list aims to help firms adjust to the S Pass qualifying salary and levy increases, by allowing them access to work permit holders from these locations for occupations with pressing manpower needs but with low take-up by locals, and those posing difficulties in automation.
Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said the Ministry of Manpower has given businesses notice of workforce policy changes well ahead of time so they can plan and budget accordingly.
“Having said that, a lot of small and medium-sized enterprises do not plan too far ahead because they are quite tied up in their business operations, but I’m sure the ecosystem will adjust accordingly,” he added.
Mr Wee noted that the S Pass moves help bring the work pass back to its original intention of bringing in skilled candidates for supervisory or managerial roles.
That suggests that sectors which tend to hire S Pass holders paying under $3,000 for front-line customer service roles that should be filled by work permit holders, such as food and beverage and retail, could be affected more, he added.
A FairPrice spokesman told ST that the retailer, the largest in Singapore with more than 13,000 employees, would comply with all government regulations and hire employees based on job fit and skills.
Meanwhile, the construction, marine and process sectors will have to pay their S Pass holders more, but also work with the lower S Pass quota of 15 per cent that kicked in on Jan 1, down from the 18 per cent in place since January 2021, and the 20 per cent before that.
Mr Pankaj Pandit, who owns the Sandpiper Hotel in Little India, said the increase in qualifying salary will drive up costs for smaller employers in the services sector like him. The hotel employs around nine workers, including one S Pass holder.
Although he welcomed the idea behind the NTS Occupation List, he noted that the 8 per cent quota for work permit holders hired through it does not amount to a significant number of workers in companies with a smaller headcount.
He suggested that the quota be increased to 20 per cent for smaller employers.
The slew of changes to Singapore’s foreign workforce policy on Friday is not limited to just S Pass holders.
New rules for Employment Pass applicants include a points-based evaluation process called Complementarity Assessment (Compass), which takes into account factors such as their qualifications.
Moreover, those seeking to rely on an applicant’s qualifications to add points under Compass will need to provide third-party verification of their diploma and higher qualifications.