The Ministry of Manpower (MOM), in April 2016, unveiled its stricter assessment framework for Employment Pass (EP) applications, to promote a stronger Singaporean core in the workforce. The stricter appraisal framework has been introduced to sift out errant employers who practice recruitment and promotion policies that discriminate against locals. While employers are still trying to comprehend the impact of the framework and their obligations, the ministry has further tightened the criteria by raising the qualifying salary threshold for EP applications. On 27 July 2016, the MOM announced that in order to be eligible to apply for an EP the candidate’s minimum monthly basic salary must be S$3,900 (effective 1 May 2020), up from the current S$3,600. The new higher salary criteria will be effective from 1 January 2017. This will also impact the EPs that are due for renewal after 1 January 2017.
The New Assessment Criteria for Employment Pass
As per the new assessment criteria, besides the candidate’s qualifications, the following factors of the companies applying for Employment Pass will be scrutinized:
- Proportion of Singaporeans employed against the industry average
- Commitment to hiring and nurturing Singaporeans
- The economic significance of the company
Companies that score well on all three factors will not have any issue in getting its EP application approved. On the other hand, the companies that do not score well on the factors will get blacklisted and will find it hard to get the new or renewal applications approved.
The purpose of the new assessment framework is to ensure that locals get priority in Professional, Managerial, Executive and Technical (PMET) positions and to encourage companies to promote internally rather than recruit foreign talent. With more Singaporeans attaining tertiary education and gaining specialized skills, the concerns of the government to create and sustain opportunities for the locals and to drive real wage growth is not unfounded. This is also essential to achieve the ever-elusive productivity growth that the government has been envisioning since the launch of the economic restructuring efforts. However, businesses are finding it hard to meet the requirements given their concerns to sustain, if not grow, their revenue and profitability amidst the challenging economic condition.
Employers feel that amidst stiff competition and a sluggish economy, such an assessment framework persuading them to prioritize employing locals is squarely unjust when the available local talent pool is limited, with nearly 97% employment rate. The application process also gets tedious as they have to submit more supporting documents and information such as current and forecasted manpower, its composition and their training and development plans.
Related Article: Singapore Employment Pass
Is this an indirect quota system…?
The EP, until now, is not based on quota, unlike other work passes such as an S pass and Work Permits for which you need to employ a certain number of locals in order to earn your right to employ a foreigner. The quota system is meant to protect the interest of the local workforce in rank and file positions. An EP is meant for PMET positions that require professionals, with higher qualification and experience competing on merit, hence the government does not see the need to bring the EP under a quota system.
The escalating complaints from the local workforce about losing PMET jobs to foreigners have compelled the government to implement measures to ensure that the locals are not sidelined in the job market. Since August 2014, recruiting organizations are required to place advertisements in the government jobs bank that exclusively hosts resident job seekers. The recruiting organizations must validate their EP applications with reasons to recruit the foreign candidate and prove that they had taken adequate steps to recruit locally, before selecting the foreign candidate.
The measures apparently have not paid off and the complaints have not receded. Hence, after a careful appraisal of the situation, the government has implemented the new assessment criteria to promote a strong Singaporean core. While some of the employers welcome the measure on grounds that it will penalize and weed out errant employers, there is a section that calls the framework a regressive indirect quota system.
Related Article: Changes in the Employment Act of Singapore from April 1, 2016
The framework will help weed out the employers who practice discriminatory measures and it is a welcome reprieve from a blanket quota system, which would adversely impact all employers. The framework does review the number of locals employed by a company against the industry average, but the assessment will be favorable if it can effectively be proven that the candidate is rare to find and possesses critical professional and technical skills that would eventually help in the transfer of knowledge and skills to the locals.
Of the total workforce in Singapore, EP holders account for only 5.5%. The proportion of foreigners working in PMET occupations in Singapore has fallen between 2014 and 2015 and has remained below 24%. Contrary to the widespread illusion, the Singapore resident workforce holds more than 76% of the PMET positions. Although the proportion has been dropping or has at least remained constant, the absolute number of non-resident PMET has been on the rise, albeit in moderation.
Related Article: Raising the Bar for Singapore Employment Pass Holders
How to manage the challenge?
Going by the statistics, most of the companies will qualify under the framework. However, there will be a section of SME employers who fall through the gaps and find it hard to recruit foreigners under the EP.
The restructuring measures have paid off but the resultant labor crunch, higher labor cost and the moderation in a global economy, have had a toll on the profitability of businesses. Experts have also highlighted that these measures are eroding the competitiveness of Singapore. The local workforce will also grow at a slower pace due to demographic reasons. Recognizing these threats, the Singapore government has launched several support schemes to help employers and the workforce to adjust to the situation.
The government’s Industry Transition plan emphasizes on automation. So tap on the support to become labor lean. Enhance labor productivity by training your PMET professionals to be multi-skilled. Tap on the mid-career PMET professionals who are made redundant by the restructuring measures. Schemes like Career Support Programme (CSP) and Professional Conversion Program (PCP) can help you to identify potential local PMET candidates to fill the positions. When you hire PMETs under such scheme, you can also get wage support. The CSP provides 10% to 40% wage support for a period of one year and PCP provides up to 70% wage support during the entire duration of training for up to two years.
Schemes like Career Support Programme (CSP) and Professional Conversion Program (PCP) can help you to identify potential local PMET candidates to fill the positions. When you hire PMETs under such scheme, you can also get wage support. The CSP provides 10% to 40% wage support for a period of one year and PCP provides up to 70% wage support during the entire duration of training for up to two years.
When you are in doubt follow the steps below:
- Review your HR practice
- Develop a plan to hire and train more locals and commit to it
- Train your current local employees and get help from government schemes
- Approach Employment and Employability Institute (e2i) and Workforce Development Authority (WDA) to connect you to potential local PMETs.
The government is determined to enhance productivity while controlling foreign manpower growth. The foreign manpower policy will not be relaxed any time soon. Companies will have to come up with strategies to comply with the framework and become labor lean businesses.
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