Knowledge Highlights 12 March 2020
On 3 March 2020, Minister for Manpower Josephine Teo announced a series of measures aimed at giving employees fair chances to progress at work and businesses fair support to succeed. These include revisions to the rules for hiring foreigners, and support to employers hiring mid-career and senior employees.
Revised rules for hiring foreigners
Employment Pass salary threshold raised to S$3,900 per month
The Employment Pass (“EP”) minimum qualifying salary was last revised in 2017, from S$3,300 to S$3,600 per month. The Ministry of Manpower (“MOM”) will be raising it to S$3,900 per month, in line with improving wages of fresh graduates of local autonomous universities.
The salary criteria for older and more experienced EP candidates will be raised in tandem. For example, an EP applicant in his early 40s will need to earn around double the new minimum qualifying salary of S$3,900. This takes into account the skillsets such an applicant will be expected to have, ensuring a level playing field for experienced local mid-career professionals, managers, executives and technicians (PMETs).
In adopting the revised salary criteria, MOM will take a staggered approach to moderate the impact on businesses. The revised salary criteria will apply:
- from 1 May 2020 for new EP applicants; and
- from 1 May 2021 for EP renewals.
Salary threshold to qualify for exemption from Fair Consideration Framework job advertising requirement raised to S$20,000 per month
Under the Fair Consideration Framework (“FCF”), employers submitting EP applications must first advertise the position on MyCareersFuture.sg to ensure fair hiring and guard against job openings being restricted to “closed circles of friends”.
Job positions with a monthly salary of S$15,000 and above are currently exempted from the FCF job advertising requirement.
From 1 May 2020, MOM will expand the advertising requirement to include positions paying up to S$20,000 per month. Positions that are more senior remain exempted as they are more likely to be market-sensitive.
Employers who have pre-selected a foreign candidate and failed to give fair consideration to qualified local applicants will have their EP application rejected and will be banned from hiring or renewing the passes of foreign workers.
Local Qualifying Salary threshold raised to S$1,400 per month
To ensure that firms do not hire locals on token salaries just so that they can hire more foreign workers, only workers that are paid above a certain threshold each month, i.e. the Local Qualifying Salary (“LQS”), can be counted towards a firm’s S Pass and Work Permit dependency ratio ceilings (DRCs).
MOM has been regularly updating the LQS to keep pace with rising local wages at the lower end and will be raising the LQS further to S$1,400 per month on 1 July 2020.
Reduction of S Pass quotas for Construction, Marine Shipyard and Process sectors
MOM will implement cuts to S Pass quotas for the Construction, Marine Shipyard and Process sectors in 2021 and 2023 to deter enterprises from hiring low-cost foreigners when qualified locals are available.
More support for employers hiring mid-career and senior employees
Increased salary support for workers aged 40 and above
Under the “Place-and-Train” programmes, an individual first secures placement with an employer or attachment with a host company on the strength of his existing work experience, and undergoes additional training to close the skills gap to fully meet job requirements. The “Train-and-Place” programmes on the other hand do not require employer commitment upfront, but as long as the programmes are well designed to plug skills in demand, participants have a good chance of obtaining job placements after they are trained.
From 1 April 2020, the Government will boost salary support for all workers aged 40 and above enrolled in “Place-and-Train” programmes, from 70% to 90%.
Further, the Government will provide a new incentive for employers who hire workers aged 40 and above, through any “Place-and-Train” or “Train-and-Place” programme. It will cover 20% of the new hire’s monthly salary for half a year, capped at S$6,000 in total.
Wage offsets to employers that hire senior Singaporean workers aged 55 and above
From 2021, through the new Senior Employment Credit, the Government will provide wage offsets to employers that hire senior Singaporean workers aged 55 and above. For 2021 and 2022, employers will get up to 8% of the wages paid to workers aged 55 and above. More support will be given for those in higher age bands. As the employment rate for workers aged 55 to 59 has improved greatly and is now close to that of the 20 to 64 age group, wage offsets for the 55 to 59 age group will be 2% in 2021 and 1% in 2022. The Government will instead focus resources on the older age groups which have lower employment rates. Wage offsets for those aged 67 and above will be the highest, at 8%.
Further, in 2021, the Government will offset half of the increase in employer Central Provident Fund (“CPF”) contribution rates through the CPF Transition Offset Scheme.