Gap between expats’ pay and Singaporeans’ pay not so large when you take CPF into account: NTU professor

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An economics and industrial relations professor at Nanyang Technological University (NTU) has suggested that the gap between the pay expatriates working here earn and the salary Singaporeans earn is not so large when you take funds that go into local employees’ Central Provident Fund (CPF) account into consideration.

Writing for Channel NewsAsia, professor Chew Soon Beng addressed the question of why companies here still hire expat staff even though they seem to cost more as he tackled recent reports that suggest that the value of a typical annual compensation and benefits package for a middle-manager presently stands at a hefty S$223,095.

Are Singaporeans not qualified, Chew asked, as he pointed to lower unit labour costs as the primary reason why companies choose to hire expats. The fact that many expats have experience managing work abroad adds value to them, according to Chew, who noted that this sort of experience is something that a lot of Singaporeans who have lived here all their life may not have.

Opining that the way to overcome this issue and place Singaporeans in prime positions to snag roles that typically go to expats is to increase Singaporeans’ competitiveness, Chew said, “The Singapore Government has been on the ball in this aspect.”

Pointing to leadership programmes by the government and the labour union, Chew indicated that Singaporeans may now have the chance to increase their value. He added that the manpower ministry has also exercised its duty to ensure that Singaporean candidates are considered first for jobs, ahead of foreigners.

Concluding his piece by saying that Singapore can enhance its attractiveness by maintaining cost competitiveness with other nations, Chew added: “It is worth noting that most of our anxieties about how much expats are paid sometimes stem from the fact that we leave out our CPF contributions when calculating our own annual pay packages. Once we factor those in, the gap may not be as large as it is perceived to be.”

CPF has continued to be one of the most hot topics in Singapore, with many locals lamenting the fact that they cannot take and use all of their savings as they wish when they retire, due to the caps that exist on the varying sections in one’s CPF account.

Given that many see the funds locked into their CPF account as untouchable, it is unclear whether Chew’s suggestion – that counting CPF contribution will shrink the gap between expats’ pay and locals’ pay – will hold much water with Singaporeans.