Singapore—On March 5, Josephine Teo, the country’s Manpower Minister, said that a raise is being imposed on the local qualifying salary for businesses that still want to hire foreign workers. From the current monthly rate of S$1200, it will be raised to S$1300 by July.
Ms Teo announced this at the Committee of Supply debate in Parliament on Tuesday.
A company’s local qualifying salary is the mandatory wage that companies must pay their Singaporean workers if they still wish to continue hiring foreign workers along with locals.
The Manpower Minister explained that the cost impact of this new qualifying salary will not be high. In fact, she said it would it would be similar to the adjustments made after the previous review in 2017, when the minimum threshold was increased by S$100 year on year.
In July 2017, the local qualifying salary was raised from S$1,000 to S$1,100. The following July, it went from S$1,100 to S$1,200.
Ms Teo said that the reasons for the decision from the Manpower Ministry to raise the qualifying salary includes the increase in local salaries as well as the future decrease in the quota for foreign workers in the services sector that was discussed in the Budget 2019 speech by Heng Swee Keat, the country’s Finance Minister.
In his February 18 speech, Mr Heng announced changes to the Dependency Ratio Ceiling (DRC), which determines the highest number of foreign workers a business can employ in proportion to its total number of workers. By 2021, the DRC will be set at 35 percent for the services sector.
The changes to the DRC will be implemented incrementally, giving companies sufficient time to adapt to the adjustments. By January 2020 the threshold will be lowered from 40 percent to 38 percent, and in the following year, from 38 percent to 35 percent.
This only applies to the services sector, as the Manpower Minister claims the most restructuring is needed in this sector.
The issue that certain businesses will be challenged in recruiting more Singaporean workers was answered by Ms Teo.
She said, “There’s no question in my mind [that] we will continue to need foreign manpower in services, but over-reliance carries risks and is not sustainable.”
She also encouraged an uplifting in the conditions of these types of employment in order to make them more attractive to locals.
The Government will provide help to companies who need it as they adjust to the changes via the Enterprise Development Grant (EDG) and Productivity Solutions Grant (PSG), now in effect through March 31, 2023.
Seventy percent of government funding is provided through the EDG for companies to firm up business capabilities, improve operational efficiencies, and internationalise their operations.
On the other hand, the PSG allows companies to apply for subsidies for out-of-pocket employee training expenses that are not covered by alternate subsidies from the Government. The maximum for this is 70 percent, at up to S$10,000 per enterprise.
Companies that seem to prioritise foreign workers over local ones are under the scrutiny of the Ministry of Manpower (MOM), which now has 350 firms on their watchlist for unfair hiring practices.
Another 260 companies have been removed from this list after compliance with Government regulations.
Singapore introduced the Fair Consideration Framework (FCF) in 2014 in order to make sure that locals would receive protection and fair treatment in the workforce.
According to Ms Teo, the 350 businesses still on the list are from various sectors, but are mostly from administrative and support services, education, information and communications, professional services, and wholesale trade.
MOM will continue to keep a close eye on the remaining 350 businesses, and their Employment Pass applications will be assessed stringently.
Since 2016, MOM has rejected or employers have withdrawn 2300 Employment Pass applications, because of these stricter measures.
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