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S-Pass change: A better deal for S'poreans?
They hope tougher criterion for foreigners will level playing field
By Melissa Kok
Receptionist Jacinta Balan, 28, feels the changes to the S-Pass requirements and foreign worker levies will raise the competitiveness of local workers. -- ST PHOTO: CHEW SENG KIM
WAREHOUSE coordinator Jeyaveerasingam Preman has dreams to 'upgrade' to a job which pays him more.
The 30-year-old Singaporean, who has a diploma in information technology from a private school here, currently earns up to $1,600 a month.
He wants to become a warehouse supervisor eventually, but feels that it may be tough because of competition from foreigners who can be hired for less money.
With the Government's recent move to tighten the qualifying criterion for the S-Pass - a work pass for mid-tier skilled foreigners who earn between $1,800 and $2,500 a month - Singaporeans like Mr Preman hope they will stand a stronger chance of landing better jobs in future.
S-Pass holders, who hold jobs in sectors like retail, construction and health care, are seen by some to be in direct competition with local workers. Their salary range is comparable to the median monthly income of Singapore residents, which stands at $2,500.
But employers and experts say it remains to be seen if Singaporeans are willing to take up or stay long in positions filled by S-Pass holders, now that the economy is near full employment.
From July 1, the qualifying salary threshold for S-Pass applicants will be raised from $1,800 to $2,000 to keep pace with salaries of local workers, which have gone up over the years, Manpower Minister Gan Kim Yong announced in Parliament earlier this month.
The higher salary threshold is also aimed at encouraging employers to be more selective, and hire foreigners who are better-qualified and can better contribute to the Government's drive to boost productivity.
It could also go some way in deterring companies from using the S-Pass to gain access to more foreign workers if they have reached the quota for hiring work permit holders, who earn less than $1,800 a month.
Firms employing existing S-Pass holders will have a one-time renewal of up to two years to meet the new criterion.
The move comes on the back of a rise in foreign worker levy rates. Employers can expect to fork out an average of $240 more a month in levy for each S-Pass holder between now and July 2013.
For example, an employer who currently pays $1,950 a month for an S-Pass holder, which includes a $150 foreign worker levy, may have to pay $2,180 a month to hire the same S-Pass holder in July. This is to meet the new $2,000 minimum salary and $180 in foreign worker levy.
Said Mr Preman: 'Now, they've increased the foreign worker levy, so there are more opportunities for Singaporeans. If you compare the CPF contribution for Singaporeans with the levy the employer has to pay, it will be about the same.'
Foreigners and their employers do not have to make CPF contributions unless the workers are permanent residents.
Experts say the measures signal that the Government is serious about easing Singapore's dependence on foreign workers, not just at the bottom rungs of the job spectrum but also at the higher levels.
Since the S-Pass was introduced in 2004, the number of holders has grown from about 44,000 in 2007 to 98,000 as of the end of last year - as companies were allowed to employ more of these workers.
Asked if the move to tweak the S-Pass criterion should have come earlier, SIM University (UniSIM) labour economist Randolph Tan said that in hindsight, he believed the tweaking 'could have been done more decisively, at least last year'.
However, he pointed out that 'the demand from employers for the Government to facilitate the supply could not have been easily ignored in our business-oriented environment'.
Analysts say it was high time to revise the qualifying income for S-Pass holders, which had not been adjusted since 2004.
With the adjustment, the Singaporean worker could expect to be more competitive when it comes to remuneration, as companies may raise wages of existing staff to be on a par with what foreigners are getting, they pointed out.
Singapore Management University economist Hoon Hian Teck said tightening the criteria helps to restrict the inflow of moderately skilled foreigners, and thus avoids putting further downward pressure on the salaries of middle-skilled Singaporean workers.
It is good news to Singaporeans like Ms Jacinta Balan, 28, who feels the changes will level the playing field. 'When we want that job and ask for higher pay, they would rather hire a foreigner who is willing to take it for a lower salary,' said the receptionist. (changes in S-pass can fool lesser mortal, but not me)
But S-Pass holder Wang Wenxiong, 38, who works as an HR manager and earns $3,800 a month, feels the changes will not do much to push employers to hire locals. 'The $200 increase in salary threshold is not much, and they still need skilled workers after all,' he said.
But the changes may add to the burden of companies in sectors heavily dependent on S-Pass holders, and which are already struggling to find Singaporeans to fill semi-skilled jobs.
In fact, some employers say they will bite the bullet and hire foreigners at higher wages, as Singaporeans may not be readily available.
National University of Singapore economist Tilak Abeysinghe said that in the short run, the wage pressure is upwards because the economy is almost at full employment, and substitution of workers from one skill category to another is not easy because training takes time.
The tight labour market could also mean that Singaporeans may job-hop even if they take up such positions. In comparison, S-Pass holders tend to stay in their jobs because their salaries are higher compared to what they get back home, employers say.
An example is the aerospace sector, which is facing a shortage in mid-skilled workers to do technical jobs such as aircraft maintenance and repair work.
Mr Charles Chong, president of the Association of Aerospace Industries of Singapore, said costs will inevitably go up. He blamed it on a lack of opportunities for Singaporean students trained in aerospace skills to further their studies at the tertiary level.
'If you look at the number of locals entering aerospace training programmes, there are sufficient numbers, but only a smaller proportion remain in the industry,' said Mr Chong.
Even with an offer of a higher salary, Singaporeans may not bite as the working conditions that come with the job may not appeal to them, said Mr Andrew Khng, president of the Singapore Contractors Association.
'We've always had an open door policy; priority given to locals. It's unfortunate that locals are not streaming into this industry. But work cannot stop, cannot be held up; we have contractual obligations to fulfil,' he said.
Some firms, like Royal Plaza on Scotts, said they would look to tap on other sources, such as mature workers and women who want to get back into the workforce.
Noting that the long-term effects of the upcoming changes will be the most significant, Dr Tan of UniSim said: 'The real value of the policy shift is to prepare businesses for interruptions in the supply of foreign manpower that are beyond Singapore's control.'
[email protected]
Additional reporting by Jessica Lim and Amanda Tan
They hope tougher criterion for foreigners will level playing field
By Melissa Kok
Receptionist Jacinta Balan, 28, feels the changes to the S-Pass requirements and foreign worker levies will raise the competitiveness of local workers. -- ST PHOTO: CHEW SENG KIM
WAREHOUSE coordinator Jeyaveerasingam Preman has dreams to 'upgrade' to a job which pays him more.
The 30-year-old Singaporean, who has a diploma in information technology from a private school here, currently earns up to $1,600 a month.
He wants to become a warehouse supervisor eventually, but feels that it may be tough because of competition from foreigners who can be hired for less money.
With the Government's recent move to tighten the qualifying criterion for the S-Pass - a work pass for mid-tier skilled foreigners who earn between $1,800 and $2,500 a month - Singaporeans like Mr Preman hope they will stand a stronger chance of landing better jobs in future.
S-Pass holders, who hold jobs in sectors like retail, construction and health care, are seen by some to be in direct competition with local workers. Their salary range is comparable to the median monthly income of Singapore residents, which stands at $2,500.
But employers and experts say it remains to be seen if Singaporeans are willing to take up or stay long in positions filled by S-Pass holders, now that the economy is near full employment.
From July 1, the qualifying salary threshold for S-Pass applicants will be raised from $1,800 to $2,000 to keep pace with salaries of local workers, which have gone up over the years, Manpower Minister Gan Kim Yong announced in Parliament earlier this month.
The higher salary threshold is also aimed at encouraging employers to be more selective, and hire foreigners who are better-qualified and can better contribute to the Government's drive to boost productivity.
It could also go some way in deterring companies from using the S-Pass to gain access to more foreign workers if they have reached the quota for hiring work permit holders, who earn less than $1,800 a month.
Firms employing existing S-Pass holders will have a one-time renewal of up to two years to meet the new criterion.
The move comes on the back of a rise in foreign worker levy rates. Employers can expect to fork out an average of $240 more a month in levy for each S-Pass holder between now and July 2013.
For example, an employer who currently pays $1,950 a month for an S-Pass holder, which includes a $150 foreign worker levy, may have to pay $2,180 a month to hire the same S-Pass holder in July. This is to meet the new $2,000 minimum salary and $180 in foreign worker levy.
Said Mr Preman: 'Now, they've increased the foreign worker levy, so there are more opportunities for Singaporeans. If you compare the CPF contribution for Singaporeans with the levy the employer has to pay, it will be about the same.'
Foreigners and their employers do not have to make CPF contributions unless the workers are permanent residents.
Experts say the measures signal that the Government is serious about easing Singapore's dependence on foreign workers, not just at the bottom rungs of the job spectrum but also at the higher levels.
Since the S-Pass was introduced in 2004, the number of holders has grown from about 44,000 in 2007 to 98,000 as of the end of last year - as companies were allowed to employ more of these workers.
Asked if the move to tweak the S-Pass criterion should have come earlier, SIM University (UniSIM) labour economist Randolph Tan said that in hindsight, he believed the tweaking 'could have been done more decisively, at least last year'.
However, he pointed out that 'the demand from employers for the Government to facilitate the supply could not have been easily ignored in our business-oriented environment'.
Analysts say it was high time to revise the qualifying income for S-Pass holders, which had not been adjusted since 2004.
With the adjustment, the Singaporean worker could expect to be more competitive when it comes to remuneration, as companies may raise wages of existing staff to be on a par with what foreigners are getting, they pointed out.
Singapore Management University economist Hoon Hian Teck said tightening the criteria helps to restrict the inflow of moderately skilled foreigners, and thus avoids putting further downward pressure on the salaries of middle-skilled Singaporean workers.
It is good news to Singaporeans like Ms Jacinta Balan, 28, who feels the changes will level the playing field. 'When we want that job and ask for higher pay, they would rather hire a foreigner who is willing to take it for a lower salary,' said the receptionist. (changes in S-pass can fool lesser mortal, but not me)
But S-Pass holder Wang Wenxiong, 38, who works as an HR manager and earns $3,800 a month, feels the changes will not do much to push employers to hire locals. 'The $200 increase in salary threshold is not much, and they still need skilled workers after all,' he said.
But the changes may add to the burden of companies in sectors heavily dependent on S-Pass holders, and which are already struggling to find Singaporeans to fill semi-skilled jobs.
In fact, some employers say they will bite the bullet and hire foreigners at higher wages, as Singaporeans may not be readily available.
National University of Singapore economist Tilak Abeysinghe said that in the short run, the wage pressure is upwards because the economy is almost at full employment, and substitution of workers from one skill category to another is not easy because training takes time.
The tight labour market could also mean that Singaporeans may job-hop even if they take up such positions. In comparison, S-Pass holders tend to stay in their jobs because their salaries are higher compared to what they get back home, employers say.
An example is the aerospace sector, which is facing a shortage in mid-skilled workers to do technical jobs such as aircraft maintenance and repair work.
Mr Charles Chong, president of the Association of Aerospace Industries of Singapore, said costs will inevitably go up. He blamed it on a lack of opportunities for Singaporean students trained in aerospace skills to further their studies at the tertiary level.
'If you look at the number of locals entering aerospace training programmes, there are sufficient numbers, but only a smaller proportion remain in the industry,' said Mr Chong.
Even with an offer of a higher salary, Singaporeans may not bite as the working conditions that come with the job may not appeal to them, said Mr Andrew Khng, president of the Singapore Contractors Association.
'We've always had an open door policy; priority given to locals. It's unfortunate that locals are not streaming into this industry. But work cannot stop, cannot be held up; we have contractual obligations to fulfil,' he said.
Some firms, like Royal Plaza on Scotts, said they would look to tap on other sources, such as mature workers and women who want to get back into the workforce.
Noting that the long-term effects of the upcoming changes will be the most significant, Dr Tan of UniSim said: 'The real value of the policy shift is to prepare businesses for interruptions in the supply of foreign manpower that are beyond Singapore's control.'
[email protected]
Additional reporting by Jessica Lim and Amanda Tan
