Hiring foreigners in Singapore is becoming more difficult. Here's why.

Singapore saw the largest drop in the number of foreigners with work visas in 2017. The decline of 32,000 was 10 times more than 2016’s decline of 2,500.  

Singapore’s ambitious economic growth targets have been hampered by a shrinking pool of its only natural resource – its people. The island state’s declining total fertility rate – currently at a seven-year low of 1.16 – has been cited as the main reason to bring in foreign talent and supplement the local resident workforce. 

However, the political and social repercussions of a relatively open immigration policy from more than 10 years ago has been highlighted of late as the government continues to adjust its policies in order to balance talent shortage in high-growth sectors and employment opportunities for its citizens.

Whats in this article

1. Fair Consideration Framework
2. Tighter ruling in 2018
3. Dependents affected by cost of living
4. The problems that won't go away

Fair Consideration Framework

Work visa approvals have been affected since the launch of the Fair Consideration Framework (FCF) in 2014, a list of hiring requirements to ensure that the local workforce have access to more job opportunities.

According to India’s business daily, NDTV, local IT industry body NASSCOM has seen the number of Indian professionals in Singapore’s tech sector shrink to under 10,000 with work visas not being renewed upon expiry. As a result, India’s tech companies are finding it hard to maintain their employee base, let alone increase hiring in Singapore. 

Recently, the FCF has further tightened approval requirements for foreign Employment Pass applications so that employers consider Singaporeans for job vacancies ahead of foreigners.

 

Tighter ruling in 2018

Starting from 1 July 2018, companies seeking to hire foreign employees on Employment Passes for positions where the fixed monthly salary is below S$15,000 must advertise the positions at the National Jobs Bank portal for at least 14 days. This applies to all companies with 10 or more full-time employees.

This is an increase from a minimum salary of S$12,000 and minimum employee size of 25 and ultimately increases the number of companies that are subject to this requirement. The jobs portal, launched in July 2014, is exclusively for Singaporean citizens and permanent residents.

In addition, the minimum qualifying salary for an S-Pass has increased to S$2,300 from 1 January 2019 and $2,400 from 1 January, 2020. The S-Pass is meant for mid-skilled employees such as technicians and supervisors.

Existing S-Pass holders whose passes expire:

 

• Before 1 January 2019 will receive a one-time renewal of up to two years based on the existing criteria
• Between 1 January and 30 June 2019 will receive a one-time renewal of on year based on the existing criteria
• On or after 1 July 2019 will have to comply with the new criteria

The FCF watchlist, launched in 2016, monitors companies with non-compliant hiring practices and has added 500 companies for unfairly favouring foreigners. Employment Pass applications by these companies have either been rejected, withdrawn or withheld by the Ministry of Manpower.

However, the talent shortage in fast-growing tech sectors such as data analytics, programming, artificial intelligence and cybersecurity is shackling growth plans of companies affected. They have had to outsource or set up overseas teams while maintaining headquarters in Singapore or forego the opportunity to grow.

UPDATE: From 1st May 2020 onwards, the minimum salary for foreign professionals to qualify for an Employment Pass (EP) will be raised to $3,900 per month, up from $3,600  

Source: Strait times

Dependents affected by cost of living

Foreign dependents of work visa holders are also affected. From 1 January 2018, work visa holders will need to meet the minimum salary criteria of $6,000 to bring their spouse and children and a minimum salary of $12,000 to bring in their parents. This is an increase from $5,000/month and $10,000 a month respectively.

Find out more about Singapore’s Dependent Pass Schemes here

 

The problem that just won’t go away

This issue is likely to grow even more pressing as the country’s twin challenge of ageing population and shrinking base of citizen becomes even more acute in the next five years.

The government has been trying to tackle the manpower issue using other angles but it will take time.

One labour-intensive sector targeted is the manufacturing industry, which accounts for a fifth of Singapore’s GDP and more than 400,000 jobs. Armed with an industry transformation map, the government has laid out a plan to drive the adoption and innovation of advanced manufacturing technologies such as robotics and digital manufacturing to reduce reliance on manpower.

Similarly, the drive to prioritise productivity and innovation in the construction sector has also seen a decline in construction work visas from a 3.2% growth in 2012-2014 to an 8% decline from 2014-2017.

 

It’s working (for now)

So far, the measures have seen an improvement in local employment figures which means that the policies have started to take effect.

The latest statement by the Ministry of Manpower indicated that local employment has doubled its growth in 2017 compared to 2016 while median monthly income of full-time employed Singaporeans increased by 4.9% over the year to June 2017 compared to 0.7% in the previous year.

While Singapore continues try and offer fair employment for its citizens, it is not completely restricting foreign hire but rather trying to manage this with a more prudent approach based on industry and requirements.

 

Reaching out to ASEAN to diversify hiring opportunities

As Singapore is strategically located, companies can diversify their hiring to other neighbouring ASEAN countries. Watch our free webinar -

Grasping growth oportunities in ASEAN on demand here to know more. 

Investment Requirements