Rise in Employment Pass qualifying pay can have adverse effects

The move to increase the qualifying monthly salary for Employment Pass (EP) holders is aimed at lowering the number of foreign workers here, so that jobs are created for local workers ("Rise in EP qualifying pay could affect bottom lines, say observers"; last Monday).

However, some companies require workers with special skill sets, and there is a limited supply of such workers in Singapore.

Therefore, these companies will still hire foreign workers despite the increase in qualifying wage.

Small firms that require skilled workers will be greatly affected because big firms are willing to pay more for these workers, and they cannot compete when it comes to "dollar votes".

These small firms will also incur more production costs as foreign employees' wages increase. How can they survive if marginal costs become too high to sustain?

The report mentioned that employers could alternatively expand the job scope of EP holders to justify the higher pay.

But doing so would mean the EP holder will be doing the job of another worker, perhaps depriving locals of the opportunity to do that job.

Individuals may even have overlapping functions, and everyone's job competency will have to be revised.

If increasing the qualifying wage of EP holders can attract more foreign talent, it would be beneficial to Singapore's economy and increase the productivity of firms on all levels. However, it should be monitored closely.

Benz Lau Yong Hock

A version of this article appeared in the print edition of The Straits Times on August 08, 2016, with the headline 'Rise in Employment Pass qualifying pay can have adverse effects'. Print Edition | Subscribe