SINGAPORE - From May 1 this year, foreigners staying in Singapore on Dependant's Passes will need a work pass in order to work here, instead of a letter of consent.

This means their employers will need to apply for an Employment Pass (EP), S Pass or work permit for them, and the relevant qualifying salary, dependency ratio ceiling and levy will apply. If they are already working, this must be done once their current letter of consent expires.

Manpower Minister Josephine Teo announced the change on Wednesday (March 3) during the debate on her ministry's budget, saying that it is "for consistency with recent work pass moves".

She noted that Dependant's Pass holders who have asked to work in Singapore via a letter of consent make up about 1 per cent of all work pass holders. Most meet prevailing work pass criteria, but those who do not will have to stop working here.

As at June 2020, there were about 1.1 million work pass holders in Singapore, excluding foreign domestic workers, which suggests there were about 11,000 Dependant's Pass holders working on letters of consent.

An Employment Pass or S Pass holder must earn a fixed monthly salary of at least $6,000 in order to bring their spouse or unmarried children under 21 years old to Singapore on Dependant's Passes.

Currently, dependants of S Pass holders have to apply for a relevant work pass in order to work in Singapore, while dependants of skilled foreign professionals or entrepreneurs on EPs, EntrePasses or Personalised Employment Passes can apply for a letter of consent.

When the change kicks in, only Dependant's Pass holders who are business owners can work using a letter of consent, and only if they own at least 30 per cent of the company shares and their business creates local employment. They must employ at least one Singaporean or permanent resident earning at least the prevailing local qualifying salary - currently $1,400 - and make contributions to the employee's Central Provident Fund accounts for at least three months.

More details will be provided later.

Mrs Teo also set out her ministry's priorities in managing the foreign workforce and balancing the need for foreigners in some sectors while strengthening the Singaporean core, which several MPs asked about on Tuesday.

"Our fundamental objective is always to serve the interests of Singaporean workers. Access to foreign workers is meant to help grow a larger economic pie than we otherwise can. Therefore, the foreign workforce must act as a complement to our local workforce," she said.

At the S Pass level, which is for foreigners earning a fixed monthly salary of at least $2,500, employers should expect further changes to S Pass rules to be phased in over this decade, said Mrs Teo.

S Pass policy has been tightened in the last two years, with sector quotas being cut and the qualifying salary being raised twice last year. Deputy Prime Minister Heng Swee Keat announced a cut in the manufacturing sector S Pass quota from 20 per cent to 15 per cent by 2023 in the Budget speech last month.

Addressing the request by Mr Edward Chia (Holland-Bukit Timah GRC) for more "surgical" application of the work permit and S Pass quota in sub-sectors, Mrs Teo said there is a limit to how much further the services sector can be differentiated.

The sub-sectors which lobby the hardest already hire the big majority of work permit holders in services, and relaxing quotas for each of them would amount to the overall quota being raised, she said.

She said the Ministry of Manpower (MOM) will focus instead on helping companies become more manpower-lean while strengthening their Singaporean core.

She added periodic adjustments will continue to be made to the local qualifying salary, which is the minimum salary for locals to count towards a firm's headcount in calculating the work permit and S Pass quota, to ensure locals are not hired on a token salary. It will not be increased this year to give firms time to recover from the impact of the Covid-19 pandemic.

Mrs Teo said that for skilled foreigners on EPs, MOM's aim is two-fold: first, to ensure that foreign professionals complement locals, and second, to ensure employers practice fair hiring and improve the diversity of their foreign professionals, managers, executives and technicians.

The qualifying salary for EP holders was raised twice last year, and the ministry will explore possible refinements, she said.

"The salary threshold is by no means a perfect gatekeeper of quality, but it is easy to understand and administer," she said.

She explained that this method is favoured over an EP quota, which would limit Singapore's ability to compete for the most cutting-edge investments amid the worldwide shortage of tech and digital skills, hurting Singaporeans' longer-term career prospects.

She added that implementing levy charges for EP holders, as Non-Constituency MP Leong Mun Wai of the Progress Singapore Party called for last week, may not be useful either since companies can employ overseas knowledge workers remotely.

Mr Leong asked on Wednesday whether Singaporean workers have been disadvantaged because foreigners do not have to make Central Provident Fund contributions, and there is no requirement for succession planning when firms apply for grants.

Mrs Teo replied that last year, amid the pandemic, the foreign workforce contracted by over 180,000, while the local workforce grew modestly.

"So with that perspective, in what way has the local workforce been disadvantaged?" she asked.

Capability development

The Capability Transfer Programme will be extended by three years, until end-September 2024, to boost skills transfer to locals.

The programme, launched in 2017, provides up to 90 per cent funding for company or industry projects to bring in foreign specialists to train locals or send local workers for overseas training attachments, in areas where Singapore lacks expertise.

About $5 million has been committed so far to support projects in 20 sectors, said Mrs Teo, adding that the programme remains a useful complement to other schemes that support company transformation and the development of locals.

DPM Heng announced the extension in his Budget speech last month. He said that as at the end of last year, more than 140 companies and over 970 Singaporeans and permanent residents have benefited, or are expected to benefit, from 40 projects under the scheme.

Workers' Party chief Pritam Singh (Aljunied GRC) asked during Wednesday's debate if "there is more to be desired" from the scheme in view of the amount of money that has been spent on it so far, and whether there are plans to improve its usage across industries.

"I agree that there's a lot of scope for it to be a game changer," he said. For instance, it could facilitate Singaporeans gaining the skills for high value manufacturing which Singapore wants to move into.

Mrs Teo replied that the aim of the extension is to encourage greater take up of the programme. But she added that the Government re-examines all of its business support schemes from time to time and regularly streamlines them.