From January next year, foreign professionals will need to be paid at least $3,600 a month if firms want to hire them on Employment Passes (EPs), up from $3,300 now.
The Ministry of Manpower (MOM) said yesterday that this is to keep pace with rising local wages, but business associations are worried that firms could lose competitiveness due to rising labour costs.
The changes are also meant to "maintain the quality of our foreign workforce and enhance their complementarity to the local workforce", said the ministry.
The qualifying EP salary was last raised in 2014, from $3,000, and before that in 2012, from $2,800. More experienced workers must also earn more to match their skills and work experience.
Starting salaries of graduates from local universities have been rising, and touched $3,300 a month at the median last year for Nanyang Technological University, National University of Singapore and Singapore Management University graduates in full-time permanent employment, according to MOM statistics.
Soon, EP applicants will also need to earn more to qualify for passes. Employers who want to renew their employees' existing EPs will have close to a year to adjust.
Passes which expire before Jan 1 can be renewed for up to three years based on existing criteria, and those expiring from Jan 1 up to and on June 30 can be renewed for up to one year based on existing criteria.
Passes which expire from July 1 next year onwards will need to be renewed under the new criteria.
There were 187,900 EP holders here as of December last year.
Employers do not have to pay a levy or adhere to a quota for workers on EPs, unlike for workers on S Passes or work permits.
The latest changes to the EP criteria could help to raise the quality of the workforce overall, said Singapore National Employers Federation executive director Koh Juan Kiat. "We expect employers to be more stringent on the qualifications, skills and experiences of foreigners that they hire," he said.
But National Trades Union Congress assistant secretary-general Patrick Tay warned in a Facebook post that the MOM will have to watch for employers "who through 'creative means' artificially blow up the wages of these foreign PMEs to meet this new criteria".
These companies may attempt to "increase" wages by illegally including add-ons such as allowances, he said.
The salary increase left some industry representatives concerned.
"This adjustment will increase the compliance cost, especially for those industries which face the challenges of recruiting skilled local workers," said Singapore Chinese Chamber of Commerce and Industry president Thomas Chua, also a Nominated MP.
Association of Small and Medium Enterprises president Kurt Wee said: "We understand there are social and other considerations but there are cost considerations as well, and when businesses are not viable, they close and we lose jobs."