Parliament: Employment Pass quota not unthinkable, but probably unwise, says Josephine Teo

At the EP level where the numbers are not as big, the ministry's key objective is to regulate quality, said Manpower Minister Josephine Teo. PHOTO: GOV.SG

SINGAPORE - Imposing quotas on higher-end foreign professionals on Employment Passes (EPs) is not unthinkable, but such a move would probably be unwise, said Manpower Minister Josephine Teo on Tuesday (Sept 1).

It is much better to use salary requirements to ensure companies can access foreign professionals of the right quality while committing to build up their local staff over time, she told Parliament.

"Without such flexibility, many of the top-quality investments would have been lost to our competitors, and the job opportunities along with them," she said.

Economic agencies also need flexibility when competing for the most cutting-edge investments and sophisticated activities to be moved to Singapore, she added.

Mrs Teo was responding to MPs in the parliamentary debate on the President's Address, and outlined the Government's considerations in managing the foreign workforce here as well as its efforts to support Singaporean professionals, managers, executives and technicians (PMETs), especially those in their 40s and 50s.

"We must therefore not miss the woods for the trees, by focusing narrowly on keeping foreigners out, and missing the larger picture of growing the pie and giving Singaporeans the chance of the best slice," she said.

Mr Patrick Tay (Pioneer) and Ms Foo Mee Har (West Coast GRC) had on Monday suggested introducing tiered quotas for EP holders based on different pay levels or sectors, which would limit the share of a firm's employees that can be on EPs.

Mrs Teo said that at the work permit level, the Ministry of Manpower (MOM) uses levies on top of quotas to regulate demand because the numbers of workers are big - 737,200 as of last December, not including domestic helpers.

There are also quotas for foreigners on S Passes, who are those earning at least $2,400 a month.

But at the EP level where the numbers are not as big - there were 190,000 working here in June - the ministry's key objective is to regulate quality, said Mrs Teo.

From today, the minimum qualifying salary for new EP applications is $4,500, up from $3,900. The change affects pass renewals from May next year.

Raising the salary requirements over time pushes EP holders at the lower-end down to the S Pass level where they are subject to the quota, something that levies do not do, said Mrs Teo, adding that in all past adjustments to EP salary requirements, a good number were downgraded to S Passes.

As for employers who falsely declare salaries to meet the higher bar, and then claw back money from foreign employees under the table, Mrs Teo said the answer must be to strengthen enforcement.

In the last five years, the ministry has taken action in more than 1,200 cases of false declarations or kickbacks, which led to nearly 388 convictions through prosecution, she said.

She noted the anxiety and heightened sense of insecurity about jobs amid the severe impact of Covid-19.

Although unemployment has not reached the highs of past recessions, it is not a given that this will remain so, she said.

In the last severe economic downturn in the 2009 global financial crisis, Singapore's gross domestic product (GDP) still managed to grow by 0.1 per cent after the Government rolled out the $20.5 billion Resilience Package, and reached double-digit growth the following year.

This year, the Government has already introduced four Budgets of support costing close to $100 billion, including salary support under the Jobs Support Scheme of up to 75 per cent, compared with 12 per cent under the Jobs Credit Scheme in 2009.

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An emotional moment as Manpower Minister Josephine Teo addresses Singaporean workers and Workers' Party chairman Sylvia Lim calls for a review of race-based policies.

But GDP is expected to shrink by 5 per cent to 7 per cent this year.

Said Mrs Teo: "We are still in the middle of a storm, and it will be sometime before we see 'green shoots'."

With Covid-19, the number of EP and S Pass holders has fallen by 22,000 between January and July this year, she added.

In fact, in the last five years, the growth in the number of locals in PMET jobs was much more than the growth in the number of EP and S Pass holders. For every new EP or S Pass holder added in that period, about four more locals took up PMET jobs.

This is not due to an increase in permanent residents, as some have suggested, said Mrs Teo. The PR population has remained stable over the last five years, at about 500,000.

Still, said the minister, in this period of great uncertainty, middle-aged local PMETs are especially concerned about two main things: if retrenchments are inevitable, will they be targeted by employers because of their age and higher wages, especially when compared with their younger foreign colleagues? And when applying for jobs, will they be passed over, especially with employers being able to hire EP and S Pass holders?


Mrs Teo said MOM actively monitors retrenchment practices and looks into aspects such as whether the employer tried other cost-saving measures before considering retrenchments and whether the company's Singaporean core was weakened as a result of the retrenchment exercise.

She noted that sometimes, older workers comprise a larger share of workers retrenched by a firm because their skill sets are less relevant to core functions.

But there has generally not been a weakening of the Singaporean core in cases seen by the ministry, she said. For instance, when Resorts World Sentosa laid off workers in July, foreign employees had to meet a higher performance bar than locals to be retained.

As for hiring, MOM will intensify efforts to ensure fair treatment of locals, said Mrs Teo.

In evaluating EP and S Pass applications, it will place additional emphasis on whether the firm has supported its local PMET staff and has responded to government agencies' efforts to help it recruit and train local PMETs. For instance, if the EP or S Pass applicant is meant to replace a local who was only recently retrenched, MOM will turn down the application unless there are very good reasons.

Also, employers must not discriminate against qualified local PMETs.

Mrs Teo noted that this is what offends Singaporeans most, that they are qualified but lost out to a foreign candidate who did not appear to be better.

One healthcare multinational firm penalised by the ministry this year had rejected candidates for not meeting requirements not even stated in the job advertisement, and did not shortlist or interview any of the seven local candidates who met the job requirements.

As a penalty, it will not be able to hire or renew EP holders for a year.

"To stay in business, they will have to recruit more locals, something they should have done all along," said Mrs Teo.

She also responded to calls to reveal the names of firms on the Fair Consideration Framework watch list, which contains some 1,200 companies that MOM is scrutinising for potentially discriminatory hiring practices. She said such an approach would be counterproductive.

The companies on the list have not flouted the rules but have an unusually high share of foreign PMETs among their staff, compared with the rest of the industry. Until they improve, their work pass applications are rejected or held back, while the Tripartite Alliance for Fair and Progressive Employment Practices helps them try to hire more locals.

Some improve. For instance, one firm's local office sought special approval from their overseas headquarters to expand the recruitment criteria to take into account local conditions. Another had been genuinely unfamiliar with local recruitment channels and welcomed Workforce Singapore's assistance.

Said Mrs Teo: "If instead we had vilified these firms through a name-and-shame approach, we would have frustrated their efforts to expand local hiring. This is ultimately counterproductive.

"Our alternative approach of scrutinising and engaging employers is highly resource-intensive but, in fact, a more effective way to get businesses to reshape their HR practices."

She added that MOM takes all feedback from whistle-blowers seriously, and called on employers to commit to fair hiring and responsible retrenchment.

"No amount of enforcement resources will catch enough employers if they are determined to hide. What we lose then is not just a job opportunity for a local, but the trust that the system is fair, that the odds were not stacked against people who are trying," she said.


There are also schemes to further tilt the balance in favour of local PMETs, such as the new Jobs Growth Incentive announced by Deputy Prime Minister Heng Swee Keat last month.

The $1 billion scheme subsidises the wage bills of employers that can grow their local headcount over the next six months, and is the nation's "biggest push ever" to help employers stretch their manpower budgets and hire more locals, said Mrs Teo.

Professional conversion programmes, attachments and other skills training opportunities also help locals upgrade their skills to prepare for new jobs.

Manpower Minister Josephine Teo speaks in Parliament on Sept 1, 2020. PHOTO: GOV.SG

Tearing up as she addressed workers directly in her speech, Mrs Teo said: "We know that in your hearts, you care most about the well-being of your families and loved ones. You want to do well not just for yourself, but for them.

"Please know that you, too, are always in our hearts," she said, pledging that the ministry will journey with them no matter how long the crisis lasts.

"However tough it may be, we will help you bounce back. Our mission is to help each one of you emerge stronger, by never giving up hope, and by working with employers in Singapore to treat you fairly, to make your hard work bear fruit."

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