Budget 2022: Higher EP, S Pass salary thresholds not a shock to firms but hiring challenges remain

From September this year, companies who employ foreign workers will have to pay them a higher minimum salary. ST PHOTO: MARK CHEONG

SINGAPORE - The increased salary thresholds for new Employment Pass (EP) and S Pass holders announced by Finance Minister Lawrence Wong on Friday (Feb 18) did not come as a shock to some companies, although employers said hiring challenges remain.

Mr Toby Koh, group managing director of Ademco Security Group, said the announcement was "not entirely shocking" as he has expected Singapore to tighten its foreign worker policies as the economy recovers.

"It will affect us a little but the bump is not going to make a significant difference in our human resource strategy because it helps the work culture having people of different nationalities," said Mr Koh.

His security company hires around 30 S Pass holders out of the 180 employees in specialised positions such as engineering.

"I would hire more locals where possible, but there are challenges in recruiting for certain roles as the labour market is tightening up," said Mr Koh.

From September this year, companies who employ foreign workers will have to pay them a higher minimum salary as Singapore further tightens its foreign worker policies this year.

The minimum qualifying salary for new EP applicants will be raised from the current $4,500 to $5,000.

For the financial service sector, which has higher salary norms, the bar will be raised from $5,000 to $5,500.

For S Pass holders, the minimum qualifying salary for new applicants will be pushed up from the current $2,500 to $3,000. A higher salary threshold of $3,500 will be introduced for the financial service sector.

The minimum qualifying salary for new S Pass applicants will be raised again in September next year, and in September 2025. The specific salary values will be announced closer to implementation, based on the prevailing local wages then.

National University of Singapore business professor Lawrence Loh said: "Increasing the salary thresholds is good for ensuring the quality of foreign talent but the added cost may also incentivise companies to first look at locals to fill the gaps in its workforce."

"This ensures that locals, such as fresh graduates, will also have a fair bite of the employment cherry," he added.

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But Mr Yee Sern Wei, project manager at a local tiling company, said the announced increased S Pass foreign worker levy rates is "demoralising". His company hires between 30 and 40 S Pass holders out of the 200 employees.

"The intent behind it is to encourage productivity, reduce reliance on foreign manpower and hire more locals but for our line of work - tiling - it is a labour-intensive job. There's no robot or machine in the industry to do this work," said Mr Yee.

"For now it's still OK because the increase is progressive over the next few years so hopefully by then, we would have cleared all the projects that have been delayed due to Covid-19 and the manpower crunch would have eased up more," he added.

More details on the various foreign worker policy changes will be announced during the debate on the Ministry of Manpower's budget.

Read next - Budget 2022 highlights: GST hike, higher income tax for top earners and CDC vouchers for all

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