Concerns that rise in EP, S Pass cut-offs may force pay hikes

The planned hikes in qualifying salaries for Employment Pass (EP) and S Pass holders will likely translate to "forced" salary increases for the foreign workforce, said Ms Foo Mee Har (West Coast GRC).

"The use of salary thresholds is a blunt instrument that does not take into account specific skills requirements and gaps in the market," said Ms Foo during the debate on the Budget statement. She suggested a points system that considers a range of non-salary factors to make the work pass system more transparent and economical.

With a tight labour market, the higher salary cut-offs will hurt employers, she added yesterday. "The higher work pass thresholds have triggered international firms to review the sustainability of their operations in Singapore."

The latest changes will see the qualifying salaries for new EP and S Pass applicants go up by $500 to $5,000 and $3,000 respectively from September.

In the financial services sector - which has higher salary norms - the bar will be raised from $5,000 to $5,500 for new EP applicants. A salary threshold of $3,500 will be introduced for incoming S Pass holders in the sector.

For older EP and S Pass applicants, their higher salary cut-offs will be raised in tandem. For renewals, the changes will apply a year later - from September 2023.

Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) welcomed the changes, saying: "Theoretically, this means that jobs which previously paid between the old and new salary thresholds - which could have gone to a foreign employee previously - will now have to be filled by a local."

But he asked if the Government would consider further differentiation of sectors beyond just carving out the financial service sector.

"Different sectors pay vastly different salary scales, and the point at which they require foreign labour or expertise may vary significantly," he said. "Having a single uniform qualifying salary may also penalise sectors where Singaporeans are less interested in those jobs, while those employers cannot get pass holders to do the jobs."

Non-Constituency MP Leong Mun Wai said the EP qualifying salary tweak is "too little to be effective". He reiterated an earlier call for a monthly levy of $1,200 to be imposed on each EP holder to "ensure fair competition".

Nominated MP Janet Ang highlighted that many companies in certain sectors, such as construction and food and beverage, have participated in recruitment fairs over the past two years, but had little success in getting Singaporeans. She hoped the Government could look at sectoral differentiation for the short to medium term.

Mr Edward Chia (Holland-Bukit Timah GRC) also said some employers have shared with him their difficulties in hiring Singaporeans, adding that the local workforce is expected to shrink with the ageing population and low birth rates.

"While I agree that we must provide gainful employment for Singaporeans and strengthen the complementary factor with the foreign workforce, we may soon reach or already have reached a point where there is simply not enough of us," he said.