Early results of EP revamp suggest firms depending less on foreigners: Tan See Leng
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A points-based system to evaluate EP applications may have pushed employers to be more selective in hiring foreign talent.
PHOTO: ST FILE
SINGAPORE – Early results from a points-based system to evaluate Employment Pass (EP) applications rolled out in September 2023 suggest it has made employers more selective in hiring foreign talent, said Minister for Manpower Tan See Leng on March 6.
Since the Complementarity Assessment Framework, or Compass, was introduced, the share of firms with higher dependence on foreigners of a single nationality has decreased by 7 per cent, Dr Tan told Parliament during the debate on the Ministry of Manpower’s (MOM) budget.
He was responding to questions from labour MP Patrick Tay (Pioneer) on how the Republic’s EP framework incentivises businesses to develop a strong local core.
The share of firms with higher dependence on foreigners generally has decreased by 15 per cent, Dr Tan added.
Across both categories, the firms also created 4,000 more professional, managerial, executive and technical jobs for locals, he noted.
“Firms more dependent on foreigners of a single nationality, or foreigners in general, will have to diversify their workforce or hire more locals to pass Compass,” Dr Tan said. He also noted that about 30 per cent of current EP holders have been issued passes under Compass.
Compass is a points-based framework
All new EP applications made since Sept 1, 2023, and renewals since Sept 1, 2024, have been evaluated through Compass.
Under Compass, four “foundational” criteria are used to assess an application. They are an individual’s salary and qualifications, as well as the firm’s workforce diversity and support for local employment.
Bonus points are given to jobs
To pass the evaluation, which is designed to provide firms with greater clarity and certainty for manpower planning, the application needs to rack up 40 points.
The EP is valid for up to two years for first-time pass holders, and up to three years for those whose passes are renewed.
“Our work pass framework is carefully managed to provide access to high-quality foreigners who support productive sectors and create good jobs for locals,” Dr Tan said.
He also said holding in escrow funds equal to the required Central Provident Fund (CPF) contributions for local workers for foreign workers to level salaries – as Workers’ Party MP Jamus Lim (Sengkang GRC) suggested – was unnecessary.
CPF contributions are already factored into local worker wage benchmarks used to set qualifying salary for work passes, Dr Tan said.
The EP qualifying salary is pegged to the top one-third of local professionals, managers, executives and technicians (PMETs).
“In salary terms, the playing field is actually quite fair,” said Dr Tan.
“While the take-home pay of an EP holder may be higher because they do not contribute to CPF, this does not mean locals are paid less, as their CPF contributions go towards housing and retirement needs.”
Responding to Ms Rachel Ong (West Coast GRC) and labour MP Mohd Fahmi Aliman (Marine Parade GRC), Dr Tan noted that the Overseas Networks and Expertise (One) Pass has contributed to anchoring productive sectors and creating good jobs for locals.
“Beyond economic contributions, One Pass holders have contributed to the local community – mentoring local leaders and start-ups, volunteering with social organisations, and collaborating with institutes of higher learning,” he added.
Rolled out in 2023, the pass targets top foreign professionals drawing a fixed monthly salary of $30,000 or more from a single employer, or those with outstanding achievements in various fields.
The issue of underemployment was also brought up.
Responding to questions by Mr Tay and Non-Constituency MP Leong Mun Wai, Dr Tan said that he understands the anxieties Singaporeans feel in a rapidly changing world that may lead to mismatches between employer needs and workers’ aspirations.
Mr Leong said that underemployment can still co-exist with a low unemployment rate, and called for the Government to track skills-related underemployment in which professionals are overqualified for their jobs.
While he acknowledged that there were no internationally accepted ways to track the phenomenon, Mr Leong suggested that MOM could track Singaporeans who took pay cuts, no longer have the same seniority in their jobs, or those involuntarily employed as contract or part-time workers.
Dr Tan said there remains no internationally accepted way to do so, but that MOM is working with the International Labour Organisation to develop such measurements. Meanwhile, he pointed out that Singapore’s resident time-related underemployment rate, which refers to individuals who are working part-time but willing and able to engage in additional work, is low and stable.
Averaging at 3.1 per cent over the past decade, and at a low of 2.3 per cent in 2024, this is lower than in many other developed economies, like the UK and Finland, he said.
Meanwhile, the incidence of discouraged workers – workers who have given up searching for work – declined from 0.4 per cent in 2023 to 0.3 per cent in 2024.
Dr Tan said the majority of these workers were seniors, whom the Government is now helping to upskill for new job opportunities.
Mr Leong also cited anecdotes, including one of a former senior vice-president in a bank who became a private-hire driver, as examples of skills-related underemployment.
To this, Dr Tan said that such anecdotal examples must be used and extrapolated with care, as only 1.1 per cent of the resident workforce works primarily as private-hire car drivers. Over six in 10 of them do so out of preference for the job’s flexibility and not because they cannot find permanent work, according to a survey by the ministry.
Dr Tan added that some workers have personal reasons for taking on jobs that may not match their qualifications, such as passion, lifestyle goals or caregiving needs.
“We respect these choices, and we want those who are underemployed voluntarily to have a range of jobs to choose from to suit their needs and their aspirations.”
The survey also showed over nine in 10 self-employed persons, such as insurance agents, real estate agents and taxi drivers, who did such work as their primary livelihood preferred such arrangements.
“Among them are degree holders who willingly take on the jobs that typically do not require a degree because either they found the current work meaningful because it suits their needs, or maybe it gives them the flexibility that they want.”
He added that if underemployment was widespread, the overall share of PMETs in the workforce would be much lower than the share of tertiary-educated workers, which has not been the case.
Still, Dr Tan acknowledged that the data may not reassure those who are feeling anxious or who may have personally experienced difficulties – be it in their livelihood, in searching for a job or one that matches their expectations, or in finding purpose and meaning in life.
“Let me assure every fellow Singaporean: For those in this phase of your career journey, you are not alone... We have a wide range of programmes to help you stay up to date in the job market, for you to stay employed, for you to stay confident, for you to seize good job opportunities,” said Dr Tan.
