Businesses fear Singapore may lose some of its allure for multinationals after the government’s move to tighten the criteria for foreign Employment Passes (EP).
Hiring foreign executives is set to get tougher for businesses. To pass, an applicant will need a higher minimum pay, and to have higher educational qualifications.
Irvin Seah, a senior economist with DBS, said: “It makes sense to tighten qualitative criteria such as employment experience and education credential in line with the salary adjustments. In addition, the minimum salary levels were set back in 2001 and they have not been adjusted for inflation over the last decade.
“This indirectly has created an uneven playing field at the expense of Singaporean workers who have bore the brunt of the rapid rise in cost of living. So, apart from an attempt to reduce the inflow of foreign workers, this is also an attempt to improve the quality of foreign workers over time.”
The move targets those in the mid-level range, which worryingly for businesses could mean the ranks of senior executives to managers.
Phillip Overmyer, CEO of Singapore International Chamber of Commerce (SICC), said: “Where the problem comes in is (that) part of being a global headquarters is that you are bringing in to Singapore a wide range of people from all over the world, so that their up-and-coming employees can learn about Asia, and hands-on learn about Asia.
“As some of these people are going to be down a couple of tiers in the organisation, if they don’t meet the right criteria, this could create problems for companies using Singapore in this way.”
Small and medium-sized enterprises (SMEs) have also expressed their worries.
A tighter supply of labour could lead to higher costs, especially in the services industry, according to Lawrence Leow, president of the Association of Small and Medium-sized Enterprises (ASME).
According to the Singapore Business Federation (SBF), a recent survey indicated that SMEs currently find it hard to expand their operations and a tightening in the Employment Pass criteria could make it harder.
Ho Meng Kit, CEO of Singapore Business Federation, said: “If the tightening of the Employment Pass criteria translates into a reduction in the number of employment passes issued, in addition to the recent increase in salary bands for this category of workers, businesses that hire EP holders will be impacted.
“The tightening of work permits quota and the progressive increase in foreign worker levies are already having a bearing on businesses, particularly SMEs.”
With upward pressure on wages, this could also mean higher inflation and a higher cost of living.
Song Seng Wun, regional economist at CIMB Research, said: “The chances are that for businesses, overall cost will likely rise, because they would have to raise wages to attract, say, more residents to work in areas which they may not necessarily have worked before.
“A good example is nursing. At this juncture, the wage level is not that attractive for many locals to want to enter into nursing but they are attractive enough for foreign nurses to come.
“We are expanding in healthcare and they would need to have to hire for various positions, so it looks like cost of healthcare could rise.”
The proposed move comes at a time when the economy is slowing down. This means the impact from such a move could be cushioned in the short term because businesses are expected to hire fewer employees over the next few quarters.
Over the long term, some observers believe Singaporeans will benefit.
Seah said: “There could be some impact in the form of higher labour cost in the near term. But as the degree of tightening is unlikely to be drastic, the impact will be limited.
“But importantly, as the policy tightening is unlikely to be reversed in the near future, companies may be encouraged to hire locals instead. And this is particularly true in the mid-skilled labour category.”
- CNA /ls
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