Jurisdiction - Singapore
Singapore – “Manpower-Lean Economy”, Implications For Employers.

10 July, 2013


Legal News & Analysis – Asia Pacific – Singapore – Labour & Employment


Employers in Singapore will have noticed since last year that work passes for foreign employees are not being granted as a matter of course. Businesses that hoped the tightening of work passes was a temporary phenomenon will by now know that this is unlikely to be relaxed in the foreseeable future, following the Acting Minister of Manpower's speech in March 2013 that Singapore must adopt”manpower – lean economy".


This policy has been adopted in response to slow productivity growth against the government's goal of 2-3% growth per annum. Yet in 2012, the number of foreign workers in Singapore grew by 67,000. The conclusion was that there has been an over-reliance on cheaper foreign talent without a corresponding increase in productivity output, which is unsustainable in the long run. Singapore employers must therefore learn to adapt to the manpower-lean economy which means doing more with fewer workers.


With fewer workers, the government has announced a number of policies including to increase skills and alleviate the cost of wages. In particular, there are two broad lines of policies which employers should be aware of – the "Singaporean core" policy, and better statutory protections for more workers in particular junior Professionals, Managers and Executives (PMEs).


"Singaporean core"


The "Singaporean Core" policy was first introduced in 2011 as an additional policy in the Tripartite Alliance Fair Employment Practices (TAFEP) guidelines which are generally aimed at anti-discriminatory practices, regardless of nationality, such as recruiting based on criteria not directly relevant to the job. However, the Singaporean Core policy, while recognising the importance of foreign talent, provides that Singaporeans remain at the core of the workforce and requires employers to make reasonable efforts to attract and consider Singaporeans for job positions on merit, and to train and develop their potential and careers. The policy does not require employers to hire only Singaporeans, but if deciding between a foreign and Singaporean candidate of about equal merit, employers are encouraged to hire the Singaporean. This policy is concerned in particular with the junior PME segment, to encourage employers to hire Singaporean junior PMEs who might otherwise lose out to similarly qualified foreigners who are prepared to work for less pay. The government's target is to keep the foreign worker component in Singapore to approximately one- third of the total workforce.


Although the TAFEP guidelines do not have the force of law, MOM has been effectively enforcing this policy by tightening up work pass criteria for foreign workers. For example, salary levels for employment pass and personal employment passes have been raised to $3,000 and $12,000 respectively (from $2,800 and $8,000 respectively). The salary threshold for S-pass which is the most junior level work pass for non-manual workers is likely to be raised from its current S$2,000 to $2,200. MOM has also stated that recalcitrant employers who discriminate against hiring or promoting Singaporean workers will have their work pass privileges suspended.



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