Assoc Prof Jamus Jerome Lim (Sengkang): One common concern Singaporeans have is the sense that foreign talents do not compete on a level playing field with our local graduates.
Some are frustrated with how foreign companies seem to favour hiring their own nationals, perhaps even simply going through the regulatory motions with a designated candidate already in mind. Others point to how international companies place a greater weight on qualifications acquired from their home countries. Yet others flag how foreign hires are favoured because they are willing to work for lower salaries than the prevailing market rate.
The Ministry has tried to address some of these issues. The Fair Consideration Framework is designed to arrest discriminatory job advertising. MOM has also instituted foreign worker quotas and levies for S Passes and the points-based COMPASS for assessing EP hires. Ostensibly, the raised salary cap was an effort to keep foreign talent earnings in line with PMET wages locally.
It is unclear whether these strategies have been successful. Between 2014 and 2021, the TAFEP received an average of 379 complaints a year, but only a third warranted additional investigations and a mere 41 were found in breach of guidelines.
If there is no underreporting, this seems to suggest that alleged cases have no merit. Yet, the sentiment about unfair foreign competition in the workplace stubbornly remains. Part of the reason is that the various restrictions on hiring foreigners do not appear to have contained their increase. The skilled foreign workforce has steadily grown over the 2010s and it took the shock of COVID-19 before we saw a scaling back.
One resident I spoke to even shared that it was only during this period that he was meaningfully considered for jobs that he had long been qualified for. Another resident shared her belief that the salary cap may have inadvertently led to accelerated pay raises for foreign hires at her workplace as her company chose to pay foreign workers slightly more rather than incur the additional cost of hiring a new local.
Existing solutions to spur local hiring appear to be targeting only symptoms. But the reason favouring the hiring of a foreign talent is that simply, without CPF, foreign talents are often just cheaper.
There are good reasons why the Government may not wish to offer CPF for foreigners. After all, the system was designed and meant for locals. Incorporating potentially transient account holders into the system could also mess with actual real assumptions and the goal of stable, long-term returns. Enfolding foreigners into CPF could easily turn into an unnecessary logistical and financial nightmare.
Yet, there is a simpler solution. We can set aside the CPF-equivalent payouts into individual specific accounts under an escrow, which will be returned to the foreign worker once they depart. We will not be shortchanging them in any way other than the modest amount of potentially foregone returns. If this is a significant concern, we could place the escrow principal into an ultra-safe, highly-liquid asset, such as Singapore Government Securities, which offer the prevailing market risk-free interest rate.
No additional management of these funds will be required beyond tracking the account holders as well as their outstanding balances, and disbursing the amounts when the worker leaves the country for good. Of course, a small administration fee may be levied for this purpose annually.
Other jurisdictions with large foreign worker populations, such as Saudi Arabia and the United Arab Emirates, already have schemes in place that are similar. This approach will go a long way towards rebalancing the perceived wage differential between the foreign and local workforce.
Ministry of Manpower
6 March 2025
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=budget-2612
The Chairman: Assoc Prof Jamus Lim.
Assoc Prof Jamus Jerome Lim (Sengkang): Sir, I appreciate Minister Tan’s suggestion that there is an existing mechanism – the qualifying salary for S Passes and Employment Passes (EPs) – that may fulfil a similar function to levelling the wage incentives faced by employers choosing between the foreign versus local hire.
But respectfully, I believe that this would only work in a special case when wages for a given position are lower than the S Pass or EP threshold, which is currently set at $3,300 and $5,600 a month, although this adjusts upward with age and for rehires. But as long as the market wage exceeds this floor, which it could, for any given job in any given sector, although I acknowledge Minister Tan’s point that it is pegged to the top third of overall salaries, then we could encounter a situation where a local could still be outcompeted by a foreigner so long as that Singaporean cannot accept a take home salary that is too low compared to a foreigner who is willing to accept a slightly lower gross income, but still receives a take home salary that is higher, just because —
The Chairman: Assoc Prof Lim, do you want to get to your clarification?
Assoc Prof Jamus Jerome Lim: I understand. So, the question is, if the Minister could explain how the qualifying salary in such instances would address this situation?
Dr Tan See Leng: I thank Assoc Prof Lim for his clarification.
My personal view, and I am not an economist, but I think he looks at it from a fairly theoretical and academic viewpoint. In reality, today we have a very tight labour market. I have repeatedly stated in this House that our businesses, our SMEs, our large local enterprises, these are owned and run by Singaporeans too. They have constantly harped on the fact that there are significant manpower constraints, resource constraints for them to grow and expand their business.
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So, in this kind of very tight labour market, when you peg it at the qualifying salaries at the top one-third of the respective sector, we are not setting up a new forward projected qualifying salary. The way we set the benchmarks is based on the prevailing salary of the top one-third of the EP and S Pass holders. [Please refer to “Clarification by Minister for Manpower“, Official Report, 7 March 2025, Vol 95, Issue 160, Correction By Written Statement section.]
At those levels, what we have seen consistently – and this is real, the numbers, the statistics do not lie – over the last 10 years, I have stated, notwithstanding the fact that we have this qualifying salary, from 2014 to 2024, the number of EP and S Pass holders increased by 38,000. But over that same corresponding period, the number of residents holding PMET jobs increased by 382,000. This is a ratio of 1:10. I mean, that is our real experience.
For the record, in June 2024, the unemployment rate for Singapore Citizens was 2.8%, which is amongst the lowest in the world. And our definition of unemployment is at that spot in time.
If you look at our long-term unemployment, it is around about 0.7%, 0.8%. Long-term unemployment is defined as someone who is unemployed for more than six months. So, if you take off the unemployment rate of about 2.8%, let us say, take away the long-term unemployment rate of 0.7% or 0.8%, that 2% delta is actually churned within six months – these people find a new job, or they find something that fulfils their calling and they get on to a new career, perhaps to a new calling.
So, I want to again emphasise today: does anyone think that we have an issue? Our issue is a very, very tight labour market. We have Mr Mark Lee here, our Nominated Member of Parliament, who has repeatedly called for the Government to help businesses. He is from the SBF. You could check with him after this debate to see how tight the situation is.
Ministry of Manpower
7 March 2025
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=budget-2619
Office of the Leader of the Opposition 