Singapore Immigration: A Fair Consideration Framework?

Now that the Singapore Government has restricted access to foreign workers, companies, especially those in the Service and Manufacturing sectors, will have to brace themselves for a tougher time fulfilling manpower requirements. 

By James Clemence & Rekha Husbands

 

In response to growing concerns over rising living and housing costs, the Singapore Government has progressively tightened the immigration framework over the past few years to restrict access to foreign workers. Measures introduced to date include increasing minimum salary thresholds for work passes, increasing levies and reducing foreign worker quotas (applicable to Work Permits and S Passes) in industry sectors seen as being over-dependent on foreign workers, particularly Services and Manufacturing.
 
From 1 Jul 2014, companies in these sectors will feel the pinch of having to reduce their overall foreign worker population. The next hurdle for businesses will be the implementation of the mandatory advertising requirement under the Fair Consideration Framework on 1 Aug 2014, changing the way in which companies recruit skilled foreign staff. Despite the announcements made by the Ministry of Manpower (MOM) from last year to prepare companies for these changes, there is still uncertainty as to how the new framework will work in practice and the impact on businesses and the local workforce in Singapore.
 
 

Reducing the number offoreign workers

 
The Government has taken steps to encourage and incentivise companies to strengthen the pool of Singaporean employees at all levels and ensure that “Singaporeans remain at the core of the workforce,” says Minister for Manpower Tan Chuan-Jin.
 
Initiatives have been rolled out to help small- and medium-sized enterprises (SMEs) hire local talent and improve employee training, Continuing Education and Training (CET) strategies are in place to ‘upskill’ the local workforce, and the Workforce Development Agency (WDA) has a number of programmes and initiatives to assist individuals. WorkPro is a programme jointly designed by the MOM and WDA to recruit and retain mature workers and back-to-work locals, signalling an awareness that Singapore’s ageing population has fewer working citizens. The Job Flexibility Scheme, introduced in 2013, enables Work Permit holders in the Services sector to be flexibly deployed by multi-tasking across occupations within the same business, which is consistent with the Government’s aim of improving productivity.
 
Alongside the introduction of various initiatives, the Government is also tackling the perceived over-reliance on foreign workers, particularly in certain sectors, by tightening foreign worker quotas. The permitted ratio of foreign workers (S Pass and Work Permit holders) to local staff in the Services sector was reduced from 50% to 45% in 2012 and from 45% to 40% in Jul 2013, and the S Pass quotas (for mid-level skilled foreigners) in the same sector was reduced to 15% in 2013. Transitional arrangements have been in place since 2012, meaning that the reduced quotas have only applied to new hires up until this year. From 1 Jul 2014, employers will not be able to retain their foreign worker population above 45%; from 1 Jul 2015, the 40% quota will kick in across the board. Employers that have not calculated the number of foreign workers who can be retained beyond 1 Jul 2014 will need to do so sooner rather than later. The MOM has confirmed that they will start to cancel passes that exceed the main foreign worker quota (also referred to as the main Dependency Ratio Ceiling (DRC) after this date, and companies will have no say over which employees they wish to retain.
 
The Financial Services sector has come under scrutiny for employing individuals from overseas to fill professional roles, but there is a worry that the restrictions on hiring foreign workers will hit this sector at a time when companies are still trying to plug competency gaps and when certain Government initiatives are in their infancy.
 
 

To advertise or not to advertise

 

The Fair Consideration Framework will require employers to advertise roles to local Singaporeans for a minimum period of 14 days before being able to apply for an Employment Pass for foreign professionals working in managerial, executive or specialised jobs. The new requirement will apply to positions attracting a salary of between $3,300 and $12,000 per month, and positions must be advertised on a new Jobs Bank portal. An advertisement can run for a total period of 90 days and should not be older than three months from the date of closing at the time an Employment Pass application is submitted. The MOM has also confirmed that one advertisement can be used for multiple vacancies as long as the role is the same as that specified in the advertisement, which will be a relief for companies operating graduate recruitment programmes, for example.
 
There are exemptions to the advertising requirement, such as for jobs commanding a salary of more than $12,000 per month. Many companies will continue to raise the bar in order to attract the best candidates; this could lead to companies raising salaries for experienced foreign nationals, for example, where there is a skills shortage in areas such as risk, compliance and audit. The second exemption is for Intra-Company Transfers (ICTs), who will be able to transfer from overseas companies to linked entities in Singapore, provided they have worked in the overseas office for at least one year and will be carrying out a professional, executive or specialist role that meets MOM criteria, or a manager with specific responsibilities. Employees should not be filling full-time permanent positions in Singapore, but there is no limit on how long employees can remain in Singapore under this route.
 
Other exemptions from the advertising requirement include companies that employ fewer than 25 people, Employment Pass renewal applications and individuals switching from an S Pass or Personalised Employment Pass, provided that they are working for the same company. These carve-outs are welcome, but—according to a survey by JobStreet.com last year—54% of the employers who were surveyed did not believe that the new Jobs Bank will help them in their recruitment process, and a third of respondents believe that the new advertising requirement will cause a delay in hiring. The survey also revealed that SMEs and companies in the Construction, Service, and Manufacturing industries—where jobs are not popular with locals—expect to be affected, as companies that require immediate staff placement will have to wait an extra two weeks.
 
In practice, the delay in hiring could be longer than two weeks. If employers are expected to carry out a fair test of the labour market, it follows that companies will need to conduct interviews over a period of time if local candidates have applied for positions via the Jobs Bank. There have been complaints from members of the public in recent months regarding advertisements that appeared to be discriminatory towards Singaporeans, and which resulted in the companies concerned to be fined and forced to make a public apology. These companies were also barred from hiring foreign nationals for 30 days. Employers need to be mindful of this when advertising a position as there may not be any specific guidance from the MOM as to what documents an employer should produce as evidence that a proper labour market test had been carried out. It is inevitable that companies will come under scrutiny if there is a complaint from a member of the public or a local candidate who was not successful in getting a job.
 
While this mandatory advertising requirement may lead to delays in hiring and the curbs on the number of foreign workers will hit certain industries in Singapore, it is questionnable whether these measures will create a fair or fairer employment market for Singaporeans.
 
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