Will raising EP salary thresholds lead to better outcomes for local PMETs?

THE salary threshold for the Employment Pass (EP), which will go up to S$5,600 from Jan 1, 2025, has been rising at a much faster clip in the last four years than in the decade pre-pandemic.

Back then, increments were a relatively modest S$300 that took effect about once every three years or so. In 2020, however, moves to tighten foreign manpower rules turned a shade more aggressive at the height of the Covid-19 pandemic. The minimum qualifying monthly salary was first raised to S$3,900 in May, from S$3,600, followed by another round to S$4,500 in September. A new higher threshold was also created for the finance sector in December the same year. By September 2022, the general qualifying salary had gone up to S$5,000.

Perhaps it is unsurprising that salary thresholds have gone up more steeply in recent years, given the rise in nominal wages and elevated inflation. Even so, it’s refreshing to hear that businesses are sanguine about the cost impact of the higher threshold this time around. Industry watchers told The Business Times that it is likely companies are already paying their EP holders “market rate” and at levels that exceed even the new threshold, whereas most small and medium enterprises (SME) have likely already been priced out of the EP market anyway.