Dependant's Pass moves could hurt startups, limit talent

Singapore

CONCERNS have been raised that the moves to tighten employment conditions for Dependant's Pass (DP) holders could hurt startups, underutilise dependants' skills and contributions, and dampen openness to talent.

Elena Chow, founder of startup talent consultancy ConnectOne, told The Business Times that the changes have created "a lot of buzz, and some concerns" in the startup community since their announcement.

Dependants of EntrePass and Employment Pass holders now apply for a Letter of Consent (LOC) if they wish to work in Singapore. They are exempt from the quotas, levies and minimum salaries imposed on work pass holders. But from May 1, DP holders will need work passes.

Manpower Minister Josephine Teo has said DP holders employed on LOCs form only 1 per cent of work pass holders in Singapore. But Ms Chow says that because startups tend to hire more such workers, they will be disproportionately affected.

"Startups with fewer than 100 employees generally have at least a few DPs on LOCs," she said. "Given our resource crunch, every single talent is very important."

She added that early-stage startups are cash-strapped. While the minimum-salary requirement for Employment Pass holders is S$4,500, older and more experienced candidates command higher salaries that many startups cannot afford.

She is thus wondering why the policy changes are necessary, when such dependants form only a small fraction of the total workforce.

"If startups cannot hire someone in Singapore with the right skills and at affordable costs, they will tend to look at hiring people remotely. Once that shift happens in our strategy, it will be difficult to return to hiring in Singapore. That will certainly impact jobs in Singapore, in the long term."

Another question is if the changes are a missed opportunity to encourage workforce participation among foreigners already living in Singapore, amid a shrinking workforce.

Chua Hak Bin, Maybank Kim Eng's senior economist, said: "I think it's a wasted resource, not allowing dependants who are already living in Singapore from contributing to the economy and society. This will further shrink the pool of foreign workers available and worsen the shortages in many sectors, as many foreign workers have already left the country over the past year."

Others who spoke to BT suggested that some professionals may now think twice about relocating to Singapore. Amarjit Kaur, a Withers KhattarWong partner who focuses on employment matters, said: "If the main applicant and spouse are banking on dual incomes to support their family in Singapore, making it harder for the trailing spouse to be gainfully employed or to run a small business, may act as a dampener."

Federico Donato, president of the EuroCham (the European Chamber of Commerce in Singapore), said he has received feedback from members of the European community. "Percentage-wise, this should involve only a limited number of individuals, but it may be misinterpreted as a sign of closure, for a country that invested decades to create unmatched goodwill, a reputation for openness and ease of doing business, envied by many global competitors."

He added that the dependants most affected are unlikely to compete with locals for jobs. While EuroCham would need to study the issue, his early sense is that many DP holders work part-time and temporary jobs in areas like school community service, and teaching of foreign languages.

Hsien-Hsien Lei, the chief executive of AmCham (the American Chamber Of Commerce), said: "The announcement took the AmCham community by surprise. While we respect the Singapore government's prerogative to align work-pass requirements for foreign talent, DP holders are a unique group."

She added: "Many DP holders have advanced degrees, skills, experience and capabilities and can fulfil niche needs and contribute to the growth of Singapore's economy. However, due to circumstances, they often require flexible working arrangements including part-time or contract work, which the LOC accommodated."

But along with the concerns raised are some upsides. Withers KhattarWong's Ms Kaur said: "Given the relatively low proportion of LOC holders, whether this move is necessary is debatable, but it does introduce consistency and level the playing field by eliminating a backdoor that has allowed spouses to bypass work-pass requirements."

Adeline Sim, executive director of HRnetGroup said: "It increases transparency and clarity, which is always a good thing. The legacy LOC scheme could have resulted in Singapore having many more foreign workers than the work-pass policies provide for."

Charles Ferguson, general manager for the Asia-Pacific of HR solutions firm Globalization Partners, said that for some dependants, the changes could be a "blessing in disguise", because obtaining a work pass would give the family greater certainty of stay in Singapore, should the main pass holder suffer a job loss. He also thinks the changes are a "necessary adjustment" to ensure Singapore can balance opportunities for its own people and foreign talent.

That said, Mr Ferguson, whose firm specialises in remote-hiring solutions, agreed the change could push businesses into looking for new hiring models to ensure long-term success in talent acquisition.

"These moves require deep analysis of the possible ripple effects they can cause," he said. "The knock-on effects need to be carefully monitored, and if needed, revisited."

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