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SINGAPORE BUDGET 2020

EP minimum salary goes up to S$3,900 from May 1 this year

For EP renewals from May 1 next year, older, more experienced candidates will need to earn much more than the S$3,900 minimum

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From May 1, the monthly minimum salary for the Employment Pass (EP) will rise from S$3,600 to S$3,900 to keep up with the improving pay of fresh graduates from local autonomous universities.

Singapore

FROM May 1, the monthly minimum salary for the Employment Pass (EP) will rise from S$3,600 to S$3,900 to keep up with the improving pay of fresh graduates from local autonomous universities.

Explaining the regular update of the EP salary criteria, Manpower Minister Josephine Teo said on Tuesday the criteria "take reference from salaries of locals with similar experience and seniority to ensure that EP holders are of good calibre and do not undercut wages of our local PMETs (professionals, managers, executives and technicians)".

That's why older and more experienced EP candidates need to command higher salaries in order to qualify for the pass, Mrs Teo said. "It keeps the competition fair."

Thus, the salary criteria for older and more experienced EP candidates will be raised in tandem.

"For example, an EP applicant in his early 40s will need to earn around double the new minimum qualifying salary of S$3,900," she said. "This is only fair, considering the skill sets he or she is expected to have. It helps to ensure a level playing field for experienced local mid-career PMETs."

While the new salary criteria comes into effect on May 1, for EP renewals, they will apply one year later, from May 1, 2021. Mrs Teo said this staggered approach will ease the impact on businesses. The minimum EP salary was last increased from S$3,300 to S$3,600 in 2017.

Mrs Teo also announced that the Local Qualifying Salary (LQS) will be raised by S$100 to S$1,400 monthly from July 2020. She added that most employers of foreign workers are not affected by the latest hike because they do not have local workers earning below S$1,400 monthly.

The LQS was introduced to ensure that firms do not hire locals on a token pay just so they can hire more foreign workers. Only workers paid above the LQS can be counted towards a firm's S Pass and Work Permit dependency ratio ceilings.

"We have been regularly updating the LQS to ensure that it keeps pace with rising local wages at the lower end," Mrs Teo said during the debate on the Ministry of Manpower's (MOM) budget. The LQS last jumped from S$1,200 to S$1,300 monthly in July last year.

The minister also warned firms that raise salaries of EP holders to meet the new salary criteria, while freezing salaries of local workers even if they are better performers, that they risk having their work pass privileges cut back. She said they also undermine their efforts to retain local employees.

Responding to the higher EP salary criteria, Erman Tan, CEO of Asia Polyurethane Manufacturing, said the increase is a "stepped progression, but not too big".

"I think it's a progression to help us understand that we should give locals priority," he added. "There are many good schemes available to groom local talent. It's good to take this opportunity to put in place a more structured plan. Especially with the coronavirus situation, there's a lot of lax capacity, people are more free now with the slowdown in business."

But Poh Ah Seng, managing director, Seng Hua Hng Foodstuff, said it's tough to find good local workers: "Singaporeans are difficult. They want to work 8-5. For foreigners, they would get it (the work) done before they go back."

He noted that his firm would have to automate, "upgrade everything, do parts in other countries".

A businessman, who asked not to be identified, questioned the timing for the increase in the salary criteria.

"This is not a good time to implement this," he felt. "When this is implemented for foreign workers, all the Singaporean wages will go up. If they (the wages) don't go up, they (the Singaporean workers) will leave. So, in the end, how?"

Touching on the Fair Consideration Framework (FCF), which now carries stiffer penalities for unfair hiring and discrimination at work, Mrs Teo said that MOM has taken action against 18 more employers since January, when it released details of five employers penalised under the framework.

She said this brings the total to 23 employers sanctioned under the new penalty framework in just over two months. They will be barred from hiring new foreign workers or renewing existing ones for at least 12 months and up to 24 months.

"A 24-month debarment is actually quite painful," Mrs Teo pointed out. "Most of the work passes will expire during this period, but none can be renewed. Neither can the employer hire new foreign workers."

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