8-7-2024 (SINGAPORE) As the employment pass renewal season kicks into full swing in Singapore, the city-state’s new points-based system for foreign workers has become a hotly debated topic, dominating conversations at after-work gatherings. Effective from September, overseas employees on work visas will need to fulfill the new criteria, which includes meeting minimum salary thresholds to maintain their jobs.
While the move mirrors practices in other countries, concerns have been raised about the potential impact on foreign companies and Singapore’s image as a global business hub. The programme, announced in 2022, aims to assess the complementarity of employment pass holders with the local workforce.
Under the new system, points are awarded based on factors such as a candidate’s salary in comparison to their Singaporean peers, their education and skill levels, and whether their nationality contributes to the diversity of the firm. This shift places the onus on employers to justify their need for hiring foreign talent.
The government’s emphasis on catering to the local population’s employment needs is driven by the recognition that job security for citizens is a crucial issue. In 2020, resentment over foreign workers led to the ruling People’s Action Party’s worst performance since independence, underscoring the political significance of the matter.
With the country undergoing its biggest leadership transition in history and elections expected by the end of the year, the issue of safeguarding jobs for Singaporeans has emerged as a potential vote-winner, prompting both the opposition and the ruling party to raise the topic whenever polls approach.
Protecting jobs for citizens is not an unusual practice, as countries like the UK and Canada also implement measures to strike a balance between foreign and local workforces. For many sectors in Singapore, hiring Singaporeans makes sense, given the population’s high educational attainment and consistent top performance in international assessments of math, reading, and science.
However, for a government that champions an open and free economy, the perception that it is restricting job opportunities for foreigners, after a history of relative ease, could potentially do more harm than good.
Hsien-Hsien Lei, chief executive officer of the American Chamber of Commerce in Singapore, acknowledged that the new rules are more transparent but cautioned that they have made it harder for US firms to find suitable candidates. “At times, we do feel that the talent in Singapore may not be ready for senior-level jobs,” she told me. “Those require different levels of exposure and specific skill sets. It’s a small country with a limited and shrinking workforce.”
Data from AmCham’s 2023 Manpower survey supports this sentiment. While the new framework provides predictability, certainty, and transparency, companies have expressed lower confidence and increased uncertainty about whether it will allow them to access the talent they need.
The new regulations could also impact companies’ decisions to establish their regional headquarters in Singapore, according to recruitment firms. Additionally, Singapore is no longer perceived as a place where foreign talent can start or develop their careers, a stark contrast from a decade ago.
For many locals, the changes are long overdue, addressing the sentiment of feeling like second-class citizens in their own country, passed over for jobs they are capable of performing. There has been rising frustration with the perceived preference for recruiting foreigners and a desire for policies that encourage the hiring of Singaporeans, seen as a way to address discontent and growing income disparities.
The changes seem to be yielding results, with employment growth for residents in the first quarter of 2024 higher than in previous quarters, while non-resident employment contracted for the first time since the third quarter of 2021, driven mainly by jobs in the construction and manufacturing sectors.
The government faces a delicate balance between keeping the economy open while also helping the local workforce achieve their career aspirations. The Manpower Ministry highlighted the availability of work permits for foreign staff, including the Overseas Networks and Expertise Pass created for top talent. It also noted that the number of people granted permission to work, overseas investment, and the number of foreign firms seeking to establish regional headquarters have continued to grow.
However, the reality is that the government’s focus on foreign talent is likely to fade as an easy fix for a ruling party that has enjoyed enviable political support for almost six decades since Singapore’s independence. Citizens could instead demand that their leaders address more pressing issues such as the rising cost of living, income inequality, and the brutally competitive education system.
