Work pass changes unlikely to affect plans of foreign firms, but companies caution against anti-foreigner sentiments
SINGAPORE: International companies in Singapore said the Government’s move to raise the minimum salary requirement for foreign workers will not affect their plans here, as many firms already make an effort to hire locals.
When they do turn to foreigners, firms said it is often because specific expertise or language skills are needed.
“It is the non-availability of the specific skills, experience and expertise that makes you go for an EP (Employment Pass), and not a case of salary economics,” said Mr KV Rao, the Southeast Asia resident director of Tata Sons, which has 20 subsidiaries in Singapore.
For instance, in its subsidiaries NatSteel and Voltas, Mr Rao said it is hard to find locals for jobs that require them to go out to the field, such as civil engineers, construction supervisors and maintenance workers.
Apart from Tata Consultancy Services, a technology company, where about 40 per cent of its employees are locals, the bulk of workers in its other businesses are mostly made up of Singaporeans and permanent residents, said Mr Rao.
He added that most of the company’s EP holders were already paid above the minimum salary threshold.
The Ministry of Manpower had announced last month that for new EP holders, the minimum qualifying salary will go up by S$600 to S$4,500 in September, with a higher criteria for the financial services industry.
READ: Minimum qualifying salary to rise by S$600 for Employment Passes and S$100 for S Passes, higher requirement for financial services
Mr Ravi Shastri, Southeast Asia and Taiwan managing director of Thermo Fisher Scientific, said that the company has “a good diverse talent pool which is primarily made up of local talent from various backgrounds”.
“A minority of the workforce is made up of global talent due to the nature of being an MNC (multinational corporation) and Singapore being a regional hub for Thermo Fisher Scientific,” he added.
“Just as we have foreigners here on rotation, we have Singaporeans in other offices overseas as part of their career development plan,” Mr Shastri said.
The medical technology giant has been in Singapore for more than 30 years. Thermo Fisher said it has 1,600 employees here and plans to expand its workforce by another 400 “very soon”.
Both Tata and Thermo Fisher did not give the breakdown of their foreign and local workforce.
TALENT TRANSFER TAKES TIME
Heads of business chambers and analysts agreed that the recent changes to the labour policy are unlikely to alter the course of foreign companies in Singapore because the take-home pay is already above the minimum requirement.
Most foreign companies bring in foreigners when there are not enough local workers to perform a certain role or for a leadership position, said Mr Lee Quane, ECA International’s regional director of Asia.
“These are generally critical roles where the employee adds value to the company’s existing Singapore workforce through skills or knowledge transfer or where they are creating business for the company, and adding to Singapore’s economy by performing a role where the company is not able to source a person with the requisite skills locally,” he said.
"These types of roles typically require the employee being relocated to Singapore to possess skills and experience which means that the salaries they will earn will generally be in excess of the minimum wage requirements.”
Tata’s Mr Rao said that practically speaking, a company’s first choice is always to hire a local. Bringing in a foreigner always costs more, he emphasised, as the organisation has to provide them with allowance for housing, education for children, insurance and other living expenses.
Foreigners in Tata are here to take on senior positions that it cannot find locals to fill, he said.
“To be at the senior level, you need somebody with a track record and relevant international experience,” he said, adding many Singapore residents have risen to senior positions in Tata subsidiaries as well.
“The talent transfer is ongoing, but it is not overnight,” he added.
According to Dr Hsien-Hsien Lei, chief executive of the American Chamber of Commerce (AmCham) in Singapore, American companies want to promote local talent but find it a challenge to do so right now.
She pointed to a manpower report that will be published by the chamber this month, which found that among half of the 127 companies surveyed, Singapore residents filled up only half or fewer of their senior level positions, that is, manager and above.
When asked what prevents them from hiring a local for these roles, 89 per cent of the companies said that the candidates lack necessary specialised skills or work experience.
For entry-level positions that require fewer than five years of professional experience, 47 per cent of the 127 companies said they had to hire a foreigner because the applicant lacked the technical skills essential for the job.
“But … definitely the conversation and this change is a reminder to our companies that we need to be more mindful of hiring practices, and overall workplace diversity," Dr Lei said.
Companies CNA spoke to stressed that they are making significant efforts to hire and train locals.
Tata Consultancy Services has offered fresh graduate and mid-career jobs through the Infocomm Media Development Authority's TechSkills Accelerator initiative, Mr Rao said, and most recently, it made available another 100 traineeships to polytechnic and university graduates through the SGUnited jobs scheme.
Thermo Fisher said it has been part of Workforce Singapore’s professional conversion programmes and SkillsFuture’s work-study programme - formerly known as the earn and learn programme - since 2017.
SINGAPORE’S EDGE BEING OPEN TO THE WORLD
Industry players and observers all said the tightening of foreign workforce requirements will not affect Singapore’s standing as an international hub, as it remains a place that is business-friendly.
“The whole world is a mess. If we’re looking at mitigating risks … I don’t think there’s a better place at the end of the day,” Dr Lei said, citing qualities such as Singapore’s transparent economy and digital networks.
Singapore’s generally low unemployment rate - the resident figure stood at 4.1 per cent in July amid COVID-19 - is another sign that companies are still entering the country and creating jobs for locals, CIMB Private Banking economist Song Seng Wun said.
They cautioned, however, that Singapore should not take its reputation for granted, and that any perception that the country is turning inwards will cause it to lose its competitive edge.
Expatriates interviewed in recent news reports and those who commented in online expatriate community groups have indicated growing difficulty in finding a job in Singapore during the COVID-19 downturn, as firms tell them they need to prioritise locals. Some said they feel less welcomed in Singapore.
“Foreign talent has even been described as 'ballast' which can be jettisoned in tough times. That is a dangerous populist message which undermines all that we have collectively built,” said Mr Victor Mills, the chief executive of the Singapore International Chamber of Commerce.
Instead, Singapore should ramp up efforts to attract entrepreneurs, innovators and researchers from across the world now to prepare for life after the pandemic, he said.
“Remember, all talent has choices. Why come here if they are not welcome? Singaporeans and their leaders took 50 years to build an exceptional brand,” he said, listing Singapore’s positive attributes like political stability and accessibility to Asian markets.
“The Singapore brand, like all reputations, was hard to build. Equally, like all reputations, it is easy to lose. We cannot, must not weaken our brand,” Mr Mills said.
Former Nominated Member of Parliament Mohamed Irshad, who represents the religious and youth communities, said that public perception of Singapore abroad could take a hit if anti-foreigner sentiments are allowed to take root, adding that the local community needs to understand that “it takes time to grow the talent”.
"(But) surely we will develop a globalised and competent Singaporean core," he added.
It is a message that Singapore’s leaders have been emphasising. Prime Minister Lee Hsien Loong said in Parliament earlier this month that even as the Government makes policy adjustments, it must not give the impression that it no longer welcomes foreigners.
Minister for Trade and Industry Chan Chun Sing also reiterated at a business forum that Singapore remains open to global talent.
“Let me be clear. We want the world’s best and brightest to be with Team Singapore – to augment our skills and capabilities, competing on our side rather than against us, and ultimately, to benefit Singaporeans, not to substitute or to hurt them,” he said last week.
SMALLER COMPANIES FACE CHALLENGES
While the tightening of foreign workforce policies will not have much of an impact for conglomerates like Tata that are firmly established in Singapore, many smaller companies may feel “stifled”, said Mr Rao, who is also the Singapore chair of the India Business Forum of the Confederation of Indian Industry, an association of Indian companies, banks and Indian government-linked companies.
He estimates that there are about 8,000 Indian entities registered in Singapore.
Dr Lei said that amid COVID-19, small and medium enterprises have been struggling. If hiring costs go up, they may have to “rethink their business model” and get the job done remotely instead of trying to get someone here.
Mr Brice Degeyter, the founder of sustainability startup Bizsu, said that while his current plan is to make use of government-issued job incentives to hire locals, there will be a time when he will need to hire a foreign worker.
“The company goal is to expand in other countries in the region. If we deal with companies in Thailand, it's important to speak Thai. As we are in sustainability, we need people who are knowledgeable on this topic. As we are close to the French community, it can be important to speak French,” said Mr Degeyter, who is a French employment pass holder.
“Can we find someone with at least two of these skills in Singapore? I would love to, that would be easier, but it's quite hard,” he said.
“If (policies are) too restrictive, they might leave Singapore and go somewhere else,” he added. “That's business lost for the country.”
“Over the long term, Singapore cannot be as attractive, fruitful and prosperous if it makes it harder for foreigners because it will lose its openness. And then everybody loses.”