Singapore looks to curb hiring of expats

Singapore looks to curb hiring of expats

LUBNA KABLY, TNN | Jan 10, 2014, 02.11AM IST

MUMBAI: Singapore has joined the bandwagon of protectionist regimes when it comes to employment of foreign workforce. A revised monthly salary structure for expats has already kicked in. Further, from August, those wishing to hire expats will need to first advertise for local (Singaporean) employees.Indian companies deputing employees from India to work in Singapore, or even subsidiaries in Singapore seeking to hire Indian employees will need to have a relook at their salary structures.
Singapore is an important hub for the Asia-Pacific region. Mega corporate groups like the Tatas, the Birlas and Reliance have subsidiaries or operations in Singapore. Large IT players like Wipro, Infosys and TCS also have Singapore-based subsidiaries.

Majority of the expats to Singapore are sent on an Employment Pass (EP) visa. From January 2014, the minimum monthly qualifying salary for new EP visa applications has been raised by 10% to Singapore dollars (S$) 3,300 or nearly Rs 1.62 lakh per month. Young graduates from good educational institutions will qualify for an employment pass if they earn this minimum prescribed salary.
“It will not be enough to just meet the minimum income requirement for experienced employees. Higher salaries will need to be paid to more experienced personnel, depending on the level of their experience and the quality they are expected to provide,” explains Grahame Wright, partner, EY-Singapore.
Indian IT firms and other companies that have operations in Singapore admit that a relook at salary structures may be required. For instance, the current monthly salary structures in the IT sector vary widely, upwards of S$2,500 (Rs 1.20 lakh) depending on the role, qualification and experience of the employee.
The revised salary norms apply not just to those hired by Singapore subsidiaries but also to employees deputed to Singapore, even if they remain on the payroll of the Indian company.
“The term, ‘fixed monthly salary’ includes basic salary and other fixed monthly cash payments. To meet the salary requirement, companies can review how the compensation is delivered to the employees. For example, housing cash allowance which will meet the definition of ‘fixed monthly salary” can be paid to the employees instead of a provision of housing benefit,” explains Wright.
Another category of visa application, the S Pass, prescribes a lower minimum monthly salary of S$2,200 or Rs 1.07 lakh. However, this visa is meant for mid-level personnel and only a limited number of S Pass holders can be hired by a Singapore company. Typically, holders of S Pass also cannot bring their families with them to Singapore.
“Indian companies are more concerned about the ‘Fair Consideration Framework’, which requires local Singaporeans to be considered first for employment opportunities. Our training costs will rise as such hires will not be acquainted with our processes,” says the HR head of a large corporate group.
From August 1, 2014, before an employer submits a new EP visa application, the job vacancy is required to be advertised on the designated jobs database managed by the Singapore Workforce Development Agency. Certain exemptions are available and this requirement is not applicable to employment pass renewals, S Pass or even work permit applications for unskilled workers.
It is expected that companies who hire a larger proportion of foreign employees could come under some scrutiny and they may experience additional challenges in the approval of employment passes, says a Singapore immigration consultant.