Singapore – One of the world's most open economies is attempting a delicate balancing act.
Meanwhile, the Southeast Asian city-state hopes to attract the world's best talent to strengthen its workforce in one of Asia's most diverse countries.
Meanwhile, locals who compete with foreigners for jobs must be assured that the system works for them as well, nipping any potential resentment or xenophobia in the bud. Must be.
Starting next year, the government will tweak the calculations to favor locals by raising the salary threshold for foreigners seeking permission to work in the city-state.
Singapore's Ministry of Manpower announced last month that new applicants to the Employment Pass (EP) system will need to earn at least S$5,600 (about $4,140) a month, up from S$5,000 (about $3,700).
Applicants working in the financial services sector will be required to earn at least S$6,200 (approximately $4,600) a year, compared to the current salary of S$5,500 (approximately $4,100).
“We will ensure a level playing field for local residents by regularly updating eligible salaries based on established wage standards,” Manpower Minister Tan Si Leng told parliament during budget deliberations. .
Analysts said the changes were not surprising for a government that has regularly tweaked rules for foreign workers, most recently increasing the salary threshold to S$500 in September 2022. ) pulled up.
Walter Teseira, an associate professor and labor economist at the Singapore University of Social Sciences (SUSS), said the move was “telegraphed”. [for] For years. ”
Mr Ciceira said that while the EP system was originally intended to import highly skilled workers to fill labor shortages, “the criteria seem to have expanded and EP holders are now at the center of the market”. “It has become more popular in the department as well.”
“This was perceived by local workers as undesirable competition for jobs that could be done by many skilled locals, so the government responded by revising the EP upward again, making it more clearly at the high end based on pay. We started targeting demographics,” he said.
For decades, Singapore, an island the size of New York City with no natural resources, has built a reputation for its tolerance for foreign talent.
The number of EP holders has increased significantly in recent years, due in part to concerns about the country's lowest birth rate and aging population.
As of December last year, there were approximately 205,400 EP holders in the city, up from 161,700 in the same month of 2021.
Going back to 2021, Mr Tan said that while Singaporeans recognized the need to attract foreign talent, they were concerned that the influx was coming at the “sacrifice” of local businesses. Admitted.
According to the Labor Market Report released by the Ministry of Manpower last month, Singapore's job growth in 2023 (88,400, excluding migrant domestic workers) will be dominated by foreigners.
Joshua Yim, CEO of talent acquisition consultancy Achie Group He said it could be seen as a “strategic move” to ease long-standing tensions over the recruitment of foreign talent in the job market.
The changes come as the Southeast Asian country prepares for one of the most politically significant transitions in its history.
Singapore's ruling People's Action Party is under new leadership with the next general election scheduled for by 2025, as incumbent Prime Minister Lee Hsien Loong prepares to step down after nearly 20 years in office. are to fight.
The issue of foreign workers rose to prominence during the 2011 general election, when there was simmering public dissatisfaction with increased competition for jobs and increased pressure on public infrastructure.
According to a 2021 survey by the Institute for Policy Studies, most Singaporeans and permanent residents agree that immigration is generally good for the economy, but just over half believe that immigrants They also think they are stealing jobs.
A separate survey conducted by research firm Milieu Insights found Singaporeans were almost evenly divided on whether the country is striking the right balance between bringing in foreign workers and protecting local jobs.
Sid Suhas, senior vice president and head of EMEA and APAC at talent acquisition firm Cielo, said the visa changes would allow major employers to “help attract, develop and develop local talent pools, particularly young professionals and talent. There is a high possibility that they will focus even more on training.” A mid-level, low-skill role. ”
Suhas said higher salary thresholds will encourage companies to take a “skills-first approach” when hiring foreigners, focusing on talent in fields such as AI, technology, engineering and healthcare. He said that there is a high possibility that
“There is an inevitable tendency to limit foreign talent to specific skills and industries. In the past, foreign talent has had the opportunity to develop their careers in Singapore in a variety of roles, but in the future There will be a focus on niche jobs,” Suhas told Al Jazeera.
Mr Suhas said he had already seen companies exploring alternative locations in the Association of Southeast Asian Nations (ASEAN), such as Thailand, Malaysia and Indonesia, as a way to redeploy key talent while maintaining proximity to Singapore. Ta.
“Most small and medium-sized enterprises [small to medium-sized enterprises] We are less dependent on the EP workforce as our core talent pool,” Huitt told Al Jazeera.
“Selected companies may employ the listed 5,000 or 5,500 EPs. [Singapore dollars] Specialist roles have a range, but typically they involve working on time-limited projects, or in specialized fields that rely on foreign talent pools due to a lack of qualified talent in the local workforce. If you are. ”
However, Achieve Group's Lim said rising labor costs could affect the profitability of small and medium-sized enterprises with tighter budget constraints.
“Local SMEs may not have as much richness in terms of processes and operations compared to multinational companies,” Mr Yim said.
“They're going to feel the heat because they have to compete with larger companies that have the financial power to offer higher EP salaries and attract higher quality talent. They may feel deprived and this group may therefore have a lower status.”
Mr Hsu Le, a lecturer in the Department of Strategic Policy at the National University of Singapore Business School, said the policy change would “encourage local businesses to think outside the box and explore alternative ways to increase overall operational efficiency and labor productivity.” It may encourage them to do so.” This in turn benefits the economy.
Beatrice Liucheng, CEO of Oriental Remedies Group, said that while higher qualification standards could pose challenges for her company's chain of Chinese medicine clinics, the company's “diversity and professionalism” “This is also an opportunity to further strengthen our business.”
Mr Liuchen said the changes would encourage the identification and development of Singaporean talent through training programmes, leadership initiatives and partnerships with educational institutions.
Analysts said Singapore's advantages such as its business-friendly environment, strategic location and world-class infrastructure will continue to attract international companies, although immigration changes will increase the cost of doing business.
Cielo's Suhas expects Singapore to remain the “preferred option” for companies' regional headquarters, even if higher costs make smaller teams more common. said.
Suhas said the changes will also accelerate the government's various initiatives aimed at creating quality jobs for locals, including early talent programs and retraining programs for mid- to late-career professionals. Then he said.
“As a result, we expect global companies based in Singapore to increasingly prioritize hiring Singaporeans,” he said.
Singapore ranks second after Switzerland in the 2023 World Economic Forum's Global Talent Competitiveness Index.
Nicholas Sim, associate professor at SUSS's business school, said companies looking to establish a foothold in Asia were still likely to prioritize Singapore, citing “high-quality infrastructure, an efficient and stable government, “Access to a talented talent pool.” .
Apart from the EP system, there are other avenues for foreign talent to come to Singapore.
In 2023, the Ministry of Manpower launched an overseas network and expertise path for “top talent” in business, arts, culture, sports, academia and research.
As of January, the ministry had approved approximately 4,200 pass applications.
“Going forward, this is a clear sign that the Singapore government wants to bring talent into Singapore's workforce, and companies are looking to attract top foreign talent who are skilled and can contribute to Singapore's long-term growth. “We will have to think more carefully about hiring candidates to be competitive,” Lim said.
“All the more, multinational companies will see Singapore as a premier location.”
