Consequence of Raising Minimum Salary Requirements for Work Passes and Preventive Measures in Place

Ms Hazel Poa asked the Minister for Manpower (a) whether companies are allowed to increase the working hours for foreign employees in order to meet the new minimum salary requirements for work passes, and reducing the working hours of local employees to counter the higher wage cost; (b) whether this is the intended consequence of raising the minimum salary requirements for work passes; and (c) if not, what can the Ministry do to prevent this.

Companies should not increase the working hours for foreign employees in order to meet the new minimum salary requirements for work passes, and reduce the working hours and thus wages of local employees to counter the higher total wage cost.

Such behaviour is absolutely not the intended outcome of MOM’s updates to the qualifying salary. The updates to the qualifying salary are to ensure that EP and S Pass holders are not hired simply because they are cheaper than locals, but because they bring in skills, networks and expertise that complement our local workforce. The result is to strengthen the complementarity of our foreign workforce.

Thus far, we have not come across any such cases as described by the Member, where EP or S Pass holders were forced to put in more hours with a corresponding reduction in work hours for local workers when updates to qualifying salary were made. And if we look at the historical data, local wages have continued to grow, including in years when EP and S Pass qualifying salaries were raised.

Fundamentally, it does not make good business sense to unfairly reduce locals’ working hours and salary. Employees who are unfairly treated will leave the company. Besides losing talent, the company may also find that it does not have enough quota to retain its S Pass holders at the next renewal. The vast majority of our employers understand that when it comes to setting wages, what matters are the job scope, responsibilities and performance of the worker, rather than the hours worked. This is particularly so for the professionals, managers, executives and technicians, or PMET, job roles that we are talking about here.

Nevertheless, if an employer engages in such unfair practices, as I stated in MOM’s Committee of Supply this year, the workers can take their grievances to the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP). TAFEP will engage the firm to conduct a proper salary review, because unfair remuneration practices run counter to the Tripartite Guidelines for Fair Employment Practices.