Update on Fair Consideration Framework

Assoc Prof Tan Kheng Boon Eugene asked the Acting Minister for Manpower whether the Fair Consideration Framework can be extended to the entire employment process to include promotion, retirement and retrenchment decisions to ensure that discrimination is kept at bay in our workplaces.

Ms Sylvia Lim asked the Acting Minister for Manpower under the Fair Consideration Framework (a) whether a Singaporean applicant using the national jobs bank can lodge a complaint if it is found from experience that the hiring process may be unfair; (b) what is the timeframe or frequency for checking up on the ratio of Singaporean to foreigner PMEs in firms; (c) what is the low ratio threshold trigger for scrutinising firms; and (d) how are repeated complaints for triggering scrutiny determined and calculated.

The features of the Fair Consideration Framework (FCF) need to be viewed in Singapore's context where there are more jobs being created than there are Singaporeans available to fill. This is a good problem to have. It is a good situation because it allows us to keep unemployment low.

Unlike in other countries that face high unemployment among locals, our economy continues to generate good and diverse opportunities for our people. The purpose of the FCF is to encourage a level playing field for Singaporeans and maintain our values of meritocracy and fairness in the workplace. The FCF, therefore, needs to be designed in a way that is practical and appropriate for Singapore – one that pushes employers to consider Singaporeans fairly but, at the same time, avoids making things too rigid for businesses. Why does this rigidity matter? It matters because when companies can thrive, opportunities are also created for our people. It is really about catering for an open, diverse and dynamic workforce but, at the same time, making sure that there is fair consideration at play. They need not be mutually exclusive.

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Let us also be very clear that there are no exemptions to the need for firms to consider Singaporeans fairly. All firms must do this. But some practical exemptions have been made only for the advertising requirement, for a start. The advertising requirement is just one part of the overall framework.

First, firms with 25 or fewer employees are exempted from the advertising requirement, as we believe that many smaller businesses do not have the sophisticated HR management to process many of these applications. One could argue whether it should be 20 or 30 employees. In our judgement and in discussion with the tripartite partners, we believe that 25 would be the number to start off with.

More importantly, however, applying the FCF to the larger firms will yield the greatest benefit, given that they employ most of the EP holders and they generally offer jobs which are more sought after by Singaporeans. In percentage terms, as highlighted in the Frequently Asked Questions (FAQs) appended when we released the information on the FCF, firms with 25 or fewer employees, employed about 25% of all EPs. Essentially, for larger firms with more than 25 employees, they employed about 75% of all EP holders.

Secondly, jobs paying a salary of $12,000 and above a month are also exempted from the advertising requirement. This is because open advertising for jobs, such as these, is usually done in a different manner. Furthermore, such jobs cover only 5% of the local workforce, meaning that the vast majority of jobs would be covered by the advertising requirement.

Thirdly, we have not applied the advertising requirement for rank-and-file jobs, because there are other tools, such as levies and Dependency Ratio Ceilings, which will spur firms to search for suitable Singaporeans before applying for S Pass or Work Permit.

Nonetheless, we will monitor the implementation of the FCF closely, and make adjustments to the exemption framework as necessary.

While there are some exemptions to the advertising requirement, let me again reiterate that there are no exemptions to the need for firms to consider Singaporeans fairly. MOM will impose greater scrutiny on firms with a low proportion of Singaporeans at the PME level for its industry – whether they are small firms or whether they have jobs paying $12,000 and above. The exemptions for small firms with 25 and fewer employees and jobs paying $12,000 and above apply only to one portion of the FCF, which is the advertising

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requirement.

Employers will be identified for additional scrutiny based on a range of factors. We will consider how a firm's proportion of Singaporean PMEs compares with others within the same industry. Other factors, such as how fast the proportion changes over time, which could be due to promotion, retirement, retrenchment patterns and so on, are also relevant. We are not expecting each firm to work towards a target percentage of Singaporean PMEs in its workforce, given that it varies across industries. Within each particular sector, there will also be variations depending on what areas of business they are in, and, even within the firm, they have different skill sets in terms of the applicability to the local workforce. What is important is that the firm has fair and meritocratic hiring practices that consider Singaporeans fairly. At MOM, we will have our internal triggers to scrutinise these companies accordingly.

Firms will also be flagged out if there are repeated complaints of unfair HR practices, whether it is for hiring, promotion, retirement or retrenchment. Such firms will be subject to additional scrutiny in their work pass applications and those which are found to have poor employment practices may have their work pass privileges curtailed. In addition, for unfair dismissal cases, we have the Employment Act to protect employees who feel that they have been treated unfairly.

In conclusion, I would stress that the FCF is not just about the advertising requirement. It is also about MOM playing a much more active role to engage firms that do not seem to be doing enough to hire and develop Singaporean PMEs. However, while the FCF signals acceptable norms in HR practices, it is also important for us to understand that it is not the intent nor is it desirable for us to ensure that every single PME job will go to Singaporeans. We do need to make sure that the economy remains competitive and that is probably the best way to look after the interests of all Singaporeans. Employers are best placed to decide which candidates can do the job. What MOM will do is to signal these expectations quite strongly and clearly, and, importantly, to monitor the firms' HR practices closely to minimise instances of unfair practices.

Mdm Speaker, I have three questions for the Minister. One, how would MOM view advertisements in a jobs bank put up by recruitment agencies that specialise in hiring employees on work passes only? That means they are actually specialised companies hiring employees on work passes. When they advertise in the jobs bank, obviously their intentions are clear: they intend to hire foreigners. How would MOM apply the FCF on such companies? To them, they are just going through the motion, so that after 14

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days, they can hire employees on Work Passes.

Two, it is stated in the published FAQs that MOM does not review the merits of a firm's hiring decision. But would MOM consider imposing some additional conditions on the firm if the number of applications for the listed jobs is more than a certain figure? If a job can attract so many locals to apply and yet, at the end of it, not one Singaporean is considered suitable for it, then something is amiss. It is either that the company is bent on hiring non-Singaporeans or maybe our education system is not churning out the right mix to power our economy.

Lastly, I understand the figure of 25 workers and below, and the exemption for advertising that applies to firms with this number of employees, I have asked some numbers but they are not given. Maybe the Minister can share them?

Okay, Employment Pass. Mdm Speaker, with regard to the first question whether companies would go through the motion of advertising, as mentioned, under the Fair Consideration Framework, the advertising component is one part of it. We require companies to advertise. That is important, especially in a tight labour market. We do believe that there are Singaporeans out there looking for jobs. Many companies assure us that they are looking out for Singaporeans but cannot find them. By having a jobs bank, there is a lot of utility in that because it ensures that every job that people are considering looking for EPs to come in, Singaporeans can have access to that data bank to look at whether those jobs are available.

If I were to combine the first question and the second one, it is about whether there would be biased hiring, meaning that people are just going through the steps and, therefore, they would just put up the advertisements for 14 days and so on, but would not want to employ Singaporeans. In this case, it would trigger the second criterion, which is for us to go in to look at companies in a much more detailed fashion. We would look for a number of reasons: were there, perhaps, allegations of unfair recruitment patterns brought forward by Singaporeans? For example, there will be jobs that Singaporeans have applied for, and they felt that they are eminently qualified for, but, for one reason or

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another, they are not hired.

It is not for us to question companies per se, but if there are certain patterns that occur, we will go in and look in detail at how these companies conduct their businesses.

I would add also that in terms of whether it is the right mix and whether the skills sets are applicable or not, what we will find is that in any economy, there will be jobs where there may not be a lot of Singaporeans going into. So, it is whether from a structural perspective, from the education and training perspective, should we cater more for that type of jobs? Or perhaps, we may not necessarily have a lot of Singaporeans that might be going to that particular sector, but there is a space for foreigners to play that role because, in turn, they contribute and value-add to that particular sector, a particular part of the economy, which, in turn, also creates other jobs and opportunities.

What we will do collectively with the other economic agencies is to analyse the patterns of job creation and local pipeline across the sectors. There may be cases where we recognise that there are certain skill-sets that, perhaps, not a lot of Singaporeans may have but are necessary for the overall economic development of Singapore which would, in turn, provide for our Singaporeans as a whole.

I thank the Minister for his clarification. I would like to ask three supplementary questions. First and foremost, many developed countries have also implemented similar frameworks. I just want to ask MOM what are some of the best practices and lessons learnt from some of these countries in which we have plugged some of these loopholes that are exploited by employers?

In implementing this FCF, are there any specific industries or sectors that the MOM is concerned about with regard to racial imbalance, and what is MOM planning to do about these sectors? Are there certain targets or benchmarks that you are going after? And are there specific actions to be taken for these sectors?

Thirdly, from an employer and business perspective, what is MOM's assessment of the impact to companies bringing global or regional roles here, with the FCF taking effect?

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Mdm Speaker, if I may just add on to the earlier reply. I left out some data in responding to Mr Png's questions. Let me address that first. The answer to the number of questions that Mr Png raised is that among all the firms that hire at least, for example, one Employment Pass holder, as of the first half of 2013, approximately 20,000 of them had 25 or fewer employees. So, each of these companies had about two EP holders on average. In terms of the larger firms, meaning employing above 25 employees, they had about 18 EP holders on average.

Some of the other data that Mr Png asked for, about local shareholding, MOM currently does not track small firms with 25 or fewer employees by percentage of local shareholding. What we want to emphasise is that whether big firms or small firms, whether jobs are above $12,000 or less, in terms of the requirements for fair consideration, that is a requirement that we expect of all companies. So, I understand where Mr Png is coming from, it is not the data that we track. Regardless of who are the main shareholders, we expect companies to adhere to some of these requirements. If they do not adhere to that, we will go in and take a look and provide greater scrutiny.

With regard to Mr Zaqy's questions, we have looked at various countries and their measures put in place. It is very much contextual. A lot depends on how it has evolved over time. What is also very clear from many of these countries is that no one particular policy is foolproof. As I have said many times, you can come up with many regulations, people are creative, they will find different ways to get around these. It is not foolproof but I think we have looked at the various measures and we have adapted them to what we believe would work for Singapore. It is not a silver bullet. These measures will not completely solve every single problem because a lot of these are about attitudes and mindsets. What we are doing is to signal clearly, and especially when there are complaints and when there are sectors that fall short of what we deem are acceptable levels, we would go in and look at it in detail.

The Member also asked about whether there are specific targets and proportions. As I have explained earlier, it is difficult to do that because different sectors have different requirements and they vary. Even within sectors, between companies catering to different parts within that sector, the requirements would also vary. We do have our internal thresholds that would trigger us to take a look, and that is something that we will review over time.

As to whether this FCF will impact the Singapore economy, what I would like to say quite clearly is this: Singapore remains committed to being open, dynamic and competitive. That is important because, ultimately, this benefits

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our people. Why? Because when companies invest in Singapore, and I would suggest not just foreign companies but local companies as well, it actually generates jobs and opportunities for our people. So, that is something we are firmly committed to.

Being open, dynamic and diverse does not mean that you cannot ensure that fair consideration takes place as well. We accept that some elements of that might have crept into some sectors of the economy, and that is why signalling has been taking place. We have been speaking to different sectors and they have been responding. The FCF is largely put in place to further emphasise this direction that we hope to go into.

At the same time, it is important for us to remember that companies invest in Singapore for a host of reasons. Having an open, diverse workforce is a compelling reason but quality of governance, stability, financial stability, transparency, security, so on and so forth, all these things continue to be important.

It is not so much about balancing the different needs but really striking a position which will continue to ensure that we grow, with good quality growth that will benefit our people but at the same time ensuring that there is fair consideration for Singaporeans.

Thank you, Mdm Speaker. I welcome the Acting Minister's assurance that the Fair Consideration Framework includes the entire employment process, including promotion, retirement and retrenchment. I would like to ask the Acting Minister what are the triggers that his Ministry would rely on when we talk about alleged discrimination in post-hiring employment decisions? Certainly, the Ministry cannot just rely on complaints and I think the FCF will be a toothless paper tiger if it just relies on employees to file complaints.

Mdm Speaker, I would like to thank the Member for his questions. I would add that complaints and information conveyed by employees or from people in the industry represent an important component in the process. We should not downplay the importance of that. What goes on internally in a company is usually not very obvious to the people outside.

I would also add that there are complaints and there are complaints. I read many complaints and we have spent quite a number of man-hours investigating some of them. There will be those that are spurred by very different reasons, as

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opposed to whether there was fair or unfair consideration at the workplace. There might be very personal issues as well. But it remains an important component.

The other trigger that we have is in terms of monitoring the various sectors. Over time, we have a sense about each different sector, depending on the make-up of the particular sector, and how many Singaporeans are in that sector. So, one reference point would be in terms of peer sector monitoring – looking at companies within that sector to see the proportion of Singaporeans they hire, and which are the companies that deviate from the norm in a significant fashion. That is one trigger. Another is that we would have our own internal sense of where we think this ought to be. It is an assessment and a judgement based on where we see the whole economy going. That would be also another trigger as to whether there are disproportionate numbers of foreigners in a particular company. There might be good reasons for that, and that is why it is important for us to go in, look into the details, talk to the company, understand the nature of the business and determine whether there is, indeed, adequate consideration for Singaporeans or not.

It is really a combination of these various triggers that have allowed us to go in deeper and to look at the company specifically to make sure that there is fair consideration at play.

Thank you, Madam. Supplementary questions for the Acting Minister. I would like the Acting Minister to refer to the question which I filed, that is, parts (a) to (d). They were filed because I thought that looking at the materials released by MOM thus far, these are still some questions that have not been answered. Earlier, the Minister‘s response also did not address these questions specifically, I thought. Could the Minister shed more light on the questions which I filed?

Mdm Speaker, Ms Sylvia Lim asked a few questions. Firstly, whether a Singaporean applicant using the national jobs bank can lodge a complaint if it is found from experience that the hiring process may be unfair. Yes, they can. As I mentioned, the advertising process is one part of the framework. If individuals find from their own experience and they are also able to provide additional information about what was in particular unfair in the process, they can raise it and we will take a look at it. If there are repeated complaints by different people, that will add to a better awareness of what this company might be on to. As I said, there are many different complaints that we receive, and it is something that we will follow up on. So, yes, they can raise

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that.

Secondly, in terms of the timeframe or frequency for checking up on the ratio, like I had mentioned, this is related or similar to the question about whether there are specific ratios and thresholds. We would have our internal thresholds to look at the various companies. As I had mentioned, one would be triggered by signals that will come from complaints or from information that we gathered from various sources. Secondly, we would also have visibility on the overall numbers in the various companies. As we apply the various internal thresholds to this, we will look at the companies and will then have to triage the whole process and decide which companies to go into and to look for further details.

In terms of repeated complaints, as I mentioned, there are many different types of complaints. One of the challenges that we face today, and I would suggest not just in my Ministry but across the Ministries, is that there are many people providing a lot of feedback. I mentioned some are spurred by personal issues, they may have lost a job, they may have lost out on promotion, they are disgruntled, and investigations show that there are not sufficient grounds. Others raise complaints without backing them up. When we want to follow up, they do not want to identify themselves, and there is not enough information to follow through with.

We have a whole range of complaints and issues being raised, and we need to then prioritise to see how best to address them. We will look at the quality of the complaint and information, and see how best to follow up. It is not really triggered by whether they are repeated complaints but more on the types of complaints raised and the information that is provided, and, based on that, we will act accordingly.