Work Permits and S Passes Issued in Last Six Months

There are three things we are juggling. Firstly, we need to calibrate our foreign manpower growth via a range of adjustments to our framework and measures. Secondly, we are mindful that companies need to do well, because they create jobs and they create good jobs for Singaporeans. I do not just mean local companies; I mean foreign companies that decide to base themselves here, when they do have decent options elsewhere. Thirdly, we need companies to be more productive and not just depend on easy access to foreign labour.

My Ministry is tracking the impact of our policies closely, including the number of Work Permits, S Passes and Employment Passes (EPs) and how they are being renewed and issued. We will release the numbers when the 2012 annual foreign workforce data is published early next year.

What I can share now is that there has been a higher number of EPs and S Passes that have not been renewed. From 1 January 2012 to 31 July 2012, 30% of EP and S Pass applications were rejected, an increase from 26% for the whole of 2011. Twenty-nine per cent out of the total number of rejected applications were for renewals, an increase compared to 21% for the whole of 2011.

The higher rejection rates were due to the following reasons. One, the increase in EP and S Pass qualifying salaries from 1 July 2011. To give companies time to adjust, existing EP and S Pass holders who were due for renewal before 1 January 2012 were given at least an additional year to meet the prevailing more stringent criteria. This is to allow companies time to adjust.

Two, the tightening of the educational qualifications for EP, and with older applicants having to command a higher salary commensurate with their working experience and the quality expected of them, which will kick in from 1 January 2012. This is quite a fundamental and important reframing of EP criteria. It is beginning to take effect, and it is probably important in terms of levelling the playing field for all Singaporeans.

Three, the tightening of the S Pass sub-Dependency Ratio Ceiling (DRC) from 25% to 20% of the total workforce from 1 July 2012, has taken effect for all new foreign workers. However, we have also given companies some time to adjust their strategies. Their existing foreign workers will have up to 30 June 2014 to comply with the new DRCs.

Essentially, that is the data as of now. We will tabulate and track the figures. At the end of it, there will be a more complete picture when we look at how we tabulate the figures as a whole. What I will say is that we need to calibrate. It is not about turning off the tap. As I said, we all recognise that we do need access to foreign workers in our workforce at the different levels. Because what they provide is a diverse workforce which remains important in keeping our companies competitive. At the same time, we need to balance the different things that we need to juggle. How do we keep companies viable? For them to be viable, they do need access to a diverse workforce but, at the same time, being able to generate good jobs for Singaporeans and to make sure that Singaporeans remain the core of the workforce.

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You can see the tensions pulling in the different directions. Unfortunately, it is not a precise science where we can calibrate all the different dials to exactly the right kind of outcomes we want, because we do not operate on a quota basis like COEs, where I cap the number of COEs we release every month. That is not the direction we want to go because I do not think it will be right to allocate manpower on that basis. But we use the market, we use some of these measures that we put in place, whether DRC or levies, so that there is a cost to companies employing them.

As I said earlier, a combination with other measures will incentivise companies to transform. We hope that we can calibrate downwards in a much more significant way, the dependency on foreign workers or foreign talent, so that the numbers can come down, and it is much more manageable but, at the same time, not affecting competitiveness so that new jobs can continue to be created for Singaporeans.

Mr Speaker, Sir, in some sense, it is a happy problem. Not so happy for the individual companies. Let me explain. From an individual company's perspective, I agree. I get a lot of emails from companies and we meet many of them on a regular basis. There will be individual companies that will find difficulties in renewing Work Permits, S Pass and even EP. They may not even get new ones.

At the same time, from the market perspective, from the overall economic perspective, the demand is continuing to increase. Companies are growing across the board. Some companies may not get it; other companies do. There are new companies coming online as well, and they are all competing for the workforce that is available. Overall, even as we are calibrating downwards, it is not that the growth has become negative. We have basically slowed down the growth, but it is still growing. We need to watch that growth to make sure that from a macro perspective, it is at the rate that we can sustain; it is a rate that we can be comfortable with. We are still looking at, from a broad basis, about one-third of our overall workforce to comprise of foreign workforce.

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That is a target from the ESC and which is something that we want to keep to. It will hover at about that level, but the way we calibrate it is through these different measures. Individual companies may find difficulties but other companies manage to get them. And a lot of it will depend on the different criteria put in place.

What I would like to assure companies is that we are fully aware that companies do need to draw on foreign workers, foreign talent in various forms but, at the same time, we also need to wean companies off easy access to them. In order for that to take place, they need to change the way they do business. Like I mentioned earlier, we do think there is upside certainly in a number of industries and a certain number of businesses where they can transform. Many have begun to do that. Anecdotally, a lot of them are looking at us to make a change and re-calibrate back to the old levels. The point is we are not. Going forward, this is something that we have to do, and companies are taking that on board. And we would like to support the companies in that process.

Sir, I would like to ask a clarification with regard to the calibration of EPs and S Passes. Rightly so, companies are recognising the need to adjust, and in the process of adjusting and calibrating – as these are higher-skilled workers that many of their businesses are dependent on – will the Ministry also look at flexibility in allowing for extra time, in terms of short extensions, to allow them as they look for new workers to also do skills transfer, especially for EPs?

There is indeed space for us to look at individual appeals on a case-by-case basis. For new applicants, I think the rules will kick in quite firmly and quite decisively. I do not think there is any room for manoeuvre with regard to new applicants. But for older applicants, that means those who have been with the companies, and this is where we do understand because someone has been with the company for some time, whether on EP or S Pass, I think there is also, over time, productivity that has been built in because they are fully familiar with the system. So, that is where I think we can look at on a case-to-case basis, how do we then accede to requests and appeals.

There is also a challenge because we get appeals from all over. Every company will swear that theirs is a special circumstance, they need exceptions, and if we go down that path, it actually becomes difficult because the whole framework will start to unravel. So, there is space, but it does mean that we need to scrutinise the various appeals and, in some cases, we have to accede but not all cases. A lot depends on the circumstances of these companies.

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I would like to thank the Minister for assuring us of the happy problem. I have a supplementary question for the Minister. Would the Minister consider a tripartite framework where available vacancies in specific industries are made known to the unions to enable us to alert our members of such employment opportunities, before approving these Employment Passes for foreigners? This is also to assure Mr Teo Siong Seng here that we are social partners and we are going all the way out to help him.

If I may complete the tripartite conversation between the Member and Mr Teo, to provide the Government perspective. There have been calls, and they are not unreasonable, to look at whether we want to tie the approval of Employment Passes with this step in between. I am open to considering that as a possibility. That is something that we can do without hot-wiring that process in a formal way for now.

Again, it is a balance. We do feel that having a fairly flexible adept workforce is important in keeping the companies competitive. I just want to return to this key point – that at the end of it, it must make sense for Singaporeans and Singaporean workers, because that is at the core of our interest. How do you then construct a framework that allows that to happen? Having a flexible adept workforce remains important because it allows the whole economy to remain that way, and to remain competitive.

We do see that there are gaps, so there are matching issues. This is where we think that we could do more to plug the gaps where the needs are. We have begun to do that, and we can extend that effort. For example, I get emails from companies appealing and saying, "Look, I have been trying very hard, but I cannot find Singaporeans who want to do this particular job." Then, what we try to do is link them up with WDA, with e2i, where they know who are the Singaporeans who are also looking for openings, and then try to match them. Sometimes, there is actually a match in terms of people with certain expertise and with those needs. But we also find that it does not always work out that way because sometimes the companies say, "Notwithstanding they are skilled in a way, but I do not want to take them".

Is it due to inappropriateness or the inappropriate quality of the candidates, or is it because they are still looking at perhaps cheaper options elsewhere? Those are the dilemmas that we need to manage. But I do agree that we can carry out that matching process a lot better. It is really about information − how do we match our awareness of the people, even though our unemployment rate is low – about 3%. But it does represent 50,000-60,000 Singaporeans. How do I make sure that the awareness of who they are, where they are, which sectors they are in, so that we can help to upgrade them and so on, through courses, but at the same time where are the needs in industries, and see how best we can match them. So, working with the unions and companies would be an important step to see how we can move ahead. But to formalise it, that is something that we are open to, but I do not think we need to do that at the moment. It is something that we can consider.

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