The Singapore government recently announced a series of important changes for its foreign workforce policies, to take effect over the course of the next three years.
First, as part of the Budget Statement 2022 announced on 18 February 2022, the minimum monthly salaries for Employment Pass (EP) and S Pass holders, and the foreign worker levy for S Pass holders, will be increased progressively from 1 September 2022 to 1 September 2025.1 This marks the third time that Singapore has raised EP and S Pass salaries in less than three years. Please see Table 1 for details and timing of the changes.
Then, on 4 March 2022, the Ministry of Manpower (MOM) announced that in addition to meeting the qualifying salary, EP candidates must pass a points-based Complementarity Assessment Framework (COMPASS).2 The new COMPASS framework will apply to new EP applications from 1 September 2023, and renewals from 1 September 2024. Please see Table 2 for details.
WHY THIS MATTERS
- Compared to the previous round of increases in August 2020 that allowed employers only two months to prepare, they are given more time now, with the first increases in salaries and levies taking effect from 1 September 2022.
- More importantly, the MOM provided more clarity on its criteria for “qualifying salary” corresponding to age. Confirmation of the high end of the age-salary criteria makes it more transparent for employers to apply to their recruitment and staffing decisions.
- Employers should plan early and develop their hiring and progression strategies to address the impact of COMPASS and the increased salary and levy requirements.
Table 1: Updates to Qualifying Salary and Foreign Worker Levy
Changes announced in Budget Speech 2022 |
Sector |
Before |
After |
Effective date |
|
1 |
Higher minimum monthly salary for Employment Pass (EP) holders |
All except Financial Services |
S$4,500 |
Will increase to S$5,000 for new applicants. Salaries for older EP applicants, which increase progressively with age, will also be raised in tandem – increases of up to S$10,500 for those in their mid-40s. |
1 September 2022 |
Financial Services |
S$5,000 |
Will increase to S$5,500 for new applicants. Salaries for older EP applicants, which increase progressively with age, will also be raised in tandem – increases of up to S$11,500 for those in their mid-40s. |
1 September 2022 |
||
All |
The above changes will apply to renewals. |
1 September 2023 |
|||
2 |
Higher minimum monthly salary for S Pass holders |
All except Financial Services |
S$2,500 |
Will increase to S$3,000 for new applicants. Salaries for older S Pass applicants, which increase progressively with age, will also be raised in tandem – increases of up to S$4,500 for those in their mid-40s. |
1 September 2022 |
Further increases for new S Pass applications: To at least S$3,150*; and To at least S$3,300.* |
1 September 2023 1 September 2025 |
||||
Financial Services |
S$2,500 |
Will increase to S$3,500 for new applicants. Salaries for older S Pass applicants, which increase progressively with age, will also be raised in tandem – increases of up to S$5,500 for those in their mid-40s. |
1 September 2022 |
||
Further increases for new S Pass applications: To at least S$3,650*; and To at least S$3,800.* |
1 September 2023 1 September 2025 |
||||
All |
The above changes will apply to renewals. |
1 September 2023 |
|||
3 |
Higher Tier 1 S Pass foreign worker levy |
All |
S$330 |
To be progressively increased to S$650 by 2025 as follows: To S$450; To S$550; and To S$650. |
1 September 2022 1 September 2023 1 September 2025 |
* Finalised values will be announced closer to the implementation date based on prevailing local wages for local associate professionals and technicians at that time. |
|||||
Source: Ministry of Manpower
Table 2: New COMPASS Framework for EP Applications
Individual Attributes |
Firm-Related Attributes |
|||
Foundational Criteria
Passing score: 40 points
20 = Exceeds expectations
10 = Meets expectations
0 = Does not meet expectations |
C1. Salary ^ Fixed monthly salary compared to local professionals, managers, executives and technicians (PMET) salaries in sector by age |
C3. Diversity ^ Share of candidate’s nationality among firm’s PMETs* |
||
> 90th percentile |
20 |
<5% |
20 |
|
65th to 90th percentile |
10 |
5 to 25% |
10 |
|
< 65th percentile |
0 |
> 25% |
0 |
|
C2. Qualifications ^ Based on candidate’s qualifications |
C4. Support for Local Employment ^ Firm’s share of local PMETs within its subsector* |
|||
Top-tier institution |
20 |
> 50th percentile |
20 |
|
Degree-equivalent qualification |
10 |
20th to 50th percentile |
10 |
|
No degree-equivalent qualification |
0 |
<20th percentile |
0 |
|
Bonus Criteria |
C5. Skills Bonus (Shortage Occupation List - SOL) For candidates in jobs where skills shortages exist. The first SOL will be announced by March 2023. Thereafter, this will be regularly reviewed to help ensure (i) responsiveness to industry needs, and (ii) existing shortages are not entrenched over the long term. |
C6. Strategic Economic Priorities Bonus For partnership with government on ambitious innovation or internationalisation activities. More details, including the finalised list of government programmes, eligibility criteria and application process, will be announced by March 2023. |
||
Job on the Shortage Occupation List |
+20 # |
Firm meets specific assessment criteria on innovation or internationalisation activities |
+10 |
|
^ The MOM will offer a Pre-Assessment Tool (PAT) for employers to get an indicative COMPASS score for their prospective EP candidate before submitting an EP application. This will be available by September 2023. * The MOM considers employees earning at least S$3,000 per month as PMETs when computing the criterion. Small firms with fewer than 25 PMET employees score 10 points on C3 and C4 by default. # Skills bonus is reduced to +10 if the share of candidate’s nationality among the firm’s PMETs is one-third or higher. |
||||
Source: Ministry of Manpower
Educational Qualifications
Under Table 2, C2. Qualifications, “top-tier institutions” include:
- Top 100 universities based on international rankings, and other highly-reputable universities across different regions
- Singapore’s autonomous universities
- Vocational institutions that are highly recognised in a particular field.
“Degree-equivalent qualifications” generally refer to:
- foreign qualifications that are assessed to be comparable to a bachelor’s degree in the U.K. system (the MOM determines this with reference to international recognition bodies, e.g., the U.K. National Information Centre for recognition and evaluation of international qualifications and skills (UK ENIC));
- professional qualifications that are well-recognised by the industry and endorsed by a relevant sector agency.
Exemptions
The following candidates are exempt from the COMPASS criteria:
- Those earning at least S$20,000 fixed monthly salary; or
- Those applying as overseas intra-corporate transferees under the World Trade Organisation’s General Agreement on Trade in Services or an applicable Free Trade Agreement that Singapore is party to; or
- Those filling a role on a short-term basis, one (1) month or less.
New Pilot Programme
In addition, the MOM will pilot a “Global Rotation Scheme,” which will facilitate international firms bringing in high-potential employees from abroad and in return, posting local Singaporeans abroad to gain exposure to the same leadership development programme. The MOM stated that it will help ensure the EP framework has the flexibility to allow for such rotations. More details of the scheme are expected to be released in due course.
KPMG NOTE
The clarity added to age-salary thresholds should help towards greater transparency and predictability for EP and S Pass application outcomes.
By launching COMPASS, the MOM adopted the recommendations of the PME Task Force3 to incorporate a points system to EP applications that considers a range of factors beyond the individual applicant’s educational attainment and salary.
Smaller firms (with fewer than 25 PMETs), including start-ups, would welcome the benefit of being automatically granted 10 points each for the two firm-related criteria.
The addition of company attributes and skills bonus criteria creates a more holistic evaluation process, which also aims to address local skills shortages and situations of over-reliance on workers from a single nationality. The new framework would continue to provide an avenue for businesses in Singapore to tap global talent, while establishing that global hires are complementary to the local workforce, hence contributing to strengthening of the Singapore workforce.
FOOTNOTES
1 See Budget Statement 2022 on the Ministry of Finance website: https://www.mof.gov.sg/singaporebudget/budget-2022/budget-statement/c-invest-in-new-capabilities#emAdjustments-to-Foreign-Worker-ememPoliciesemem-em . For a report on and analysis of the budget by KPMG in Singapore, see: https://home.kpmg/sg/en/home/campaigns/2022/02/kpmg-singapore-budget-2022.html .
2 See MOM website: https://www.mom.gov.sg/passes-and-permits/employment-pass/upcoming-changes-to-employment-pass-eligibility/complementarity-assessment-framework-compass .
3 The task force, formed by the National Trades Union Congress (NTUC) and Singapore National Employers Federation (SNEF), submitted its report providing nine recommendations to address concerns of Singaporean professionals, managers and executives over job security and fair opportunities, among others.
S$1 = US$0.73
S$1 = €0.668
S$1 = £0.562
S$1 = A$1.0165
Source: www.xe.com
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in Singapore.
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