Legal Briefing

Fair Employment Practices – Building a Singaporean Core

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Immigration | 24 August 2016

The Fair Consideration Framework (FCF) was introduced in Singapore in August 2014 with the aim of promoting fair employment practices. It requires employers to consider Singaporeans fairly for job vacancies and to provide them with equal employment opportunities based on merit. Under the FCF, it was noted that companies which have scope to improve their hiring and career development practices would be identified and monitored by the government. These companies may include those that have a disproportionately low concentration of Singaporeans at the professional, executive, managerial and technical (PMET) level compared to others in its industry, or those companies with repeated complaints of nationality-based or other discriminatory human resource practices.

Companies under scrutiny may be required to provide organization charts with detail such as nationality information, details of recruitment processes, including staff grievance handling procedures and framework for staff progression for review by the Ministry of Manpower.

Under the FCF, employers are also required to advertise for positions which pay less than S$12,000 a month in fixed monthly salary on a government run Jobs Bank for 14 days, in order to make these jobs available to locals before submitting an application for an employment pass to hire a non-Singaporean national. As approximately 94% of the local workforce earns less than S$12,000 per month, this would therefore mean the majority of jobs would fall under the advertising requirement.

An exemption from advertisement may be obtained if:

  1. A company has 25 or fewer employees; or
  2. The job position is paying a fixed monthly salary of $12,000 and above; or
  3. The job is to be filled by an intra-corporate transferee (ICT). Under the World Trade Organization’s General Agreement on Trade in Services (WTO GATS), ICTs refer to those holding senior positions in the organization or have an advanced level of expertise; or
  4. The job is necessary for short-term contingencies (ie period of employment in Singapore is for not more than one month).

Companies are strongly encouraged to advertise all their job vacancies on the Jobs Bank for access to a larger pool of Singaporean candidates, even if an advertising exemption applies. All companies are expected to have fair employment practices which are open, merit-based and non-discriminatory, regardless of the advertising criteria. Companies found to have discriminatory human resource practices risk having their employment pass privileges curtailed.

In spite of these initiatives, two years into the FCF complaints are still abound that foreigners are sweeping away PMET level jobs from Singaporeans. To address this issue, steps were taken by the Minister for Manpower in April to reinforce to all employers that, under the FCF requirements, companies seeking employment passes for foreign hires will be assessed on their commitment to developing a ‘Singaporean core’, in addition to the economic value to the country.

In addition, the Ministry of Manpower announced in July that the minimum salary for a foreigner to qualify for an employment pass will be raised from S$3,300 to S$3,600 per month with effect from 1 January 2017. This change, together with the Jobs Bank and the additional scrutiny, is expected to level the playing field for local PMETs by keeping pace with their rising median wages. These measures are also expected to help maintain the quality of the foreign workforce in Singapore

Companies with an unusually high proportion of foreign PMETs, and without any plans to hire, train and develop Singaporeans for these higher roles, will find it harder to obtain employment passes. These companies will also encounter difficulties renewing the employment passes for existing overseas personnel. Companies which cannot provide genuine reasons for the need to hire foreign nationals, and which do not take steps to reduce reliance on them, will risk having its employment pass privileges curtailed if no action is taken to improve hiring and career development practices. These companies will eventually find it very difficult to operate and expand its business in Singapore.

The government has also been increasing enforcement efforts following FCF reports that there are now 100 companies on a ‘black sheep’ watch list for having a weak Singaporean core. With over 50% of jobs paying more than S$3300 a month filled by foreign nationals, these companies display a weak commitment to hiring local PMETs compared to other companies in the same industry where the majority have a healthy Singaporean core. The identity of these 100 companies was not made public, although their progress on compliance with government policy will be reviewed in six months’ time.

The Minister also addressed the perception among some Singaporeans that they are a minority in the national workplace and noted that this is likely due to undesirable ‘pockets’ of businesses where foreign PMETs are concentrated and outnumber locals, resulting in the deepening of the local-foreign divide. These businesses are considered in breach of the FCF for an apparent failure to provide fair employment opportunities to Singaporeans.

While recruiting foreign PMETs is likely to get tougher, companies with a strong Singaporean core and strong economic links, in sectors critical for future growth, will receive help from the government to bring in foreign experts to nurture, train and share their knowledge and know-how with Singaporeans to equip them to take on higher roles, including regional and global roles. To stay ahead of the competition, it is essential that there is a balance between local and foreign workers to enable Singapore to remain competitive in winning investment and a strong jobs market.

Since the introduction of the FCF, the number of employment passes issued has fallen from a high of 32,000 in 2011 to 9,000 in 2015.

The table below provides the percentage of local PMETs (Singapore citizens and Singapore permanent residents) and foreign PMETs in the four main industrial sectors of manufacturing, construction, services and others (which includes agriculture, fishing, quarrying, utilities and sewerage & waste management).

Overall, the number of Singapore Citizens and Permanent Residents in PMET jobs has been steadily increasing over the last three years, in line with the government’s initiative to build a Singaporean core.

Employed persons aged 15 years and over in Professional, Managerial, Executive & Technical (PMET) occupations by industry and residential status, 2013 to 2015 (June)

Industry Residential Status 2013
(in thousands)
2014
(in thousands)
2015
(in thousands)
Total Singapore Citizens 864.7 892.7 929.7
Permanent Residents 225.3 231.9 237.3
Non-Residents 335.8 353.2 365.8
Manufacturing Singapore Citizens 120.9 105.1 105.5
Permanent Residents 46.0 41.9 38.6
Non-Residents 55.7 58.0 58.9
Construction Singapore Citizens 33.9 33.0 39.6
Permanent Residents 14.4 12.9 15.8
Non-Residents 29.9 33.1 34.5
Services Singapore Citizens 697.1 743.8 772.7
Permanent Residents 162.1 174.5 181.0
Non-Residents 249.1 260.9 271.3
Others Singapore Citizens 12.8 10.8 11.9
Permanent Residents 2.9 2.6 1.9
Non-Residents 1.1 1.3 1.2

To further support the creation of a strong Singaporean core in the local workforce, the government has also pledged to help local PMETs, who have lost their jobs in what has become a volatile and leaner economy, to retrain and take on new jobs. A series of programmes has been launched as follows:

  • The Career Support Programme encourages employers to hire eligible job seekers for positions paying at least S$4000 a month and to provide them with on-the-job training.
  • The Professional Conversion Programme is aimed at helping retrenched PMETs find jobs in growth sectors, including logistics, pharmaceuticals and retail.
  • Under the P-Max Programme, the government’s aim is to increase the number of local PMETs placed in small and medium enterprises (SMEs) and to help these SMEs improve their human resource practices and do better in terms of recruiting, managing and retaining newly hired PMETs.

In addition, a wage subsidy scheme which helps older retrenched workers get back into work will now be extended to all unemployed PMETs by giving employers who hire them a subsidy to cover a percentage of their salaries for one year. Local PMETs, however, must be prepared to adapt to different jobs, in new business sectors and at lower salaries, if necessary, to help them grow again.

In conclusion, the ultimate aim of the Singapore government is to support industry transformation to become more manpower-lean and more productive, to build a strong Singaporean core and to strengthen the global competitiveness of the Singapore workforce, comprising a balance of both local and foreign manpower. The government has indicated that it wants to send a clear and strong signal that whether an individual is a local or foreigner, whether an employee or employer, union or management, that everyone has a role to play and work together to strengthen the Singapore workforce and to compete for the best investments and jobs for all to share.