The Ministry of Manpower in Singapore has announced an increase in the salary thresholds for employment pass and S-pass workers.

Malaysians form the largest component of non-Singaporean workers in the island republic. However, there are no statistics available on the breakdown of Malaysians holding the different categories of permits, such as employment pass, S-pass and work permits.

The reason given for raising the salary thresholds is to make it harder for employers in Singapore to recruit higher-skilled foreigners such as Malaysians, whom many Singaporeans have complained are competing with the local citizens for the higher paying jobs.

Raising the salary threshold may not alleviate the problems that Singaporeans may face competing with foreigners like Malaysians, as long as employers are allowed to have unlimited hiring of employment pass foreigners and up to 25 percent of the total workforce for S-pass.

Unfair competition against Singaporeans?

How does a Singaporean graduate compete with a younger Malaysian graduate who may be more qualified and experienced, and is willing to work for a much lower wage?

Since employers do not have to make Central Provident Fund (CPF) contributions for foreigners, hiring a Malaysian on a Q1 employment pass at the new minimum salary of S$4,000 (RM9,713) will enable the employer to save S$640 (RM1,554) a month.

Since foreign male workers like Malaysians do not have national service reservist
obligations, the employer does not have to worry about the up to 40 days of reservist training in a year.

Since most foreign female workers may be single and not pregnant when they arrive in Singapore, local employers may be less concerned about the four months of maternity leave and salary costs.

Also, foreigners generally cannot change employers during their typical two-year contract period. So, less turnover problems too for the Singaporean employers.

Increase in minimum wage

By giving employers of existing employment pass holders a one-time renewal of up to two years to meet the salary thresholds, foreigners like Malaysians are effectively being given a 11 and 12 percent pay increase for S-pass and Q1 pass respectively.

However, the locals – Singaporeans and permanent residents – only had a 0.5 percent real median wage increase last year, and negative real median wage increase in 2009 and 2008.

In effect, the minimum wage for foreigners like Malaysians, on employment pass and S-pass, has been increased, even though there is no minimum wage for the locals.

According to the Singapore Ministry of Manpower’s 2010 Labour Market Report, the rate of change in the growth of foreign workers in Singapore last year was about four times more than that for locals, at 59,700 for foreigners and 14,400 for locals, compared with 2009.

These figures may indicate that the playing field may not be level for Singaporeans vis-a-vis foreigners like Malaysians.

Employers can hire 100 percent Malaysians?

It is not uncommon to see a Singapore employer hiring entirely non-Singaporeans, because under the foreign worker quota rules in Singapore, a company can have unlimited employment of permanent residents and employment pass holders.

This can be up to 25 percent of S-pass workers and 50 percent of Malaysian work permit holders in certain sectors, such as the services sector.

For other work permit holders, such as those from China or India, the quota in the services sector, for example, is much lower, at generally 10 percent, compared with 50 percent for Malaysians.

To illustrate this: A company can have 100 percent Malaysian permanent residents, 100 percent employment pass Malaysians, 100 percent mixture of Malaysian permanent residents and employment pass holders, 50 percent Malaysian permanent residents with 25 percent S-pass and 25 percent Malaysian work permit holders.

Are there any developed countries in the world that allow the unlimited hiring of foreigners, like Malaysians, on a monthly salary of just S$2,800 (RM6,801) – which is quite low as it is only around the 55th percentile of wages for locals in Singapore?

Finally, how can a foreign worker who only earns S$2,800 – which is 37 percent less than the average wage of S$4,474 (RM10,869) in Singapore, be called “foreign talent”?

Most Singaporeans may have no issue with highly-skilled and highly-salaried foreigners coming to work in their country.

However, they are concerned about the almost unrestricted hiring of lower-paid and arguably not much higher-skilled foreigners, be they Malaysians or others, who may be competing unfairly with Singaporeans for jobs.