TL; DR – Raising the salary threshold for Employment Pass means only the best of the best can make the cut. If you are already the Michael Jordan-equivalent at your workplace, you have nothing to worry about!
Budget 2022, like every other similar announcement that came before, brought sweeping changes to the lives of Singaporeans. While many celebrated the financial packages for lower-income households and additional support for businesses, one announcement raised many eyebrows: the one about raising the minimum qualifying salary of new Employment Pass (EP) applicants.
In February 2022, the Singapore Government announced that the minimum qualifying salary for an EP would be raised from the current S$4,500 to S$5,000. For those in the financial services sector, which already has a higher-than-normal salary to begin with, the bar will be raised from S$5,000 to S$5,500. These changes will kick in come September 2022 for new applications and September 2023 for renewal applications.
It’s easy to see why the collective eyebrows of naysayers were raised when the news hit the headlines. Some have the misconception that, without doing an ounce of extra work, an EP holder’s salary will be given a S$500 boost — no questions asked. If that was the truth, and it’s most definitely not, it would be unfair indeed.
Here are a few reasons why these naysayers are actually wrong about the new EP announcement, and why everyday Singaporeans have nothing to worry about.
There’s a fundamental misunderstanding of the announcement on raising the threshold for Employment Pass
When companies hand out bonuses at the end of the year, one question never gets asked: “Why so much?” That’s because, and we are unafraid to admit it, nobody has ever refused a sudden and inexplicable salary bump. As such, on the surface, increasing the minimum qualifying salary for EP by S$500 is going to seem like a pretty good deal. Sit tight, do the bare minimum and get paid S$500 extra every month — shiok, man.
However, that’s just not how the new minimum qualifying salary for EP works. If an EP holder was earning S$6,000 per month, or S$1,000 above the current minimum qualifying salary, he or she is not going to suddenly earn S$6,500 on 1 September 2022. In fact, short of a promotion, an earned pay raise or a change of job, his or her salary is going to stay exactly the same.
Raising the threshold for Employment Pass – It’s about recruiting only the best of the best
Let’s say you are a basketball coach for a secondary school and you are putting together a basketball team. A bunch of equally tall and talented basketball players show up to apply, but you really want the team to do well in the national championships. If possible, you want the team to make it to the regional championships also. So you increase the minimum qualifying height from 170cm to 180cm, just so that you amass a basketball team that’s not only super talented, but super tall (for secondary school children) too.
Of course, being tall doesn’t gain you automatic entry to the basketball team. If you have two left feet and can hardly dribble the ball, it doesn’t matter if you are taller than LeBron James — you won’t make the team anyway. The same applies to the minimum qualifying salary for new EP applicants also. Raising the minimum qualifying salary is about quality control.
In a post-Budget 2022 dialogue aired on Mediacorp’s Channel 5 and Channel NewsAsia, Finance Minister Lawrence Wong said that “the tightening we have made in this Budget is more a calibration… to ensure that foreign workers and professionals coming into Singapore are of the right calibre”. So, by raising the minimum qualifying salary for an EP from the current S$4,500 to S$5,000 just means that those not good enough to command a S$5,000 salary will not be granted an EP come September 2022. Meanwhile, only the best of the best can make the cut. If you are already the Michael Jordan-equivalent at your workplace, you have nothing to worry about. Really.
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Singaporeans will still get adequate job opportunities
Part of the concern comes from the number of jobs available as well. The irrational fear is that, if we were to pay foreigners more, then more foreigners would want to work in Singapore. And because many people believe that there is a finite amount of job opportunities more foreigners hired means fewer Singaporeans being employed. They think that it’s a zero-sum game, and it’s either you win or I win — there’s no in-between. NOT TRUE. By combining and complementing local and foreign expertise, we can attract more investments and create many more good jobs and career choices for Singaporeans!
The truth is that the number of EP holders has been decreasing over the years. As of June 2021, there were more than 167,000 EP holders in Singapore. In December 2016, there were more than 192,000 — that’s a 13% reduction in just five years. In fact, that is the trend across the board: within the same time period, S Pass holders dropped from about 180,000 to 164,000; Work Permit holders dropped from about 993,000 to 834,000.
Coming back to the point at hand, it is true that foreign workers might be enticed by the increased minimum qualifying salary of EP. However, they first have to deserve the minimum qualifying salary (based on the employer’s discretion), and the number of EPs handed out is tightly controlled as well. This means that Singaporeans will not be shortchanged even when it comes to job opportunities.
Singapore is an island, for better and for worse
In the same dialogue, Finance Minister Lawrence Wong added, “Our workforce is ageing. Our labour force growth is declining and we don’t have enough workers. We must always have that attitude and mindset that we keep our borders open and we welcome foreign professionals, foreign workers into Singapore to complement our local workforce. That must be our attitude because the minute we start resisting that, I think we will be in trouble.”
Singapore is an island, and a very small one at that. By population, we are ranked 114th in the world, which means that if we want the very best people working for us and remain competitive, we need to look beyond our national borders.
Ultimately, raising the minimum qualifying salary of new Employment Pass applicants shouldn’t come at the expense of Singaporeans. Instead, it is about careful calibration, making sure that we attract only the best, most qualified foreign workers, then raise the abilities of our local workforce as well. That way, we create a win-win situation, everybody is happy and the super talented, super tall basketball team wins the championship — shiok, man.