MOM Committee of Supply 2020: EP qualifying criteria raised, support for COVID-affected sectors, and more

Come Budget Day every year in Singapore, we learn about the Government’s proposed spending and new policies, for the upcoming financial year (1 April to 31 March). Parliament then sits as a Committee of Supply (COS) to scrutinise the respective Ministries’ budget (also known as its Estimates) in detail.

This year’s COS discussions are well underway and on 3 March 2020, we heard from several key leaders representing the Ministry of Manpower and labour market issues, including Minister for Manpower, Josephine Teo, Manpower GPC Chairman Patrick Tay, as well as leaders Zaqy Mohamad, and Low Yen Ling.

These are some of the key topics that have been discussed (scroll further down for detailed takeaways from the COS discussions):

  • S$500 additional top-up as well as employers’ hiring incentive for mid-career workers in their 40s and 50s
  • Positions upto $20,000 salary included for mandatory advertising under FCF
  • Tightening the S Pass policy and raising the EP qualifying salary
  • Senior employment credit to offset hiring of workers aged 55 and above

Starting off, Minister Josephine Teo highlighted that despite employment outcomes for Singaporeans having improved overall (in terms of low retrenchments, higher incomes and employment growth), the outlook for 2020 has become very uncertain.

“Given the COVID-19 outbreak, it would be unrealistic to expect employment growth of the last few years. It will also be a challenge for unemployment to remain in the relatively low range of recent years. These unfavourable conditions demand a united response from all of us.”

In light of this, the bulk (60%) of the Stabilisation and Support Package announced by DPM Heng Swee Keat will go into jobs support and wage credits. “Our first priority is to prevent large-scale job losses. Particularly for those earning lower salaries, we should also prevent a scaling back or reversal of wage increases,” she affirmed.

Beyond immediate relief, she announced a slew of measures to tackle future challenges for businesses to transform and keep creating good jobs. These are based on four pillars:

  • Fair opportunities
  • Fair hiring
  • Fair competition
  • Fair support

#1 Fair opportunities – SSG programme to help workers aged above 40

Update on key existing initiatives

  • Adapt & Grow (A&G) initiative: Last year saw more than 31,000 local jobseekers being placed in jobs through A&G, similar to the number in 2018. More than half were aged 40 and above, while nearly one-third of placements were aged 50 and above. Since 2016, the A&G initiative has helped over 100,000 jobseekers get placed.
  • Workforce Singapore (WSG) will continue to enhance its service and programme offerings. Eg, has new features to help employers identify suitable candidates.
  • Place-and-Train programmes have benefitted nearly 14,500 Singaporeans since 2016.
  • Professional Conversion Programmes (PCP) – Currently stand at 100 across around 30 sectors.
  • Moving upstream: In the last two years, over 2,000 PMETs were reskilled and redeployed within the same companies, well before they became redundant.

Launch of new initiatives

SkillsFuture Mid-Career Support Package

This new programme aims to empower persons in their 40s and 50s to refresh their skills, to complement their employers’ training investments, through the following pillars:

  • Capacity in reskilling programmes will be expanded to support more mid-career individuals who may be affected by the faster pace of business transformation. In particular, for workers in their 40s and older, the aim is to double annual placements to around 5,500 by 2025.
  • Additional top up of SkillsFuture Credit of S$500: This is over and above the S$500 SkillsFuture Credit top-up for eligible Singapore Citizens. As Minister Teo explained: “Bear in mind that many courses are already heavily subsidised by the Government, up to 90% in some instances. This additional top-up will mean even lower out-of-pocket expenses.”
  • Ramping up of Train-and-Place programmes: These programmes will not require employer commitment upfront, but must be well-designed enough to plug skills-in-demand, so participants have a good chance of getting job placements after they are trained.
  • All trainees will continue to receive full salaries or allowances. “In other words, although we do not have unemployment insurance in Singapore, we have programmes provide income support to unemployed persons who are prepared to undergo reskilling, which maximises their chances of returning to work.”
  • Career advisory system, which Minister Teo referred to as the “scaffolding and hand-holding” part of this framework: This is essentially the employment and training assistance capability created within the system – through agencies such as (WSG and NTUC’s e2i), private sector players, sector agencies (such as MAS and the Institute of Banking and Finance), and more.
  • The Career Advisors Initiative will commence with the ICT and Finance sectors

[Find out more about the Career Advisors initiative]

WSG has also intensified support to job seekers through a suite of high-touch career coaching programmes:

  • The Career Recharger module equips discouraged jobseekers with a positive mindset for their job search journeys;
    The Career Catalyst module offers one-on-one coaching to help jobseekers uncover their strengths and career options;
    The Career 360 module helps jobseekers access networks to widen job opportunities.

Noting that peer support will be useful in amplifying the impact of these, Minister Teo added that the team of full-time career coaches will be complemented by building up a pool of volunteer Career Advisors, who:

  • Will receive training to provide sector and occupation-specific career advice and outline career options.
  • Will also be equipped with in-depth knowledge of resources and channels of support such as the A&G programmes
  • Can help to boost the confidence of their mid-career peers in charting the way forward.

Employers to get a new incentive for hiring workers aged 40 and above

  • In terms of supporting employers, effective 1 April, salary support will be boosted for all workers aged 40 and above enrolled in Place-and-Train programmes, from the current 70% to 90%. As Minister Teo said: “Essentially, the Government will underwrite almost the entire salary and training costs of mid-career recruits for the period of training.”
  • There will be a new hiring incentive for employers who hire workers aged 40 and above, through any Place-and-Train or Train-and-Place programme. It will cover 20% of the new hire’s monthly salary for half a year, capped at $6,000 in total.
  • The enhanced employers’ support extends to workers above age 60. Depending on the duration of training, this means employers will get salary support of up to one year in most cases.

Through the pillars of the SkillsFuture Mid-Career Support package, close to S$750m will be invested in the reskilling and placement of mid-career workers, over the next five years.

[Find out more about this hiring incentive for employers]

Additional support for employers: To implement business and workforce transformation plans

  • The S$10,000 SkillsFuture Enterprise Credit continues to be in play, to help defray 90% out-of-pocket cost.
  • Through the enhanced Productivity Solutions Grant (PSG), 70% of funding will be provided to companies to engage job redesign consultants, capped at S$30,000 per enterprise.
  • Most of the remaining 30% out-of-pocket expenses can be paid off using the new SkillsFuture Enterprise Credit. “In other words, costs will be very minimal, for SMEs in particular,” Minister Teo affirmed.
  • For companies with a clear plan to transform their business, MOM will consider supporting them with transitionary manpower. Others may take advantage of the current downtime to increase training hours.

[Find out more about how jobs can be designed through consultancy support]

Enhancements to Adapt and Grow (A&G) initiative under the Stabilisation and Support Package

$2.4 billion (60%) of the Stabilisation and Support Package (announced at Budget 2020) will go towards the following economy-wide measures for workers:

  • Jobs Support Scheme: Help companies retain local employees
  • Enhancement to Wage Credit Scheme: Support companies to transform and share productivity gains with workers

Support for sectors more directly impacted by COVID-19 (e.g. hotel, retail, food services, tourism, air transport):

  • Funding support extended from 3 months to a maximum of 6 months:Job Redesign Place-and-Train (PnT) Programme for Hotel Industry
  • Job Redesign PnT Programme for Retail
  • New programmes to support redeployment:Job Redesign Pnt Programme for Food Services Industry
  • Digital Marketing PnT Programme
  • Professional Conversion Programme (PCP) for Meetings, Incentives, Conventions and Exhibitions (MICE), Attractions and Tour and Travel
  • PCP for Digital Operations Talents for Furniture Industry
  • PnT Programme for Air Transport Coordinators

#2 Fair hiring – Positions upto $20,000 salary included for mandatory advertising under FCF

New rules on advertising requirements under FCF

Minister Teo stated: “In Singapore, where the workforce includes foreigners, we are particularly watchful about discrimination against locals.” Thus, the following actions continue to be taken to ensure this is implemented:

  • Mandatory advertising for EP applications: Under the Fair Consideration Framework (FCF), employers continue to be required to advertise on before submitting Employment Pass applications.
  • Salaries up to $20,000 to be advertised on FCF come 1 May: Currently, job positions with salary of S$15,000 and above are exempted from the FCF job advertising requirement. Effective 1 May 2020, MOM will expand the advertising requirement to include positions paying up to $20,000. Positions that are more senior remain exempted as they are more likely to be market-sensitive.
  • Intra-company transferees: This demographic needs to meet stricter criteria to qualify. As a result, they have constituted to a very small share of EP applicants.
  • Data analytics: MOM has started to use data analytics to scrutinise EP applications. It is also actively following up on leads provided by whistle-blowers.
  • Nationality-bias to be identified: MOM is proactively identifying employers suspected of nationality-bias in their hiring. It is looking out for employers with an exceptionally high share of foreign PMETs compared to industry peers, or high concentrations of single nationalities. These employers will be put on an FCF Watchlist where all their EP applications will be scrutinised or withheld.

Affirming how critical these rules are, Minister Teo said: ” Nonetheless, if we uncover evidence that an employer had pre-selected a foreign candidate and did not give fair consideration to qualified local applicants, we will reject the EP application and ban the employer from hiring or renewing foreign workers.”

Actions taken against errant employers

As of 2019, MOM had put about 600 firms through the FCF Watchlist. Today however, about 1,000 firms have been scrutinised. To date, a total of 3,000 EP applications have been rejected or withheld by MOM, or withdrawn by employers. In addition, firms under the FCF have hired more than 4,400 Singaporean PMETs over the same period.

However, the objective, the Minister added, is not just to penalise errant employers. “We want them to improve. This is why we reached out to another 350 employers whose workforce profiles give us cause for concern, so that they take steps to strengthen local hiring.”

Earlier this year, MOM enforced stiffer penalties on all forms of workplace discrimination i.e. discrimination by age, gender, nationality or mental health condition. Employers that violate the Tripartite Guidelines on Fair Employment Practices will be barred from hiring new foreign workers or renewing existing ones for a minimum of 12 months, up to a maximum of 24 months.

“We will also hold culpable key decision makers responsible, whether it is the CEO, chief HR officer, or line managers. We are prepared to name them publicly, and revoke their work passes if they are foreigners,” Minister Teo added.

#3 Fair competition – tightening the S Pass policy and raising the EP qualifying salary

Fair-minded Singaporeans do not expect to be given a free pass, but they do expect fair competition, and rightly so,” Minister Teo said, citing a number of existing and new measures.

Tightening the S Pass policy

  • Cuts to S Pass quotas will be implemented for three sectors – construction, marine shipyard, and process sectors in 2021 and 2023.
  • Initiatives are being taken to train locals for jobs in these sector – Eg, from 2017 to 2019, there was an annual average intake of 7,400 polytechnic students in related courses. For mid-career persons, PCPs are available for BIM professionals, marine engineers, marine technicians, and process construction and maintenance professionals.

On this topic, Minister Teo urged businesses not to worry about finding people. “The SkillsFuture Work-Study Programme can help you identify suitable polytechnic and ITE graduates and defray their training costs. You can also consider mid-career workers.”

“I urge employers to get in touch with WSG or the relevant trade associations. For example, in the last three years, trade associations and chambers have helped more than 4,500 SMEs recruit mid-career PMETs through the P-Max programme.”

Local qualifying salaries for S Passes and EPs to be increased

The local qualifying salary (LQS) is a measure to ensure that firms do not hire locals on token salaries just so that they can hire more foreign workers, thus only workers that are paid above a threshold each month can be counted towards a firm’s S Pass and Work Permit DRCs.

  • LQS raised to $1,400: After having last raised the LQS in July 2019 from $1,200 to 1,300, it will be raised further to $1,400 on 1 July 2020.
  • The S Pass salary criteria were raised in 2019 and this year.
  • Employment pass qualifying salary raised to $3,900: After having last raised the EP minimum qualifying salary in 2017, from $3,300 to $3,600 per month, it will be raised to $3,900 per month. This increase is in line with improving wages of fresh graduates of local autonomous universities.
  • The new salary criteria will apply to new EP applicants from 1 May 2020. However, for EP renewals, they will apply one year later, from 1 May 2021. This staggered approach will moderate the impact on businesses.

[Find out more details on all the new policy requirements for foreign workforce]

#4 Fair support – senior employment credit to offset hiring of workers aged 55 and above

This theme refers to support provided not only to the self-employed, but also employers and Singaporeans in general to build up their retirement nest egg.

Senior Worker Support Package

As a reminder, the CPF contribution rates for senior workers will be raised gradually over the next decade. The first increase will take effect from 1 January 2021. The exact timing of future moves will be decided later, but the full increases aim to be implemented by 2030.

To further to support senior workers, Retirement Age (RA) and Re-employment Age (REA) will be raised to 65 and 70 respectively by 2030.

Further, the retirement age for Home Affairs Uniformed Services will be raised from age 55 to 58 by 2030. MOM will work with MHA and tripartite partners to similarly review retirement age policies for Auxiliary Police Officers and private-sector firefighters.

Efforts to create more age-friendly workplaces by supporting employers

  • The Senior Worker Support Package will provide up to $1.3 billion in support over three years from 2020 to 2022.
  • From 2021, through the new Senior Employment Credit, wage offsets will be provided to employers that hire senior Singaporean workers aged 55 and above. For 2021 and 2022, employers will get up to 8% of the wages paid to workers aged 55 and above. More support will be given for those in higher age bands.
  • The employment rate for workers aged 55-59 is now close to that of the 20-64 age group. Hence, wage offsets for the 55-59 age group will be 2% in 2021 and 1% in 2022. Thus, more resources will be focused on the older age groups which have lower employment rates, i.e. wage offsets for those aged 67 and above will be the highest, at 8%.
  • Overall, companies will get $660 million in Senior Employment Credit over two years.
  • In 2021, half of the increase in employer CPF contribution rates will be offset through the CPF Transition Offset scheme.

New grants for employers

  • Minister Teo urges employers to to raise the RA and REA ahead of legislative schedule. This will allow them to tap up to S$250,000 under the new Senior Worker Early Adopter Grant (EAG) to be introduced.
  • Another issue to solve is that many employers today provide mostly full-time positions, and their work structures and processes cannot support workers on partial shifts, or job sharing of full-time positions. To give efforts in this area a push, a new Part-Time Re-employment Grant (PTRG) will be introduced that provides up to S$125,000 to each company that commits to providing part-time re-employment opportunities to eligible senior workers upon their request.
  • Both the EAG and PTRG will provide support of $100 million to companies over three years. In total, it is estimated that up to about 110,000 companies and 570,000 workers will benefit from the Senior Worker Support Package.

Photo / Minister Josephine Teo speaking at MHA COS 2020

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