Most expats in Singapore unaffected by tighter salary rules

The city-state is tweaking the balance in favour of locals by hiking aliens’ wage thresholds.

Singapore’s higher salary thresholds for foreigners will have a limited impact on the payroll of most companies, either because they are already paying more than the new rates or have few foreign employees, amidst stiff job competition from locals.

“Assuming the benchmarking is correct, then the lower two-thirds of professionals, managers, executives, and technicians should not be affected by this at all, and the higher one-third should not be any more affected than they would have been when salaries were generally at a lower level,” Ian Lim, a partner at TSMP Law, told Singapore Business Review.

One of the world’s most open economies is trying to balance its desire to lure the world’s best and brightest to boost its workforce, and the need to assure its citizens that the system works for them, too.

The Ministry of Manpower has tweaked that balance in favour of locals by raising the minimum qualifying salary for foreign workers to $5,600 from $5,000 for general employment passes effective 1 January 2025, and to $6,200 from $5,500 for those in the financial service sector.

The salaries, which will cover new applications and renewals, are benchmarked to the top one-third of local professional, manager, executive, and technician wages.

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The revised guidelines are not expected to affect foreign workers at “higher level positions,” Lim said. “The proportions should remain the same, and we won't see more foreign workers at higher level positions.

Qualifying salaries increase with age, and the rates for next year are $10,700 for employees in their mid-40s and $11,800 for those in their mid-40s in the financial service sector. Singapore had 1.55 million foreign workers as of June 2024, about 202,000 of which were highly skilled employment pass holders, according to the ministry.

Some companies in the city-state do have a problem with renewals, Averill Chow, an associate at Baker McKenzie Wong & Leow, told Singapore Business Review. This means they will have to be relocated to other countries without strict salary requirements, or get fired.

This could be a problem for Singapore, whose small population of 6.04 million and status as a regional financial hub point to a wide talent gap. Michael Page’s 2024 Talent Trends Report found that 41% of organisations in Singapore struggle to find the right talent.

Singapore’s total employment grew by 11,300 in the second quarter, more than double the increase a quarter earlier, according to government data. Non-residents (12,000) accounted for all the increase, while resident employment fell by 600.2.

Lim noted that despite the higher thresholds, Singapore would continue to rely on expatriates to plug its workforce gap.

“Of course, Singapore has to rely on foreign talent,” he said. “The authorities have been quite clear… that in order to maintain our standing as a global hub, we have to attract foreigners. But we want to make sure we attract the right kind of foreigners at the right level of positions.”

The tighter salary rules are expected to ensure that Singaporeans remain the priority for local jobs.

“There shouldn't be a situation whereby the job could have been offered to a local worker who was more qualified than the foreign worker, and yet the position still went to the foreigner,” Chow said. “That is not supposed to happen.”