10 Facts About the New EP System That’ll Start from Sept 2023

Unless you’ve been living under a rock, you’ll be aware that people in Singapore are talking about a particular topic:

Budget 2022.

Yes, it’s that time of the year when the government gives out sweets hoping to alleviate the financial burden of people in Singapore. Granted, not so much this year considering the GST hike was brought up right at the end of the 2-hour speech.

You can check out our YouTube video hosted by a funny blue dog to know what that’s all about:

Other than the GST Hike and enhanced financial support for Singaporeans, another hot ticket item was discussed in the budget: Changes to the Employment Pass (EP) system.

Why is making changes to the employment system a hot topic? Would it really help the situation? And why should you care?

Well, here are10 facts about the changes to Singapore’s EP system that you need to know, or you would probably be left out of many conversations.

1. The Current Employment Pass Situation

Previously, it was explained that Singapore cannot afford to alienate foreign talents. For one, it could turn Multi-National Companies (MNCs) away from setting up regional headquarters in Singapore.

That’s a waste because, with Hong Kong’s relative instability, MNCs are leaving the previously-number-one financial hub and looking for somewhere else to set up shop.

And two, these foreign talents act the part of new blood, bringing skills and talents that Singapore doesn’t have. The hope is that these foreign talents will help Singapore grow the skillsets it needs for the economy of the future.

Of course, with the COVID-19 pandemic, the government were forced to strengthen the Singapore core (read: make Singapore first) and it increased the salary requirements for EPs to S$4,500.

Now, do you think that’s the end? Apparently not.

It seems like the powers-that-be in Singapore felt that the system could be fine-tuned further, and Compass was born.

2. Compass

No, I’m not talking about the thing all NSFs bought and attach to our watches to look cool even though we don’t know how to use it.

Nor am I talking about one particular mall located in the Northeast.

Compass is the Singapore government’s latest instrument to strengthen the Singapore Core (a.k.a get Singaporeans more jobs).

The salary increase, according to Manpower Minister Tan See Leng, is a blunt tool. It’s easy to understand but might not achieve what they want.

So they came up with a surgical tool: the Complementarity Assessment Framework, or Compass for short.

3. What Exactly Is This New Framework

In essence, Compass is a points-based system that applicants must pass before they can successfully obtain an EP.

There are four broad areas within the framework:

  • Salary: How much is the applicant’s salary compared to local PMETs within the company
  • Diversity: Is the hiring company relying too much on a single candidate
  • Qualifications: The quality of the candidate’s degree
  • Support for local employment: Whether the company has hired enough local PMETs

In order to pass, the application must score 40 points or above.

4. Bonus Points

Now, if you’ve read #1 above carefully, you’ll know that the EP system was implemented to bring highly-qualified talents into Singapore, especially in areas that have a skills mismatch.

In order for Compass to help meet that requirement, two bonus categories were put into place.

The first is Skills Bonus; if the job is on the Jobs Shortage Occupation List (meaning there’s a skills shortage in that area), the application will be awarded a bonus of 20 points.

That’s half of the required points to pass the assessment.

The second is the Strategic Economic Priorities Bonus; firms that meet specific assessment criteria for innovation or internationalism will get a bonus of 10 points.

5. What About SMEs?

Okay, if you’re an MNC, you’ll probably be okay because you have a large workforce.

But what about SMEs where even a few staff changes will affect the diversity drastically?

Dr Tan assures that SMEs will be minimally impacted by the new framework.

Businesses with fewer than 25 PMETs will be automatically scored as “meeting expectations” on two out of four main attributes.

That’s 20 points, by the way; so if the role is on the Job Shortage list, you’ll have met the 40 points passing mark.

6. Salary Threshold To Be Increased Again

Other than the additional requirements, the salary requirement for EP holders will be increased again.

From the current S$4,500, it’ll be raised to S$5,000.

For the financial industry, however, which has higher wage norms, the bar will be raised to S$5,500.

7. When Will It Take Effect

The changes will take effect from September 2023.

For EP renewals, however, the changes will take effect on September 2024. This gives firms an additional year to adjust to the new business requirements.

8. Not a Tightening Measure; It’s A Raising Quality Measure

According to Dr Tan, this isn’t a way for Singapore to tighten its foreign workforce policies; instead, it’s meant to increase the quality of EP holders in Singapore.

Most EPs in Singapore, he said in Parliament, will not be affected by the changes as they’re earning above the bar.

There are some, however, who do not meet the new requirements; but that, Dr Tan says, is how Singapore maintains its “a high-quality EP stock”.

The rise in salary requirements, he added, is to make sure the qualifying salary is tagged with the local wage growth.

This is so EP holders are not hired because they’re cheaper than local PMETs.

9. Global Rotation Scheme

A few years back, the government were singing along the same tune: The world is your oyster.

Basically, they want young Singaporeans to get out there into the world to gain skills and experiences; then bring them back to help Singapore grow.

It seems that the focus hasn’t changed as the new EP process will be “flexible” enough to allow global firms to rotate their local and foreign talents for overseas postings.

A global rotation programme pilot will be implemented where global companies can post their foreign talents here in Singapore as long as our local PMETs are given the same opportunities for overseas postings.

10. Businesses Will Be Given Time To Plan Ahead

The new requirements don’t mean that Singapore is closing itself against foreign talents, Dr Tan emphasises.

“Singapore is and will always be committed to remaining open to foreigners who complement our local workforce, and who are able to add vibrancy to Singapore’s economy.”

Foreign workforce policy changes will kick in gradually, Dr Tan says. This will allow businesses here time to adjust and plan ahead.

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