Singapore Personalised Employment Pass (PEP) criteria tightened

Singapore Personalised Employment Pass (PEP), is a special type of Singapore work visa issued to highly-skilled foreigners. Unlike ordinary Employment Pass (EP), PEP is independent of any employer and allows its holder to stay in Singapore for up to 6 months in between jobs.[1] With normal Employment Pass, you can only stay in Singapore up to a month if you lose your job so for this reason many EP holders try to get PEP to have better flexibility and security in their jobs in Singapore.

Currently about 12,000, 7 per cent of the 174,000 Employment Pass holders have PEP. But this number is set to fall as Singapore Ministry of Manpower (MOM) has announced that starting December 2012, foreign professionals applying for a personalised employment pass (PEP) will have to meet more stringent criteria that includes a minimum annual fixed salary of S$144,000, up four-fold from the existing S$34,000 a year.[2]:

From 1 December 2012, the qualifying criteria for the Personalised Employment Pass (PEP) will be raised and some of its features will be refined. This ensures that the PEP remains a premium pass for top-tier foreign talent and is in line with recent moves to raise the quality of Employment Pass holders. P1 Pass holders who earn a fixed monthly salary of at least $12,000 and overseas-based foreign professionals whose last drawn fixed monthly salary was at least $18,000 will be eligible for the PEP. For overseas-based foreign professionals, they should not have been unemployed for longer than a continuous period of 6 months at the point of application. Correspondingly, the minimum annual fixed salary requirement will be increased to $144,000.

 The period of validity of the PEP will be reduced to 3 years. [3]

The changes will apply to all new PEP applicants, including existing P1 Pass holders who wish to apply for the PEP. There is no immediate impact on existing PEP holders. MOM will give all existing PEP holders until 31 Dec 2014 to meet the revised minimum annual fixed salary requirement of $144,000.

Previously PEP was available for current and former P1 Employment Pass holders and overseas-based foreign professionals with $8,000+ salary, P2 Pass holders with at least 2 years’ on a P Pass and earned a fixed salary of at least $34,000 in the preceding year, Q1 Pass holders with at least 5 years’ on a Q1 Pass and earned a fixed salary of at least $34,000 in the preceding year and foreign graduates from Singapore’s Institutes of Higher Learning with at least 2 years’ on an Employment Pass and earned a fixed salary of
at least $34,000 in the preceding year.[3]

See this PDF file titled CHANGES TO PERSONALISED EMPLOYMENT PASS (PEP) for the details of the new changes and answers to frequently asked questions.

[1] - Singapore Personalised Employment Pass (PEP)
[2] - MOM tightens criteria for premium employment pass
[3] - Changes to the Personalised Employment Pass

Further tightening of SPass work visa holder inflow

To further slowdown the increase of the number of foreign workers in Singapore, The Ministry of Manpower (MOM) is now looking at tightening the increase of S-Pass holders here. S Pass is a Singapore work visa type designed for mid-level skilled foreign workers employed by companies operating in Singapore.[1] Foreign workers earning more than $2000 per month in supervisory or junior PME (Professional, Managerial Executive) hold this type of work visa. The number of foreign workers holding S-Pass in Singapore has jumped by 14,200 in the past year and now there are 128,100 S-Pass holders in Singapore according to recently released population statistics.

While number of SPass holders jumped, number of Employment Pass holders slighttly went down from 175,400 to 174,700. This suggests that companies are applying SPass for new hires or renewing their employee passes with SPass instead of Employment Pass due to the restrictions introduced in Employment Pass category (salary lower limits for Employment Pass holders was increased in the beginning of the year):

"Acting Manpower Minister Tan Chuan-Jin said that it is likely that companies are using S Passes to bring in
more junior-level professionals, managers and executives (PMEs).  “The S Pass is a sector we are not totally comfortable with, because there’s a lot of transference of lower (level) Employment Pass into S Pass and we are now exploring measures to perhaps tighten that segment,” he added.[2]

The sentiment on the ground is that S-Pass holders are taking up decent paying jobs that could have gone to Singaporeans. Also as a more worrying trend, the work force is still increasing despite a significant slowdown in Singapore's economy which is resulting in productivity decline in Singapore. It seems like Singapore's economy is only expanding by adding more working age people to its population and excessive borrowing (especially the construction sector is running on near zero interest rate fueled mortgage spike), which is quite unsustainable and also reduces the wealth of man on the street while the GDP goes up, rather than increasing productivity.

Although the number of foreign workers is continuously increasing, super unproductive SMEs of Singapore seems to not get enough of them. A recent Association of Small and Medium Enterprises (ASME) survey
of some 200 companies found that eight in 10 currently face manpower shortages, following the tightening of
regulations on foreign labour.[2] A few weeks ago, an SME boss was telling "we cannot increase productivity in many cases since it is not feasible". He gave an example of small bakeries who needs automated baking machines to increase the individually because they do not have enough revenue to finance it. He basically told bringing more worker is the only choice and otherwise the bakeries will bankrupt. In my opinion this this is exactly what should happen: Let's say there are 5 bakeries like this. If the constant influx of cheap labour which is sustaining their unproductive business practices goes, some will definitely go out of business. But 1 or 2 out of these 5 (probably 2 of the 10 in ASME surveys) will survive and armed with an increased share in market, they will be able to finance a baking machine. They will also hire the locals working for the other companies with probably higher salaries thanks to the productivity increase. Is this process painful? Yes, it is but it is constructive destruction and after the initial pain it will be win-win for all Singaporeans and Singapore economy. Enter Joseph Schumpeter's creative destruction.

The Acting Manpower Minister, however, stressed that Singapore cannot continue to rely on low-cost foreign labor to grow the economy, as it is “a race to the bottom”:

“We will not be able to sustain our competitiveness against our neighbours, who will always have more ready access to lowcost labour,” he said, noting that textile firms in China are relocating to other countries with even lower labour costs.[2]

[1] - Singapore S-Pass
[2] - Govt may further tighten inflow of foreign workers

Sponsoring Dependent Pass for spouse is stricter now for Singapore work visa holders

By September 1st  2012, S Pass and Employment Pass (EP) holders will need to earn a fixed monthly salary of at least 4,000 Singapore Dollars Per Month to sponsor the stay of their spouses and children, announced Singapore Ministry of Manpower (MOM). According to MOM, these changes to Dependent Privileges for Work Pass holders will help ease the pressure on Singapore’s social infrastructure:

“The Government is tightening the criteria for work pass holders to sponsor dependants as part of the overall direction to moderate the growth of Singapore’s non-resident population. This will help ease the pressure on our social infrastructure. Nonetheless, Singapore remains a global talent capital. We continue to welcome highly skilled foreign professionals who wish to bring their dependants to stay with them.”
Source : MOM Passes & Visas

There are 2 additional changes, P1 Pass holders will no longer be able to bring in their parents-in-law (they may still bring in their parents, spouses and children) and P2 Pass holders will no longer be able to bring in their parents or parents-in-law (they may still bring in their spouses and children).
These stricter rules on passes for foreign worker’s families are the last changes in a series of changes to

Singapore work visa framework in the past 1 year. In 2011, government announced an increase to the minimum salary requirements for each work pass type. The move is to further slowdown the inflow of foreign workers here. Currently, S Pass holders earning more than 2,800 SGD per month and all Employment Pass holders could sponsor their spouses’ Dependent Pass. Family members already here will not be affected as long as their sponsor stays with the same company but an employment change will be considered as new work visa and will be subject to new laws.

Immigration is the hottest topic in Singapore recently with the huge inflow of foreigners in the past few years has put great strain on the infrastructure of the country. Since married skilled foreigners will value the ability to bring in their family with them, these rules will make it harder for employers to offer lower prices to foreign workers.