Sectoral fluctuations: "MOM does not and should not micro-manage how the job market functions"

Manpower Minister Tan See Leng stressed this while tackling a Parliamentary query on whether the Ministry has reduced the number of EPs or S Passes issued, in lieu of recent fluctuations in the I&C sector.

Recent news about retrenchments by big technology companies has raised concerns in Singapore on the outlook of the information & communications (I&C) sector.

In light of this, the Ministry of Manpower (MOM) has received several Parliamentary questions in the last few months regarding the retrenchments. However, Minister for Manpower Dr. Tan See Leng has reassured that MOM is closely monitoring the situation.

Based on the latest available data as of September 2022, total employment in the I&C sector grew by 13,700 in the first three quarters of 2022. The number of job vacancies in the I&C sector at 9,300 in September 2022 was also higher than that observed in the same period in 2021.

With this in mind, Minister Tan still cautions that global headwinds may weigh on labour demand in the near term — in fact, MOM expects to see a "dampening in hiring demand and a slower increase in total employment in Q4 2022."

"Even so, we remain cautiously optimistic about the long-term prospects of the I&C sector as tech firms continue to pursue opportunities in Southeast Asia’s growing digital economy from Singapore. Tech skills also continue to be in high demand both within and beyond the I&C sector as the pace of digitalisation accelerates across our economy," he added.

Against this backdrop, Minister Tan has further addressed a query on whether the Ministry has reduced the number of Employment Passes (EPs) or S Passes issued, if the I&C sector has shrunk.

"Singapore's economy is open and connected. It is only natural that changes in external demand in the global economy have an impact on our companies, and on our job market. We have designed our policies to safeguard good local employment outcomes across the business cycle," he stressed.

When it comes to Singapore's foreign workforce policies, MOM has "set a quality benchmark" for EP and S Pass holders to be pegged to the top one-third of local professionals, managers, executives, and technicians (PMETs), and associate professionals and technicians respectively. "This ensures that firms do not turn to cheaper options as a first resort, to ride out a business downturn," Minister Tan pointed out.

Apart from that, he reiterated the following measures:

• Firms are incentivised to hire and retain locals. Specifically, with the upcoming introduction of the Complementarity Assessment Framework (COMPASS) at the EP level, firms with a low local PMET share relative to industry peers will score fewer points on COMPASS and will face a harder time getting the points required for their EP applications.
  
  
• For the S Pass, MOM has put in place the S Pass sub-Dependency Ratio Ceiling (DRC), or quota. This quota is calculated based on a firm’s total workforce, including how many locals the firm hires. Hence, should the firm’s total workforce fall when locals are amongst those retrenched, the S Pass quota available to the firm would decrease and the firm will not be able to hire as many S Pass holders as before.

Finally, the Minister also highlighted points under the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, which states that retrenchments should be a last resort, and selection of employees to be retrenched should be based on objective criteria with primary considerations given to employee merit and preserving skills to ensure business sustainability.

[ALSO READ: Retrenchment as the last resort: How to do it responsibly]

He also encourages employers to take a long-term view of their manpower needs, including the need to maintain a strong Singaporean core. This means that retrenchments should generally not result in a reduced proportion of local employees.

"In summary, MOM does not and should not micro-manage how the job market functions by directly and arbitrarily adjusting the number of EPs and S Passes issued in response to business fluctuations.

"Adopting such a protectionist measure would cause significant business uncertainty, and undermine Singapore’s reputation as a transparent, competitive, and reliable location for businesses. It would go against how we have thrived over the decades by being an open economy and a business hub.

"Instead, we have a comprehensive suite of measures in place that allows us to attract more investments, and grow the pie to create many more good jobs and career choices for Singaporeans."

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