Thanks to its strong links with other countries, Singapore's economy is considered a barometer of economic conditions. However, there is growing concern about the 2023 outlook as the World Bank warns of a possible recession. As a result, the Singaporean government is introducing a new strategy to sustain its economic growth based partly on foreign talent. Here's how this works.
A new attempt to attract foreign talent
Singapore is currently on the lookout for international talent. Last month, in an effort to attract them, the government launched a new program: the Manpower for Strategic Economic Priorities (M-SEP). This scheme will allow eligible companies to recruit foreign professionals with S visas or work permits without worrying about existing quotas. Until recently, Singaporean companies had to comply with quotas based on visa status when recruiting foreign workers. With the M-SEP, these quotas can now be exceeded, not only to attract more qualified foreign professionals but also to boost the economy.
As a reminder, there are two main visas for foreign workers: the S Pass and the Work Permit for foreign workers. The S Pass is intended for skilled applicants earning on average between S$2300 and S$3000 per month (US$1747 to US$2278 per month). The salary level varies depending on the employee's age and the sector in which they work. For example, a young foreign worker in the finance sector can expect to earn more than S$3500 (US$2658). On the other hand, the work permit for foreign workers applies to semi-skilled foreigners in construction, marine, manufacturing, or service industries.
The M-SEP is more flexible and straightforward
In practice, the M-SEP will allow member companies to increase the number of employees hired under the S Pass and/or work permit by up to 5% of their base workforce. Previously, the quota was 10% for a service business and 15% for a construction, shipyard, or manufacturing business. The new measure will allow greater flexibility and better responsiveness to changing market needs. At least, that is the government's ambition.
To join the M-SEP, companies must meet two conditions: they must commit to hiring or training local workers in the same way, and they must support strategic economic priorities. To this end, Singapore has established several agencies to promote these strategic economic priorities, namely the Economic Development Board, the Singapore Tourism Board and Enterprise Singapore. Companies wishing to benefit from the M-SEP will need to be affiliated with at least one of these agencies. Concerning local employment, affiliated businesses will be required to guarantee that they maintain a local workforce. Those joining the M-SEP will be able to take advantage of the new hiring provisions for two years.
Singapore changes its policy on foreign talent
A survey conducted in early 2022 revealed that 70% of Singaporeans wanted stricter immigration rules applied. Since Covid, anti-foreigner sentiment has risen sharply in the City-State. But the government wants to put an end to this and bring back foreigners, especially international talent.
The health crisis and rising nationalism
The pandemic exacerbated the resentment of a part of the Singaporean population against foreigners, whom they consider responsible for the rise in property prices and the lack of employment. In 2020, Ong Ye Kung, Minister of Transport (now Minister of Health), criticized the gap between the salaries of Singaporeans and foreigners working in finance. Singaporeans were earning an average of S$6,000 to S$8,000 (US$4,550 to US$6,060), while foreigners were making S$8,000 to S$10,000 (US$6060 to US$7,580).
While the international media praised Singapore's management of the health crisis in the first few weeks, criticism soon followed. Vaccination campaigns stalled, forcing the government to introduce strict lockdowns and severe travel restrictions. Like locals, expatriates were victims of the pandemic, but they were also accused of not respecting health rules.
At the same time, the Singaporean government tightened visa requirements. In September 2020, Gan Siow Huang, then Singapore's Minister of State for Human Resources (now Minister of State for Education and Labor), openly urged companies to prioritize local candidates and, if they were to lay off employees, to choose foreigners first. Many expatriates reported feeling increasingly uncomfortable in a country that was supposed to be an international hub. As a result, many of them preferred to leave the country, and in one year, the number of professional visas granted dropped by 10 percent. Ever since then, the Singaporean government has been trying to curb anti-foreigner sentiment.
Foreign talent and economic growth
In September 2022, Singapore revised its visa policy in an effort to attract more foreign recruits. But this was not any plan for international recruitment. Instead, the city-state was targeting white-collar, skilled, and highly qualified professionals. If their monthly salaries exceeded $22,800, they could obtain a five-year visa and bring their families along.
Considering the global context, Singapore did well in 2022, with a 3.8 percent growth rate. That was higher than the estimated 3.5 percent but still well below the 7.6 percent growth statistics for 2021. The combination of global inflation and rising interest rates has dampened Singapore's expansion since then. Exports are expected to fall sharply this year, and there are even signs of a possible recession, with its manufacturing sector struggling, due to a decline in computer chip world exports.
This is another good reason for the government to invest in its talent and boost the recruitment of foreigners. Labor Minister Tan See Leng said: "As a country with little or no natural resources, talent is our only resource, and talent acquisition is an offensive strategy for us. We are now in an era where businesses follow talent, as much as talent follows businesses". The M-SEP program is heading in that direction.
Will it be enough to bring back foreign talent? Expatriates who have left Singapore for the United Arab Emirates, Thailand or Australia are not considering returning at all, as they feel the nationalist drift is still too strong. Whether the government's new program will bring back talent remains to be seen. The wealthiest have always been welcome in Singapore, and this will continue to be the case.
