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Oral Answer by Mr Tan Chuan-Jin, Acting Minister for Manpower, to Parliamentary Questions on the Fair Consideration Framework

Notice Paper No. 415, 416 and 418 of 2013 For The Sitting On 21 October 2013
Question No. 1540, 1543, 1555 And 1556 For Oral Answer

MP: Ms Mary Liew

To ask the Acting Minister for Manpower in respect of the Fair Consideration Framework (a) what is the purpose of the exemption limit for jobs with fixed monthly wages above $12,000 and on what basis is this determined; (b) whether this exemption limit is subject to review and adjustments in accordance with economic conditions and inflation; and (c) whether the Ministry will also be looking beyond the application of the jobs bank for PMEs to the rank and file jobs.

MP: Assoc Prof Tan Kheng Boon Eugene

To ask the Acting Minister for Manpower whether the Fair Consideration Framework can be extended to the entire employment process to include promotion, retirement and retrenchment decisions to ensure that discrimination is kept at bay in our workplaces.

MP: Mr Png Eng Huat

To ask the Acting Minister for Manpower with regard to the Fair Consideration Framework (a) what is the consideration for excluding small firms with 25 or fewer employees; (b) what is the current total number of small firms and the total number of workers they employ; (c) what is the estimated average ratio of Singaporeans to employment pass employees at the PME level in all firms; (d) what is the estimated average ratio of Singaporeans to employment pass employees at the PME level in all small firms; (e) what is the percentage of small firms that fall below 30% local shareholding; and (f) what is the estimated average ratio of Singaporeans to employment pass employees at the PME level in small firms that fall below 30% local shareholding.

MP: Ms Sylvia Lim

To ask the Acting Minister for Manpower under the Fair Consideration Framework (a) whether a Singaporean applicant using the national jobs bank can lodge a complaint if it is found from experience that the hiring process may be unfair; (b) what is the time frame or frequency for checking up on the ratio of Singaporean to foreigner PMEs in firms; (c) what is the low ratio threshold trigger for scrutinizing firms; and (d) how are repeated complaints for triggering scrutiny determined and calculated.

Answer:

  1. Features of the Fair Consideration Framework (FCF) need to be viewed in our local Singaporean context, where there are more jobs being created than there are Singaporeans available to fill. This is a good problem to have, and it is a good situation to keep unemployment low. Unlike in other countries that face high unemployment among locals, our economy continues to generate good and diverse opportunities for our people.
  2. So, the purpose of the FCF is to encourage a level playing field for Singaporeans and maintain our values of meritocracy and fairness in the workplace. The FCF therefore needs to be designed in a way that is practical and appropriate for Singapore – one that pushes employers to consider Singaporeans fairly but at the same time, avoids making things too rigid for businesses. Why does this rigidity matter? It matters because when companies can thrive, opportunities are also created for our people. So it is really about catering for our open, diverse and dynamic workforce, but at the same time making sure that there is fair consideration at play. They need not be mutually exclusive. Let us be clear that there are no exemptions to the need for firms to consider Singaporeans fairly. All firms must do this. But some practical exemptions have been made only for the advertising requirement, for a start.
  3. First, firms with 25 or fewer employees are exempted from the advertising requirement, as many of such small businesses do not necessarily have sophisticated HR management to respond to many applications. One could argue it should be 20 or 30, in our judgment, in discussions with the tripartite partners, 25 will be the number to start off with. More importantly, however, applying the FCF to the larger firms will yield the greatest benefit, given that they employ most of the EP holders and they generally offer jobs which are more sought after by Singaporeans. In percentage terms as highlighted in the FAQs, when we released the information on the FCF, 25 or fewer employees for firms such as these contend for about 25% of all the EP holders.
  4. So essentially, those firms larger than 25 and above employers cater for about 75% of all EP holders.
  5. Secondly, jobs paying a salary of $12,000 and above a month are also exempted from the advertising requirement. This is essentially because advertising for jobs such as these is usually done in a different manner. Furthermore, such jobs cover only 5% of the local workforce, and hence, the vast majority of jobs would be covered by the advertising requirement.
  6. Third, we have not applied the advertising requirement for rank and file jobs, because there are other tools such as levies and dependency ratio ceilings which will spur firms to search for suitable Singaporeans before applying for S Pass or Work Permit.
  7. Nonetheless, we will monitor the implementation of the FCF closely, and make adjustments to the exemption framework as necessary.
  8. While there are some exemptions to the advertising requirement, let me reiterate that there are no exemptions to the need for firms to consider Singaporeans fairly. MOM will impose greater scrutiny on firms with a low proportion of Singaporeans at the PME level for its industry – whether they are small firms, or have all jobs paying above $12,000.
  9. Employers will be identified for additional scrutiny based on a range of factors. We will consider how a firm’s proportion of Singaporean PMEs compares with others in the same industry. Other factors such as how fast the proportion changes over time, which could be due to promotion or retirement or retrenchment patterns, are also relevant. We are not expecting each firm to work towards a target percentage of Singaporean PMEs in its workforce given that this can vary across industries. What is important is that the firm has fair and meritocratic hiring practices that consider Singaporeans fairly. And at the MOM side we will have our internal triggers to home in on, and we will scrutinise these companies accordingly.
  10. Hence, firms will also be flagged if there are repeated complaints of unfair HR practices, whether it is for hiring, promotion, retirement or retrenchment. Such firms will be subject to additional scrutiny in their work pass applications and those which are found to have poor employment practices may have their work pass privileges curtailed. In addition, for unfair dismissal cases, we have the Employment Act to protect employees who feel they have been treated unfairly.
  11. In conclusion, I should stress that the FCF is not just about the advertising requirement. It is also MOM playing a more active role to engage firms that do not seem to be doing enough to hire and develop Singaporean PMEs. However, while the FCF signals acceptable norms in HR practices, it is also important for us to understand that it is not intended, not is it desirable for us to ensure that every single PME job goes to Singaporeans. I think we do need to ensure that the economy remains competitive and that is probably the best way to look out for the interests of all Singaporeans. Employers are best placed to decide which candidates can do the job. What MOM will do is to signal these expectations quite strongly and clearly, and importantly to monitor the firms’ HR practices.