Oral Answer by Mr Tan Chuan-Jin, Minister for Manpower, to Parliamentary Questions on Allowing the Increase in Qualifying Salaries for S Pass Holders to be Met by Fixed Allowance Increase Instead of Basic Salary Increase

1. We need to raise minimum qualifying salaries (both for S Pass and EP) from time to time, to keep pace with local wages. Foreigners who are older and more experienced should command higher salaries to qualify, commensurate with the quality they bring. This helps to level the employability playing field for Singaporeans. At the same time, we also need to strike a balance in keeping our companies competitive and enabling them to have access to a diverse workforce.
2. Employers can meet the new thresholds either via the basic salary or via fixed allowances, or any combination of the two, as long as whatever increment is a fixed quantum that does not vary from month to month.
3. We have heard employers asking us if it is possible to allow them to count variable allowances, bonuses and annual wage supplements as part of the qualifying salary. We have not done so because work pass eligibility has to be based on the consistent calibre of the worker, which should not vary from month to month. It is not practical to have a situation where a worker is eligible for S Pass in one month due to good performance, but whose pass needs to be revoked the following month because he has not accrued enough variable commissions or bonuses to qualify. This is why only salary components that are paid on a fixed monthly basis – whether it is basic salary or allowances – may be included in work pass eligibility criteria.
4. But, we do encourage employers to look at the approach of having variable allowances, bonuses, commissions to incentivise higher productivity and better performance. They can still provide that to S Pass and EP holders, to motivate them to attain better performance. They can structure salaries such that S Pass holders commit to deliver certain minimum level of performance each month, and the associated bonus or commissions can be built in as a fixed allowance. Variable allowances can be given in addition, for performance that exceeds the minimum level.