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Serious graduate under-employment while Singapore continues with flawed foreign employement policy

by Kelvin Sim

Channel NewsAsia published an article on Tuesday (10 Apr) talking about under-employed graduates. The survey – conducted jointly by the Lee Kuan Yew School of Public Policy Ong Teng Cheong Labour Leadership Institute – highlighted the bleak picture of this situation and called it a “black swan in our labour landscape”.

Typically, the situation of under-employment arises due to retrenched workers taking up the first job offer that came their way out of desperation. After settling into the job, they then find it difficult to venture out for a new job or upgrade themselves.

Despite working full-time, such “graduates” earn less than S$2,000 per month. Despite this, the average under-employed started off well with the typical respondent having about 10 to 15 years of working experience with local enterprises.

Under-employment brings about profound psychological and economic impact, the 1626 survey respondents had a median age of 35 years with more than half (61%) having no children and 63% of such respondents were female.

Are government actions sufficient to help these group of people?

The CNA article noted that the government has a host of policies to address the situation. One example quoted is the Career Support Programme which provides incentives to employers to hire professionals who have been unemployed for 6 months or more by co-funding their salaries.

However, the quantum may not be sufficient to convince companies to hire an unemployed worker. For example, a 38 year-old who has been out of work for more than a year but manages to get a new job would have 20% of his salary co-funded by the government for the first 6 months and 10% for the next 6 months.

Studies have repeatedly shown that employers are reluctant to hire those with a resume gap of more than 6 months. This is because employers feel that such people may have skills which are outdated, and these people are generally perceived as workers who have lost their drive after being out of work for so long.

Number of foreigners in Singapore increases in the past year as Fair Consideration Framework proves ineffective

According to MOM statistics, there was a nett increase in the number of foreign PMETs in Singapore last year. Although the number of Employment Pass holders fell by 4,600, the number of S-Pass holders increased by 4,700. So, there was in fact a nett increase of 100.

Given that an employment pass holder needs to earn at least $3,600 a month, it is curious why such opportunities are not offered a chance to take on more challenging roles to meet their skills and experience instead. Currently, all that an employer needs to do is to place an advertisement on jobs bank before being able to apply for an Employment Pass.

According to an earlier TOC article, the then Minister for Manpower Tan Chuan Jin admitted in 2014 that his ministry was not able to “directly track” the number of applications submitted by Singaporeans. In addition, the number of non-compliance has doubled in the span of a year with more than 500 firms having been put on the watchlist in 2018 for unfairly favouring foreigners, up from 250 in 2017.

ECA International: Singapore has one of the highest pay packages in the world

According to the MyExpatriate Market Pay survey published by employment consultancy ECA international, expats in Singapore get one of the highest pay packages in the world. The average pay middle-manager gets $316,600 which includes base cash salary, tax and benefits such as accommodation, international schools, utilities or cars.

After factoring in the low personal tax rates in Singapore, the cost for the average expat into the 9th most expensive place in the World. In addition, the weakening US currency also means that the pay package has fallen to a five-year low in USD terms.

Flawed foreign employment scheme

However, it is not to say that foreign workers are not welcome. Instead, it is how the foreign employment policy in Singapore contrasts against the manner in which many developed countries run their schemes to attract its immigration workforce, targeting at skilled workers which the workforce lacks.

TOC understands that many companies are forced to let go off their skilled professionals whom cannot be replaced by the local workforce and that their appeals were rejected without any explanations. At the same time, foreign employment numbers continue to increase which begs the question of whether MOM is simply granting employment passes on a quota basis rather than scrutinizing the qualifications of the foreign workers and the local supply for the said jobs is insufficient.