Virginia, US
In 2017, Singapore placed first globally for start-up talent – eclipsing even global behemoth Silicon Valley – in a research report by the Startup Genome, a US-based organisation.
The tiny island city-state came up tops due to access and cost sub-factors. The report found that the average Singaporean start-up hire had at least two years more experience than the global average, while also demanding a significantly lower salary (at least US$10,000 less than global standards) – making it more cost-effective for start-ups to do business in Singapore. Considering all metrics, Singapore placed 12th overall in this report.
Startup Genome also found that 35 per cent of start-up founders in the Southeast Asian city-state were immigrants, almost doubling the global average of 19 per cent. In spite of such positive statistics, visa success rates for work passes are low – just 25 per cent -- well below the global average of 41 per cent. In comparison, US hubs Silicon Valley (#1) and Los Angeles ranked about 58 per cent and 31 per cent respectively in the same report that utilized extensive research including interviewing experts around the world, conducting surveys and collecting data from reputable databases on start-up intelligence..
Could Singapore be a nice place to do business for start-ups, but less friendly towards foreign nationals wishing to contribute to its start-up ecosystem?
Since the introduction of the Fair Consideration Framework (“FCF”) in August 2014, the Singapore government has tightened immigration policies in a bid to encourage companies to recruit and develop local talent. Get a quick recap about the FCF here.
Some of the most recent changes that were implemented in late 2017 and early 2018 include:
- The inclusion of additional recruitment questions in the Employment Pass application; and
- Increasing the salary thresholds for Employment Pass (“EP”) and S Pass holders wishing to sponsor dependant family members into Singapore.
With these changes in place, how will Singapore fare for start-ups looking to hire foreign talent and what will the visa success rate be in 2018? In this blog, I offer tips for start-ups wishing to ramp up recruitment in the new year.
Put a Positive Spin to Compliance
On 21 November 2017, the Ministry of Manpower (“MOM”) introduced additional recruitment questions to the EP application form pertaining to the employer’s recruitment methods and data on the company’s pool of candidates. In addition to advertising the position in the government’s job portal and job bank, employers are further required to answer a series of questions related to recruitment methodology and candidate profiling.
For example, employers must now provide statistics on the number of Singaporeans, permanent residents and foreign nationals who participated in each stage of the recruitment process, including the number of applicants who (a) applied for the job; (b) were interviewed for the job; (c) were offered the job; and (d) were hired for the job.
Conventionally, start-ups thrive on creativity and take pride in being equal-opportunity recruiters who value a candidate’s skills and experiences over his or her nationality. Questions pertaining to nationality and race are typically frowned upon when asked during recruitment, as they can be perceived as “discriminatory”. In fact, many start-up businesses have made it a point to exclude such questions, as they can create bias in the recruitment process, and have also put in place anti-discrimination policies.
Thus, the inclusion of these questions presents a reputational challenge to start-ups, as they are now required to collect sensitive data on their candidates’ nationalities.
How, then, can start-ups ensure compliance with these new requirements, without compromising their reputational integrity?
While it would be difficult to remove perceptions of bias (whether actual or perceived), start-ups can try to focus on compliance when explaining the need to collect such data. The MOM has clarified that these questions are not meant to discriminate against candidates of certain nationalities; rather, the purpose is for the MOM to collect data on nationwide recruitment practices and monitor compliance with the FCF.
This could be a good starting point.
To go a step further, start-ups could even include these explanations as general disclaimers in their application form. An example that comes to mind is when the Personal Data Protection Act 2012 (PDPA) was implemented in Singapore in 2013. Companies back then included a general disclaimer related to collecting personal data in all forms of communications (e.g., on their websites, in email footers, etc.). While the MOM has not mandated in legislation informing applicants of the reasons for collecting data on their nationalities and ethnicity, such an approach would maintain transparency throughout the data collection process and in opening communication channels behind new changes and, consequently, would instill trust and confidence in candidates.
Ensure Compliance is Carried Out to the Bone, and as Best Practice
The inclusion of additional recruitment questions may also cause potential delays in having EPs approved. Delays typically happen when the MOM requests clarifications on a company’s responses in order to better understand the company’s recruitment practices. As many start-ups operate on a lean model and require candidates to be onboarded quickly to meet expanding business needs, delays in work pass approval could slow down delivery of their services or products and erode customer confidence.
These pressures can lead to riskier immigration approaches such as allowing candidates to travel – frequently – into Singapore on business/tourist visas before their work passes are approved. In some cases, candidates genuinely do so only to prepare for work in Singapore (e.g., to find housing, look for schools and open bank accounts) before properly commencing work on a valid pass. If candidates travel frequently to Singapore before the work pass is approved, the risk of deportation increases as immigration officers could perceive candidates’ frequent visits as a pretext for commencing employment before their valid work pass arrives. A deportation and subsequent appeal could cause a delay of at least two months.
In essence, start-ups should review their policies on tourist and business visa applications for selected candidates to avoid having them stuck in a quagmire of delays and possible deportation. If travel is required before the work pass is approved, activities should be limited to meetings and discussions. While travelling to Singapore on a tourist or business visa might seem like an easy fix to pressing manpower issues, it carries the risk of increased scrutiny from the authorities which far outweighs the short-term benefits of having candidates arrive earlier in Singapore on a temporary pass.
Consider Other Work Pass Alternatives
Although the EP is a popular work pass option for foreign candidates, there have undoubtedly been more delays and difficulties in obtaining EPs due to the recent changes. Start-ups could also consider applying for alternative work passes that are also suitable. These alternatives include:
- A Letter of Consent (“LOC”) for Dependant Pass (“DP”) holders
- A Personalised Employment Pass (“PEP”) The LOC is a relatively easy work pass to obtain. However the candidate must fulfil other conditions, such as holding a Dependant Pass tied to an EP, having sufficient remaining validity on the LOC and must have a job offer. Start-ups also do not need to advertise the role or answer additional recruitment questions for an LOC application, making the process less data-intensive.
The PEP is suitable for overseas foreign professionals whose last drawn fixed monthly salary is at least S$18,000 (the last drawn salary should be within 6 months from the date of filing the application) or for EP holders who earn a fixed monthly salary of at least S$12,000.
The PEP is an individual work pass application, granted on a one-time basis (i.e. it cannot be renewed) and does not require employer sponsorship. This means that a PEP holder can maintain the pass even if he/she switches employers. If a PEP holder is being offered a monthly salary of at least S$12,000, start-ups could choose to maintain his/her PEP status instead of converting the pass to an EP. However, some companies may find it difficult to retain PEP workers due to the high salary threshold.
Review Compensation Packages to Retain Top Talent
Along with the additional recruitment questions in the EP application form, the MOM has also raised the salary threshold for the inclusion of dependants into a candidate’s EP or S Pass application.
Starting 1 January 2018, these thresholds have been raised as follows:
- For Dependant Passes for Spouses/Children, from S$5,000 per month to S$6,000 per month
- For Long Term Visitors Passes for Parents, from S$10,000 per month to S$12,000 per month
This has become a challenge for qualified talent to bring their families into Singapore, and could be a deal breaker in accepting a job offer. The MOM has explained that these increases are not to make it more difficult for foreign employees to work here, but rather to prepare them and their families for the increased costs of living in Singapore.
Start-ups wishing to retain top talent could review compensation packages holistically, and also consider if candidates might still relocate if they are unable to bring their families to Singapore.
Conclusion
Singapore has always been a great place for start-ups to do business and to scale up their operations.
While the tightening of requirements to obtain work passes presents new challenges, there are opportunities for start-ups to think creatively about
current immigration and mobility policies.
With change comes disruption, innovation and re-creation – common values defining start-up cultures, and values that help
pave the way for new ideas in their respective industries.
So, why not start now?
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Serene Joseph, an Immigration Consultant in Fragomen's Singapore office, contributed to this blog.