A new Singaporean law aimed at encouraging firms to hire more locals could also potentially boost the earnings of some foreign banking candidates, if their salaries would otherwise have fallen slightly below the regulation’s minimum pay threshold.
Under the Fair Consideration Framework (FCF), which came into force on 1 August, employers must advertise jobs paying under S$144k to Singaporeans on a government-run online “Jobs Bank” for at least 14 days before they can apply for an Employment Pass (EP), a work visa for a foreign candidate.
As we reported on Friday, even after the 14-day advertising period is over, banks now perceive that most EP applications for sub-$144k jobs are likely to be rejected by Singapore’s Ministry of Manpower. Banks are already telling recruiters not to bother shortlisting foreign candidates below the advertising salary threshold.
Banks in Singapore who need to hire foreigners – especially in talent-short sectors like risk, internal audit and (increasingly) capital markets – will be inclined to submit EP applications mainly for positions paying $144k or more.
Some mid-level banking jobs in Singapore pay in the $130k to $140k region – a level at which banks may be tempted to boost salaries to $144k for overseas applicants. VP salaries in credit risk, for example, start at $130k, according to the Robert Walters Salary Survey, while some AVPs in front-office functions earn similar money.
“If it’s an urgent role and the skills of the candidate are niche, companies are likely to increase salaries to make the EP application run more smoothly,” says Chris Jay, sales director at recruiters Morgan McKinley in Singapore.
Banks have not yet had to boost pay for foreign candidates purely because of the FCF – the regulation has only been in force for a few days. Tight cost controls at large banks also mean that any future increases should be relatively small (for example, a 5% to 10% rise over budget to bump up a salary to $144k) and limited to elite foreign candidates whose skills are hard to find locally.
“Firms will typically only raise salaries for good commercial reasons, often adjusting the budget after realising the original level was not competitive or wouldn’t have been able to get them the calibre of candidates they want,” says Lay-Hoon Ng, a senior manager at recruitment firm Michael Page in Singapore.
Banks in Singapore have in the past been prone to making minor compensation increases when recruiting from abroad. At an eFinancialCareers roundtable in Singapore in April, two banking HR professionals said they had done this to stop EPs being rejected for falling below the key threshold at that time – the S$98k salary needed for a “P1-level” pass (the work visa given to most white-collar professionals).
“In a couple of recent instances, we’ve been forced to increase the candidate’s pay in order to get them an EP, because below the threshold the Ministry of Manpower is less likely to think that their skills are needed in Singapore,” said one of the roundtable delegates, all of whom asked not to be named.
While these occasional and minor increases in budgeted salaries for top-performing foreign candidates look set to continue under the FCF, banks must now also ensure that Singaporean applicants have been treated “fairly” during the hiring process. This is the overriding objective of the legislation, regardless of salary level.
Banks that raise pay for overseas candidates too often or by too much – and put locals at a disadvantage as a result – are likely to face extra scrutiny from the Ministry of Manpower as well as from their own employees.
“This would actually accentuate the original problem the FCF is trying to solve,” says Howe Yuin Teo, senior consulting manager at recruitment agency Huxley Associates in Singapore. “Not only would there be a perception that foreign talents are taking over jobs, but they are deliberately being paid higher to circumvent the FCF.”
A survey by eFinancialCareers last month found that 55% of Singaporean finance professionals believe that their foreign counterparts are already receiving preferential treatment in the workplace.