THE Ministry of Manpower (MOM) will look into a potential loophole that allows employers to lower the basic wages of foreign workers, making them "cheaper" than Singaporean hires, said Manpower Minister Tan Chuan-Jin yesterday.
The move follows a point raised in Parliament yesterday by Mr Zainal Sapari (Pasir Ris-Punggol GRC), who asked about the increase in the monthly qualifying salary of S Pass holders.
It was raised from a minimum of $2,000 to $2,200 last month.
This increase, however, need not be in the form of a rise in the worker's basic pay. It could be made up of fixed allowances that do not vary from month to month, said Mr Tan.
The flexibility worries Mr Zainal, who said employers could just increase their foreign workers' allowances but keep basic pay low. A low basic pay means a lower overtime rate and lower bonus, making these foreign workers relatively cheaper than local hires, he added.
"Would MOM consider plugging this loophole to ensure the cost of hiring a foreigner has parity to hiring a local worker... to ensure a more level playing field?" he asked.
Mr Zainal, an assistant secretary- general of the National Trades Union Congress, also said union members have given feedback that some employers deliberately lower basic pay to contain the cost of hiring foreigners.
He later told The Straits Times that an S Pass worker in a building material firm had his basic pay cut from above $1,900 to $1,000. His allowance was raised from under $200 to $1,300. Other S Pass holders in the firm were similarly affected.
Mr Tan said there is no stated requirement on how much of the qualifying salary must be met by basic pay, and how much by allowances. "But I think this is something we can take a look at to see whether it's a loophole that is exploited on a consistent basis," said Mr Tan, adding: "We will explore that further."
Recruiters interviewed yesterday said the practice exists but is not common.
The managing director of RecruitPlus Consulting, Mr Adrian Tan, said he had noticed that employers who use high fixed allowances - of up to 30 per cent, for instance - to meet the new qualifying pay usually fail to get their S Pass applications approved.
PrimeStaff Management Services managing director Ronald Lee said his firm's practice is to ensure that the basic salary meets the $2,200 minimum.
With employers who want to use a fixed allowance to meet the minimum, "our advice to them is not to do so", he added. "It is not such an enlightened practice."
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