Singapore tightens work visa rules

Singapore is tightening its grip on foreign talent, which could significantly impact entrepreneurs from around the world who see the city-state as an ideal place to grow their startups. New points-based criteria for work visa renewals will come into effect in September, creating a more challenging environment for foreign professionals.

The updated system requires foreign employees to meet a minimum salary threshold and accumulate points based on various factors such as salary comparisons with local counterparts, education, skills and contribution to diversity in the workplace. While the changes align with practices in other countries, they have raised concerns that they could discourage foreign companies and damage Singapore’s reputation as a global business hub.

The program, announced in 2022, aims to ensure fair hiring practices, but it also places greater responsibility on employers to justify hiring foreign workers. The policy is especially relevant in light of the country’s political climate. With elections looming by the end of the year, the government is keen to address local employment concerns.

Protecting jobs for nationals is a common practice worldwide, and Singapore’s local workforce is highly educated. However, there are challenges in fostering creativity in the education system, although efforts are being made to address these.

The new rules, while bringing greater transparency, pose some challenges for US and other foreign companies in finding qualified candidates for senior positions. The limited size of the workforce and the shrinking population exacerbate these challenges. Data shows increased uncertainty among companies about access to the necessary talent under the new structure.

Recruitment experts warn that the changes could impact the decisions of companies considering Singapore as their regional headquarters. The city-state is becoming less attractive to foreign talent, especially in entry-level and mid-level positions, which are increasingly being given preference to residents.

For many Singaporeans, the changes are a welcome step. There is growing frustration over perceived favoritism towards foreign workers, and locals feel excluded from jobs to which they are entitled. The new rules are seen as a step towards addressing this issue and reducing income inequality.

Early data shows that the policy is starting to yield results. Resident employment growth in the first quarter outpaced previous rates, while non-resident employment fell for the first time since late 2021, particularly in construction and manufacturing.

Striking a balance between an open economy and meeting the needs of the local workforce remains a challenge for the government. Despite the new rules, the number of foreign workers and interest from foreign companies in setting up regional headquarters in Singapore continues to grow.

However, the focus on foreign talent is likely a temporary policy strategy. Long-term solutions to fundamental issues such as high living costs, income inequality and a competitive education system remain critical. Addressing these deeper issues is essential for Singapore’s sustainable success as a global business hub.