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International relations

Singapore's minimum pay rule stifles hiring of Japan expats

New thresholds translate to 20% to 30% drop in job placements from abroad

Singapore is home to about 37,000 Japanese people, the second-biggest community in Southeast Asia. (Photo by Takashi Nakano)

SINGAPORE -- Japanese companies doing business in Singapore have been forced to rethink hiring strategies after the government tightened work visa requirements to encourage more local hires.

The changes make it harder to recruit Japanese graduates of such prestigious schools as Waseda University and Keio University, who now need to be paid more to qualify for employment passes for professional and managerial positions, a study by Tokyo-based JAC Recruitment shows.

The higher hurdle to employment passes will have a significant effect on international companies and their employees, said Shingo Kasumoto, Southeast Asia regional manager at YCP Holdings, a management consultancy.

"Japanese corporate representatives in Singapore may decrease by 20% to 30% in the next year or two," Kasumoto said.

Singapore's government mandates narrowly defined pay levels for foreigners seeking employment passes, based on such criteria as nationality, age, and academic background. How these levels are determined is not spelled out in detail, but applicants can take a self-assessment using the Ministry of Manpower's online tool.

One reason for the higher pay requirement is that the base threshold has risen.

To qualify for an employment pass, applicants as of September must earn a minimum 4,500 Singapore dollars ($3,300) a month. This comes after the minimum monthly salary was increased to SG$3,900 in May, according to JAC Recruitment, which used the tool to track changes in the pay requirement. The threshold rises with age, reaching SG$8,400 for applicants 45 and older.

Academic criteria for employment passes have also been updated this year, JAC Recruitment says. About 60 Japanese institutions -- including Waseda, Keio and Osaka University -- that were grouped into the category with the lowest pay threshold are now in the second category. This leaves just three Japanese schools in the first category: the University of Tokyo, Kyoto University and the Tokyo Institute of Technology.

To qualify for an employment pass under the new rules, a 30-year-old with a degree from Keio or Waseda must earn a minimum of about SG$6,410 a month. This is about 50% more than what this applicant would have needed two years earlier, according to JAC Recruitment.

Younger staff at large Japanese corporations may not be able to meet the higher pay requirements with raises. But tighter rules would also have an impact on service-sector jobs like food and hairdressing.

Japanese chefs who do not hold university degrees have often been required to show a monthly pay of about SG$8,000 to qualify for a visa. Further hikes in the threshold would impose a heavy financial burden on Japanese restaurant owners.

Prime Minister Lee Hsien Loong has called on international companies to diversify hiring in Singapore.

"One specific red flag is when we see a company that has an over concentration of a single foreign nationality in its ranks, especially when compared to other companies in the same sector," he said.

Singapore is home to about 37,000 Japanese people, the second-biggest community in Southeast Asia after Thailand. The new visa regulations are expected to encourage Japanese companies operating here to rely on more local hires.

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