Glass Ceiling Salary level for Singaporean PMET workers may be as low as $1720/month ($2,208.33/monthly if company is honest).

Glass Ceiling Salary level for Singaporean PMET workers may be as low as $1720/month ($2,208.33/monthly if company is honest).

From this point onwards, there is zero financial incentive to hire Singaporean from a corporate balance sheet perspective. This glass ceiling threshold point, whereby any citizenship benifit of being Singaporean vanishes for the Singaporean employee.

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Calculation:

E-pass minimum salary is $3600 to qualify and levy payable is zero (FOC). https://www.mom.gov.sg/passes-and-permits

Based in salary costs to company payroll, the Singaporean salary must be $3600/1.2= $3000 considering that company has to pay 20% CPF for the Singaporean/PR worker.

If S-pass workers are included in the calculation, the salary ceiling is even lower because S-pass salary level is at $2400 and the levy is as low as $250 (onwards) meaning payroll costs of just $2650 and thus equivalent citizen salary of $2,208.33/monthly (if company is honest and doesn't operate a slush fund). If the foreigner is agreeable to give say $500 monthly kickback to company (accept $1900/ mth salary), then that is additional $585 payroll discount (need to add corporate income tax labour costs deduction), so payroll costs will be $2065 and thus citizen salary ceiling will be just $1720.83/mth.

Kickbacks: https://www.straitstimes.com/singapore/some-who-employ-foreign-workers-still-demand-kickbacks

At this point of salary ceiling/ higher $2,208.33/monthly (honest employer) , it is financially wise to retrench the Singaporean employee and hire a foreign employee instead.

S-pass levy rates:

This image has been resized.Click to view original image

source: https://www.singaporebudget.gov.sg/docs/default-source/budget_2019/download/pdf/annexc3.pdf


Reference:

Spoiler! 

Local PMEs don't have it easy
Published on May 31, 2014 1:22 AM
I REFER to the report ("MPs want more protection, support for local PMEs"; Tuesday)
When I was the general manager of a local IT company and, subsequently, a financial controller for a Dutch multinational corporation, I preferred hiring foreign mid-level staff for the following reasons:
- The company did not need to pay CPF contributions for them;
- Their salary expectations were lower than Singaporeans'; and
- Their skill sets and experiences were on a par with those of Singaporeans.
The total cost differential between local and foreign professionals, managers and executives (PMEs) was 20 to 40 per cent.
An Asian foreign employee with a degree and work experience can easily afford a city apartment and family sedan in his home country if he makes $200,000 during his stint here.
In Singapore, $200,000 would allow a Singaporean with the same qualifications to buy only a three-room HDB flat in outlying regions like Woodlands or Jurong. A family car would set him back by $120,000.
An Asian foreigner's cost of living back home is so much lower than ours. Hence, he is more willing to work for $3,000 to $5,000 a month. But a Singaporean graduate earning $4,000 a month will be trying to keep up with inflation.
It does not make sense that a foreign PME working here has a bright future, while his Singaporean counterparts are struggling with their living expenses, unless they are in strong sectors like banking and health care, where pay is high.
A levy is imposed when one hires a maid, but there is no such tax for hiring foreign PMEs. No wonder foreign PMEs were replacing local ones at an increasing rate until tighter restrictions were imposed last year.
At the moment, the local PME retrenchment rate is still high as employers are hiring foreigners for the cost savings.
Over the medium to long term, this will weaken Singapore's economy as local PMEs will become structurally unemployed as they lose their skills and employability.
Lim Kay Soon
ST: Local PMEs don't have it easy