Newsletter April 2014
In Asia Pacific, there seems to be a move to tighten foreign labour in some countries and specific sectors. This update highlights some of these moves that are likely to stir the contracting market somewhat…
Indonesia is exploring ways to ensure that qualified locals land jobs that would otherwise go to foreign professionals. More than 75,000 work permits were issued in each of the last three years. The present law prefers white collar foreign professionals and require them to renew annually. Apart from declaring the required skills, companies have to explain why a foreigner is preferred. Companies are required to apply for a quota which needs to be reapplied once the quota is exhausted.
For a start, restrictions on the outsourcing of telecommunictions contractors were suddenly introduced in the 4th quarter of 2013. Outsourcing to freelancers were restricted resulting in large scale termination of contract for services within the sector. Multinationals and management companies had to scramble for alternative models, which ultimately restrict the contracting market.
In the oil and gas sector, there were similar restrictions requiring separate licences to bring in foreigners in this sector. Under a recent regulation (The Regulation of the Minister of Energy and Mineral Resources Number 31 of 2013), companies engaged in the oil and gas business are required to prioritise the use of Indonesian workers in their activities.
Expatriates cannot be employed:
- Where Indonesian workers are deemed competent or available;
- In human resources, legal counsel, EHS (environmental health and safety), supply chain management (including procurement, materials and logistics), quality control and other structural positions under superintendent level (or other positions) in the exploration and exploitation phases;
- In more than one position and cannot be employed by more than one employer unless appointed as a Director or Commissioner of the company.
Since the last general elections where the issue of foreigners competing against local job-seekers was a hot issue, the government have been gradually tightening the criteria for work passes into Singapore.
Thus far, the tightening have focussed on the lower category passes (ie work permits, S passes catering mainly to blue collar up to just below the supervisory levels). This has been achieved mainly through the raising of levies and minimum salary levels.
However, this trend will soon extend to the supervisory, managerial and professional levels. In the first instance, the minimum salary for employment pass applications was raised from S$3,000 to S$3,300. In reality, that amount is much higher as clients are needing to justify approvals at the minimal official level.
Effective 1 August 2014, all firms seeking to hire people for S$12,000 or less per month must first post the job on the Ministry of Manpower (MOM) website for a minimum of 14 days. Firms that fail to do so will automatically have their Employment Passes denied.
In addition, if a firm has "disproportionately low numbers of Singaporeans at the Professional and Managerial level", it will come under "additional scrutiny", which would include providing org charts with nationality.
Here is an extract from the MOM advisory:
++MOM expects all firms to consider Singaporeans fairly for jobs, based on merit. All firms are strongly encouraged to advertise their job vacancies and must ensure that jobs advertised are open to Singaporeans
++Firms making new EP applications2 must advertise the job vacancy on a new jobs bank administered by the Singapore Workforce Development Agency (WDA)
Implications for the contracting market
For one, the time taken to onboard the contractor will not be as fast as what it used to be. From a few days now, it will take a few weeks in the future. The details of the implementation is not out yet but what it means is that there has to be closer collaboration between clients, agencies and the sponsor company.
A glimmer of loosening seems to be happening in Australia. A decade ago, changes in government policies resulted in a tightening of the 457 visa [temporary work visa that allows Australian employers to employ workers skilled in occupations which are on the Australian government’s Consolidated Shortage Occupation List (CSOL)], favouring the local mid level work force.
However, that seems to be changing, driven by political changes and the acute shortage of much needed talent following years of growth in Australia… watch this space.
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