Introduction
If you are a business owner in Singapore, you may have heard of the term “Local Qualifying Salary” (LQS). The LQS is a crucial factor that determines the number of local employees that can be used to calculate your firm’s Work Permit and S Pass quota entitlement. As a result, it is important to understand what the LQS is and how it impacts your business.
Understanding Local Qualifying Salary (LQS)
The LQS is the minimum salary that local employees must be paid to be considered for Work Permit and S Pass quota entitlement. Currently set at $1,400, the LQS is expected to rise to $1,600 for full-time local employees and $10.50 per hour for part-time local employees in 2024. This means that all companies that hire foreign workers will be required to pay all their local employees at least the LQS from 1 September 2022.
Eligibility and Implementation
To be eligible for Work Permit and S Pass quota entitlement, companies must have a certain number of local employees on their payroll. The number of local employees that can be used to calculate a company’s quota entitlement is determined by the LQS. The LQS is also used to determine the minimum salary that local employees must be paid to be considered for Work Permit and S Pass quota entitlement. Companies that fail to comply with the LQS requirement may face penalties and other consequences.
Key Takeaways
- The Local Qualifying Salary (LQS) is the minimum salary that local employees must be paid to be considered for Work Permit and S Pass quota entitlement.
- The LQS is expected to rise to $1,600 for full-time local employees and $10.50 per hour for part-time local employees in 2024.
- Companies that hire foreign workers must pay all their local employees at least the LQS from 1 September 2022.
Understanding Local Qualifying Salary (LQS)
Concept and Significance
If you’re an employer in Singapore, you must be familiar with the concept of Local Qualifying Salary (LQS). The LQS is a wage threshold set by the Ministry of Manpower (MOM) to determine whether a local employee can be counted towards the company’s entitlement for foreign worker quota. It is an important factor that determines the number of local employees that can be used to calculate a firm’s Work Permit and S Pass quota entitlement.
The LQS ensures that local workers are employed meaningfully, rather than on token salaries for firms to access foreign workers. This means that employers must pay their local employees a minimum wage that meets the LQS criteria to qualify for Work Permit and S Pass quota entitlement.
Calculating LQS for Full-Time and Part-Time Workers
The LQS is currently set at $1,400 for full-time local employees. For part-time local employees, the LQS is calculated at an hourly rate of $9. To qualify for Work Permit and S Pass quota entitlement, employers must ensure that their local employees meet the LQS criteria.
Starting from Budget 2024, the LQS for full-time local employees will be raised to $1,600, while the LQS for part-time local employees will be raised to $10.50 per hour. This means that employers must pay their local employees a minimum wage that meets the new LQS criteria to qualify for Work Permit and S Pass quota entitlement.
In summary, understanding the concept and significance of Local Qualifying Salary (LQS) is crucial for employers in Singapore. By ensuring that their local employees meet the LQS criteria, employers can qualify for Work Permit and S Pass quota entitlement.
Eligibility and Implementation
Criteria for Employers
If you are an employer in Singapore, you need to meet certain criteria to be eligible for hiring foreign workers. One of the most important criteria is paying your local employees a Local Qualifying Salary (LQS) of at least $1,400 per month. This applies to Singaporean or Permanent Resident employees employed under a contract of service, including the company’s director. If your local employee earns half the LQS of at least $700 to below $1,400 per month, they are counted as 0.5 local worker.
Starting from 1 September 2022, all companies who hire foreign workers will be required to pay all their local employees at least the LQS. This means that if you want to hire foreign workers, you need to ensure that you are paying your local employees the LQS.
Government Regulations and Support
The Ministry of Manpower (MOM) is responsible for regulating the employment of foreign workers in Singapore. They have implemented strict regulations to ensure that employers are paying their local employees the LQS. Failure to comply with these regulations can result in penalties and even the revocation of your company’s Work Permit or S Pass.
To support employers in meeting the LQS requirements, the government has increased its co-funding share under the Progressive Wage Credit Scheme to a maximum of 50 per cent. This is aimed at helping employers to improve the wages of their lower-wage workers.
In addition, the government has announced in the Budget 2024 that the LQS will be raised from $1,400 to $1,600 for full-time local employees and from $9 per hour to $10.50 per hour for part-time local employees. This will benefit half a million lower-wage Singaporeans.
Impact on Workforce and Economy
Effects on Local and Lower-Wage Workers
The increase in the Local Qualifying Salary (LQS) from $1,400 to $1,600 for full-time local employees and from $9 per hour to $10.50 per hour for part-time local employees will have a positive impact on the lower-wage workers. The rise in wages will help to improve the standard of living for these workers and make their wages more sustainable. This increase in wages will also help to reduce income inequality and promote wage growth.
The enhanced Progressive Wage Credit Scheme, which co-funds wage increases, will provide transitional support to companies that will face higher operating costs due to the wage increases. This scheme will help to ensure that the wage increases are sustainable and will not have an adverse effect on the economy.
Influence on Foreign Worker Quota
The increase in the LQS may have an impact on the foreign worker quota. The LQS ensures that local workers are employed meaningfully, rather than on token salaries for firms to access foreign workers. With the increase in the LQS, companies may find it harder to access foreign workers, which may lead to a reduction in the number of foreign workers in Singapore.
However, it is important to note that the increase in the LQS will help to promote sustainable wage growth and reduce income inequality. This will help to ensure that local workers are paid fairly and are not undercut by foreign workers who are willing to work for lower wages.
Overall, the increase in the LQS will have a positive impact on the workforce and the economy in Singapore. The rise in wages will help to improve the standard of living for lower-wage workers and promote sustainable wage growth. The enhanced Progressive Wage Credit Scheme will provide transitional support to companies that will face higher operating costs due to the wage increases. This will help to ensure that the wage increases are sustainable and will not have an adverse effect on the economy.
Policies and Schemes
If you are an employer in Singapore, there are several policies and schemes that you should be aware of regarding the local qualifying salary. These policies and schemes are designed to ensure that your employees are fairly compensated and that your business operates in a sustainable and responsible manner.
Progressive Wage Credit Scheme (PWCS)
The Progressive Wage Credit Scheme (PWCS) is a government initiative that aims to encourage employers to raise the wages of their lower-wage workers. Under this scheme, employers who raise the wages of their lower-wage workers will receive a co-funding from the government. This co-funding can go up to a maximum of 50% of the wage increase.
The PWCS is an important scheme for employers who hire workers in industries such as cleaning, security officers and landscape workers. These industries are often associated with lower wages, and the PWCS provides an incentive for employers to raise the wages of their workers.
Progressive Wage Model (PWM) in Key Sectors
The Progressive Wage Model (PWM) is another government initiative that aims to increase the wages of low-wage workers. The PWM is a structured wage ladder that sets out minimum wages for workers at different skill levels. This model is currently being implemented in key sectors such as cleaning, security officers and landscape workers.
The PWM is designed to ensure that workers are paid fairly for their skills and experience. This model also encourages employers to invest in the training and development of their workers, which can lead to higher productivity and better business outcomes.
In conclusion, the PWCS and PWM are important policies and schemes that employers in Singapore should be aware of. These initiatives are designed to ensure that workers are paid fairly and that businesses operate in a sustainable and responsible manner. By implementing these policies and schemes, employers can help to create a more equitable and prosperous society in Singapore.
Future Directions and Enhancements
Budget 2024 and Beyond
As Deputy Prime Minister Lawrence Wong announced during Budget 2024, the Local Qualifying Salary (LQS) will be raised from $1,400 to $1,600 for full-time local employees. For part-time local employees, the LQS will increase from $9 per hour to $10.50 per hour. This move is part of the government’s efforts to support lower-wage workers and ensure that they receive fair wages.
Moreover, the government will increase its co-funding share under the Progressive Wage Credit Scheme to a maximum of 50 per cent. This will encourage employers to adopt progressive wage practices and improve the wages of their workers. The government will also extend the Progressive Wage Model (PWM) to more sectors, such as retail, food services, and landscaping, to benefit more workers.
Striving for Higher Productivity and Better Wages
To achieve higher productivity and better wages, the government will continue to implement productivity improvements and progressive wage moves. Prime Minister Lee Hsien Loong highlighted in his National Day Rally speech that productivity improvements are essential to sustain Singapore’s economic growth and ensure that workers’ wages keep up with the cost of living.
The government will also continue to support the adoption of technology and automation to improve productivity and reduce the reliance on foreign labour. This will create higher-skilled jobs and increase the demand for local workers, which will, in turn, lead to higher wages.
In conclusion, the Singapore government is committed to enhancing the Local Qualifying Salary and supporting lower-wage workers. With Budget 2024 and beyond, the government will continue to implement productivity improvements and progressive wage moves to achieve higher productivity and better wages for workers.
Frequently Asked Questions
How can you calculate the Local Qualifying Salary for this year?
Calculating the Local Qualifying Salary (LQS) is an important part of determining your company’s entitlement for Work Permit and S Pass quota. For this year, the LQS is set at a minimum of $1,400 per month for a local worker to be counted as one in the quota. You can calculate the LQS by taking the monthly salary of your local employees and comparing it to the minimum requirement set by the Ministry of Manpower (MOM).
What’s the latest minimum salary requirement for a Singaporean to be considered for quota?
To be considered for quota, a Singaporean employee must earn at least the LQS of $1,400 per month. This requirement is part of the Progressive Wage Model, which aims to uplift the wages of low-wage workers and improve their standard of living.
Isn’t it thrilling to know the minimum salary needed for Employment Pass eligibility in Singapore?
The minimum salary requirement for Employment Pass eligibility in Singapore is currently $4,500 per month. This requirement is set by the Ministry of Manpower and is subject to change depending on the economic climate and the needs of the country.
Could you tell me the exhilarating details of how the Local Qualifying Salary is worked out?
The LQS is worked out by taking into account the median wage of full-time employed residents, as well as the inflation rate. It is reviewed annually by the Ministry of Manpower to ensure that it remains relevant and reflective of the current economic conditions.
What’s the current minimum wage required for CPF contributions in our vibrant Singapore?
The current minimum wage required for CPF contributions in Singapore is $1,400 per month. This is the same as the minimum LQS requirement for a local worker to be counted in the quota.
What are the fresh updates on the Work Permit salary requirements in Singapore?
The Work Permit salary requirements in Singapore vary depending on the industry and the type of work being done. For example, the minimum monthly salary for a foreign domestic worker is $800, while the minimum monthly salary for a construction worker is $1,400. It’s important to stay up-to-date on the latest requirements set by the Ministry of Manpower to ensure compliance with the law.