Cost Of Hiring in Singapore
So, you are ready to expand your business, and you need to start hiring. What are the costs involved when hiring in Singapore? Let’s find out.
Hiring Singapore Citizen and Singapore Permanent Resident
Singapore has a pension fund to which every working Singapore Citizen (SC) and Permanent Resident (SPR) needs to contribute. This pension fund is called Central Provident Fund (CPF). This is how it works when you hire an SC or SPR. There are three components to the salary payable.
- Employees take-home pay
a. 80% of gross salary - Employees contribution to CPF
a. 20% of gross salary - Employer contribution to CPF
a. 17% of gross salary
Assuming a gross salary of SGD4,000, the employee will be paid SGD3,200 (80%) in cash. The employer will then pay the SGD 800 (20%) of the salary to CPF on the employee’s behalf. On top of that, the employer is expected to top another SGD680 (17%) into the employee’s CPF account.
For an employee getting a gross monthly salary of SGD4,000, the total payable is:
- SGD3200 – Cash
- SGD800 – CPF (employee)
- SGD680 – CPF (employer)
Total = SGD4,680.
The CPF contribution rate varies accordingly to the age band of the employee. So please refer to the official CPF website for more detailed information.
Hiring Foreigners
In some circumstances, companies may opt to hire foreigners. This is usually the case if the company is unable to source the required talents locally.
There are three types of work passes for foreigners.
- Employment pass
- S-Pass
- Work Permit
Depending on the skill level of the foreigner, the company will apply for the relevant work pass accordingly.
For foreigners, they are not required to contribute to the CPF. Thus, for an employment pass holder commanding a monthly gross salary of SGD4,000, the total payable will be SGD4,000 (in cash).
However, for S-pass and Work Permit these are subjected to a hiring quota and foreign worker’s levy payable monthly. These conditions vary according to the industry and type of work involved.
Hiring Locally Versus Overseas
Even though it might seem ‘cheaper to hire foreigners, companies will also do well to account for the additional cost of hiring foreigners. Such as paying for their pass application, accommodation, flight back home (when the work pass expires), etc.
It is also essential for companies to practice the Fair Consideration Framework (FCF), which mandates all employers in Singapore to consider the workforce in Singapore fairly for job opportunities. Employers should not discriminate on characteristics unrelated to the job, such as age, gender, nationality, or race.
If the employer fails to adequately prove that they have practised FCF and reasonably considered all local candidates, it is improbable to approve their foreign workers’ work passes.
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