Should You Hire a Local Resident or Send an Employee to Singapore?
If you are just entering the Singapore market or expanding your existing business, you will need to decide how to staff your operations. You have two options: hire a local resident with the right skill set, or send an employee from home on assignment. While assigning an expat may seem like the top choice, the risks and costs reduce the appeal of sending employees abroad, and many companies are beginning to favor hiring talented locals.
Advantages of Hiring in Singapore
There are some real perks when you set up an entity and hire any type of employee in Singapore:
- An English speaking country with ease of access to all Asian markets
- The business climate is favorable for multinationals
- An existing highly educated workforce with a wide range of talent
- Government supports private enterprise and entrepreneurship
- Developed infrastructure, transport, public safety and government regulations
- Relatively low corporate tax rate of 17% to incentivize businesses
- Double Taxation Agreements with many countries to offset any double tax effects
Hiring Local vs Sending an Employee to Singapore
Considering these positive elements of doing business in Singapore it is no wonder that multinationals have an interest in opening a subsidiary or branch. The process of staffing operations will lead to the choice of either hiring locals or sending employees on assignment.
There are pros and cons to each, and here is a quick overview of the key points to keep in mind:
Hiring Locals in Singapore
At first, hiring a local may seem more difficult given the need to recruit, hire and onboard from your home office. But, if you take a closer look at the realities, it is not an insurmountable challenge and in many ways preferable to sending an employee on assignment.
- Fair Consideration Framework (FCF)
The FCF was recently expanded in scope in Singapore to favor hiring of locals over foreign nationals. This is an express government policy now, and hiring a local will be easier from a regulatory standpoint.
When sending staff from home, employers will need to show that the position was advertised in Singapore for consideration of locals first, and that any foreign employees are being paid a certain level of salary.
- Lower Cost/No Relocation Expenses/Logistics
Hiring a local means a lower cost, even with an equivalent salary level. There is no need for the time and expense of relocation, and the local hire can be onboarded almost immediately.
- No Immigration Issues
Obviously, locals will not need any type of work permit to begin employment.
- Local Knowledge
Hiring a resident employee also brings their personal and professional network inside of Singapore, as well as their knowledge of the country.
- Offers Diversity
Even if you send employees on assignment, also hiring locals will bring diversity to your team and organization.
- No Language/Cultural Barriers
Although English is the business language in Singapore, the local’s knowledge of other Asian dialects, culture and business customs will help bridge any gaps for your company.
- New to the Organization
Like any new hire, a local will not be as familiar with your company or the position, compared to your existing employees.
- Remote Work Challenges
Sometimes companies will hire locals as remote workers, or ask them to interface with a team from your home office, which means they need to overcome communication challenges and time zone differences.
- Need for Training and Support
Naturally, the local hire will need either in person or remote training and support in their new role, whereas an expat will already be proficient and experienced.
- Limited Talent Pool
Although Singapore has many adept professional and technical workers, it is still a relatively small country with some limits, and competition for available local talent.
Sending an Employee on Assignment to Singapore
Companies traditionally have sent willing management or technical employees on assignment from home, but this is no longer the default method of staffing in countries like Singapore.
Employment Pass in Singapore
The first issue that comes up is that all expats on assignment of more than 60 days will need a work permit. The Employment Pass is the primary permit for professional workers and does come with a few requirements.
- The Employment Pass is given to individuals that earn minimum SG$3600 monthly. For expats that want to bring their dependents that amount has increased to SG$6,000 as of Jan 1, 2018.
- The EP application can only be done manually by an employer or employment agent.
- In November 2017, changes were made to the EP application making it more in-depth and detailed, asking about company’s hiring practices, and reasons to not hire a local applicant instead.
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