Consider these Costs When Hiring Singaporean Talent.
Hiring international employees can be an attractive option for growing companies. Countries like Singapore offer a diverse, skilled talent pool to boost business competitiveness.
While salaries are important, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory social security contributions. They may also provide staff with additional benefits like healthcare when competing for top talent.
This article will walk you through the fixed and variable costs of hiring in Singapore.
Costs to Consider When Hiring Around the World
The basic hiring costs in Singapore include:
- Employee’s gross annual salary
- Taxes and benefits
- Vacation pay and other leaves
- Overtime pay
- Severance pay
Plus, you may want to add certain optional costs like benefits, bonuses, and extras.
Mandatory Costs of Hiring an Employee in Singapore
Salary
One of the “Four Asian Tigers”, Singapore boasts a leading economy, high standards of education, and a strong ecosystem of innovation. This makes Singapore a unique destination for hiring top-quality, highly-skilled talent.
There is no set minimum wage for most industries in Singapore. Instead, the Ministry of Manpower (MOM) suggests that employers use market standards to determine wages.
That said, the Ministry applies a Progressive Wage Model (PWM) to certain industries. This scheme primarily targets lower-skilled workers in cleaning, security, landscape, lift and escalator, retail, and food service jobs. In a nutshell, PWM sets out a minimum wage and an upskilling career path, helping workers gradually increase wages.
For skilled workers, salaries in Singapore will be relatively high due to its high cost of living. In 2023, the country ranked 7th on the Numbeo cost of living index, right behind Norway.
Mandatory Taxes and Benefits
Payroll costs in Singapore add up to about 17.25% of the employee's gross salary. The numbers below apply to Singapore citizens and permanent residents under the age of 55.
- 17%: Central Provident Fund (CPF) (max SGD 1,020 per month or about USD 752)
- 0.25%: Skills Development Levy (min SGD 2 and max SGD 11.25 per month)
Employers and employees both contribute to taxes and funds. So, employers must also withhold:
- 0% - 22%: Personal Income Tax
- 20%: Central Provident Fund (max SGD 1,200 per month or about USD 855)
- 15%: Supplementary Retirement Scheme (max SGD 15,300 per year, can be contributed by employee or employer)
Mandatory Bonuses
There are no mandatory bonuses in Singapore. However, the MOM does suggest an Annual Wage Supplement (AWS), which is essentially a thirteenth-month salary. Certain union agreements may stipulate AWS as a requirement. In addition, many employers offer performance bonuses at the end of the year.
Paid Leave
There are several types of paid leave entitlements in Singapore.
- Public holidays: There are 11 public holidays in Singapore.
- Paid vacation days: Full-time employees are entitled to seven days of paid annual leave after their first year of service with an employer. They get an additional day for every year worked until they reach 14 days at eight years of tenure.
- Sick leave: Singaporian employees can take 14 days of outpatient sick leave and 60 days of hospitalization leave per year. They are entitled to these leaves after three months of service but only receive the entire duration of entitlement after six months. The employer bears all the relevant costs.
- Maternity leave: New mothers can take 16 weeks of maternity leave (certain conditions apply). For the first two children, employers will pay for the first eight weeks of leave and the government will cover the rest. For the third child onwards, the government will bear the costs.
- Paternity leave: New fathers can take two weeks of paid leave upon the birth of their child.
- Shared parental leave: New mothers can transfer one to four weeks of their maternity leave to their partner. However, this type of leave is paid at a maximum of SGD 2,500.
- Childcare leave: Each parent can take up to six days of paid leave to care for children under the age of seven. The employer pays for three days and the government pays for the other three.
Overtime Pay
The standard working hours in Singapore are eight to nine hours per day for five to six days per week, respectively. In either case, the working hours should not exceed 44 hours per week.
For any overtime, employers must pay at least 1.5 times the employee’s standard wage. Employees should not work more than 12 hours per day in total and cannot exceed 72 hours of overtime per month.
Severance Pay
In the case of layoffs (called retrenchment in Singapore), employers must offer compensation to all employees who have served them for over two years. Typically, this is calculated based on tenure at a rate of two weeks to one month of salary. Unions will typically have their own agreements with regard to severance pay.
Additional Costs of Hiring Singaporean Talent
Today’s talent market is extremely competitive. To hire top Singaporean talent, employers may also want to offer a benefits package, which can help both search and retention. Here are some benefits you might consider offering Singaporean employees along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition. In Singapore, many employers offer benefits like extended health coverage, retirement plans, training funds, flexible work arrangements, gym memberships, and more.
While Singapore citizens are covered by basic public health insurance, most prefer to add on an Integrated Shield Plan. This plan provides extended coverage and costs start at about SGD 500 per year or USD 370.
Bonuses and Extras
Finally, you’ll want to consider smaller expenses like gifts for special occasions, comped meals or coffees for meetings, etc.
If you hire one or two employees in Singapore, they’ll likely do remote work. Even so, you may want to pay for a coworking space or provide funding to set up a home office. Daily rates for coworking spaces in Singapore start at about USD 30.
However, you might be hiring an entire team to work on larger projects such as software development. If that’s the case, it can be wise to rent an office space to facilitate collaboration among your staff in Singapore.
Average Cost of Hiring One Employee in Singapore (Annual in USD)
Below is an estimate based on a salary of $100,000 for an employee in Singapore. This salary is for ease of calculation only. It will change as per your hiring goals including the employment contract, the candidate’s experience, and the type of position.
- Salary: $100,000
- Employer Taxes: $17,250
- 17%: Central Provident Fund
- 0.25%: Skills Development Levy
- TOTAL: $117,250 + Benefits (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Singapore.
A Global EOR Can Help You Manage International Payroll
With so many costs to consider, it may feel overwhelming to start hiring globally. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Singapore.
If you’d like to begin global hiring but aren’t sure where to start, book a demo with Borderless. We’ll walk you through every step, so you can reap all the benefits without the added headaches.
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