Wednesday, 19 August 2020

Government to pump in $8 billion more for COVID-19 support measures: DPM Heng Swee Keat in Ministerial Statement on 17 August 2020

Jobs Support Scheme to be extended by 7 months till March 2021
$1 billion Jobs Growth Incentive to boost hiring of local and older workers
By Grace Ho, Senior Political Correspondent, The Straits Times, 18 Aug 2020

As the COVID-19 pandemic drags on and the impact on businesses and jobs mounts, support for employers to pay the wages of their workers will be extended and become more targeted.

In total, $8 billion more will be spent to save jobs, create new ones, and seize new growth opportunities, said Deputy Prime Minister and Finance Minister Heng Swee Keat.

In a ministerial statement broadcast yesterday, Mr Heng said that the Jobs Support Scheme (JSS), which comprises wage subsidies to help firms retain local workers, is ending soon and cannot be sustained at the current level.

"It draws heavily on our reserves and risks trapping our workers in unviable businesses. Some sectors are also recovering faster than others," explained Mr Heng.

While the JSS, which covers wages up to this month, will now be extended to cover wages paid up to March next year, the support is tiered based on how quickly each sector is expected to recover.

Firms in the hardest-hit aerospace, aviation and tourism sectors, which are currently getting 75 per cent wage support, will get 50 per cent wage support for seven more months.

The built environment sector will get 50 per cent support for two more months, before it is lowered to 30 per cent of wages paid up to March next year, in line with the phased resumption of construction activities. Most other sectors will get 10 per cent support for seven more months.

Those that are doing well, such as biomedical sciences, financial services, and infocommunications and technology, will get this amount of support up to December.

"Even at 10 per cent support, the payouts cover more than half of employers' Central Provident Fund (CPF) contributions. This ensures that we continue to build up the CPF savings of our workers during the crisis," said Mr Heng.

The COVID-19 Support Grant, which was introduced in May to help Singaporeans who have been laid off or have suffered significant income loss, will be extended to December 2020. To qualify, unemployed applicants must demonstrate job search or training efforts. The application window, which was slated to end next month, will now reopen on Oct 1.

More lower-income workers - including those who have received or will be receiving Workfare for work done this year - stand to receive the $3,000 cash payout under the Workfare Special Payment.

The measures announced yesterday come on top of the nearly $100 billion committed under the four Budgets this year.

They will be funded by the reallocation of monies from other areas, such as development expenditures that were delayed due to COVID-19.

There are no plans to draw on past reserves beyond the $52 billion for which President Halimah Yacob's approval was obtained earlier.

The support has been extended amid a deepening recession, with gross domestic product shrinking by 6.7 per cent in the first half of the year. In the second quarter, the economy contracted by 13.2 per cent year on year, the worst on record.

Retrenchments more than doubled in the second quarter, with 6,700 workers laid off, up from 3,220 in the first quarter.

While no one knows what the post-COVID-19 world will look like, it will not be business as usual, given the intensification of the competition between the United States and China, the reconfiguration of global supply chains and the acceleration of digital shifts, Mr Heng said.

He acknowledged that it will be a difficult journey ahead, but assured Singaporeans, whom he called "one people with extraordinary courage, commitment and can-do spirit", that they will not walk alone.

"We have the fortitude - to improvise, adapt and overcome the uncertainties. We have the resilience - to weather the difficulties, turn challenges into opportunities and prepare for the future," he said.

"And we will stand in solidarity as one united Singapore - to beat this crisis and emerge stronger as a nation."

Govt extends Jobs Support Scheme by up to 7 months till March 2021; sectors to get 10-50% tiered wage subsidies
By Joanna Seow, Assistant Business Editor, The Straits Times, 18 Aug 2020

Wage subsidies under the Jobs Support Scheme (JSS) will be extended by up to seven months, to help employers to retain their local workers.

The subsidies will now cover wages paid up to March next year for firms in sectors harder-hit by the COVID-19 crisis, and up to December this year for sectors which are managing well, said Deputy Prime Minister Heng Swee Keat.

The support - which will range from 10 per cent to 50 per cent for wages paid from September onwards - will be adjusted based on the projected recovery of the different sectors, said Mr Heng yesterday in a ministerial statement on how the Government will continue to support businesses and workers.

"We cannot sustain the JSS at current levels," he said. "It draws heavily on our reserves and risks trapping our workers in unviable businesses. Some sectors are also recovering faster than others."

The subsidy applies to the first $4,600 of gross monthly wages paid to each Singaporean or permanent resident employee.

Firms in the aerospace, aviation and tourism sectors will receive 50 per cent of wages paid from September until March.

Businesses such as karaoke lounges and pubs that have not been allowed to resume on-site operations will receive the highest level of wage support - 50 per cent - until they can resume work or until March, whichever is earlier.

Those in the built environment sector will receive 50 per cent of wages paid next month and in October, and then 30 per cent of wages paid until March, as construction activity resumes in phases.

The arts and entertainment, food services, land transport, marine and offshore, and retail sectors will receive 30 per cent of wages paid until March.

Sectors managing well - biomedical sciences, precision engineering, electronics, financial services, infocomm technology and media, online retail and supermarkets - will receive 10 per cent of wages paid until December this year.

Other firms will receive 10 per cent of wages paid until March.

The scheme, which was introduced in the Budget statement in February and enhanced subsequently, has subsidised between 25 per cent and 75 per cent of wages paid for 10 months.

It was to cover wages paid until this month, with the final payout in October.

There will now be additional payouts in March and June next year for relevant firms.

Mr Heng said: "I urge all businesses to make full use of this additional support to retain and upskill your workers, and to transform your operations for the post-COVID-19 world.

"This will enable you to spring back faster when the recovery comes."

The latest JSS enhancement comes after calls from people, including business leaders and economists, to extend the support in order to protect jobs as the impact of the pandemic drags on.

Mr Heng yesterday said more than $16 billion of the $23.5 billion allocated for the scheme has been disbursed so far, benefiting over two million local workers in more than 150,000 firms.

While the resident unemployment rate has risen from 3.3 per cent in March to an estimated 3.9 per cent in June, it is still below the peak levels seen during the Sars (severe acute respiratory syndrome) outbreak and global financial crisis, he noted.

Even at 10 per cent support, the wage subsidies still cover more than half of employers' Central Provident Fund contributions for workers, he said.

"This ensures that we continue to build up the CPF savings of our workers during the crisis," he said.

Nearly 600 companies have also returned or donated their JSS payouts, he added, thanking these firms for their sense of community.

He urged firms that are coping well to do likewise.

Employers can refer to the Inland Revenue Authority of Singapore's JSS website for more details on the computation and payment schedule.

Businesses can also tap other existing schemes such as the enhanced Enterprise Financing Scheme and Temporary Bridging Loan Programme, which aim to provide firms with access to credit and financing for cashflow needs.

These are available until March next year.

New $1 billion Jobs Growth Incentive to boost hiring of locals in expanding sectors: Heng Swee Keat
It will help companies hire more locals, with special focus on older workers
By Joanna Seow, Assistant Business Editor, The Straits Times, 18 Aug 2020

A new $1 billion scheme will be introduced to boost the hiring of local workers in the coming months, including in growth sectors, with a special focus on helping older workers.

Firms that raise their headcount of local workers over the next six months will receive a subsidy for up to 25 per cent of salaries of new local hires for one year, subject to a cap, under the Jobs Growth Incentive announced by Deputy Prime Minister Heng Swee Keat yesterday. This applies to growth firms that meet the qualifying criteria.

The co-payment by the Government will be up to 50 per cent for workers aged 40 and above, he said in a ministerial statement on further measures to support firms and workers amid the COVID-19 crisis.

Observers praised the focus on older workers, who often face greater challenges remaining employable or finding a new job if they have not been able to update their skills in recent years.

Mr Martijn Schouten, PwC's South-east Asia people and organisation consulting leader, said: "While the (growth) sectors may already be hiring, the subsidy will encourage employers to take on local workers, in particular, supporting mature workers who are at higher risk of displacement due to digital disruption."

OCBC chief economist Selena Ling said the move may help level the playing field to some extent as older workers may have higher salaries and be discriminated against at this time, when there is significant slack in the job market.

EY Asean workforce advisory leader Samir Bedi noted that there may be a requirement to provide reskilling, but this cost is also being covered through funding, which makes it commercially viable for companies to consider mature workers.

Singapore National Employers Federation president Robert Yap said the incentive could encourage companies to continue hiring or do so more aggressively, though they would also consider market forces and the available talent.

Mr Heng said: "There are bright spots amidst the severe economic situation. Our biomedical sciences, financial services and ICT (information and communications technology) sectors continue to need more workers," he said. "The public healthcare and long-term care sectors are hiring. Some firms in the food and beverage, and manufacturing sectors are growing and innovating."

The Ministry of Manpower will give more details on the scheme later this month.

Additional reporting by Sue-Ann Tan


Jobs Growth Incentive to spur hiring of older workers
It will tilt the balance in favour of them but this must go together with training, say analysts
By Sue-Ann Tan, The Straits Times, 19 Aug 2020

The Jobs Growth Incentive will entice companies to hire older workers, whose higher salary expectations are one of the bigger challenges this demographic poses for employers, analysts said.

But this must go together with training, they added.

The $1 billion scheme was announced by Deputy Prime Minister Heng Swee Keat on Monday, aimed at boosting hiring of local workers, especially the older ones.

Firms that hire local workers over the next six months will receive a subsidy of up to 25 per cent of their salaries for one year, subject to a cap. This applies to growth firms that meet the qualifying criteria.

The co-payment goes up to 50 per cent for workers aged 40 and above.

OCBC Bank's head of treasury research and strategy Selena Ling said: Mature workers may face many challenges, ranging from higher salary, possibly obsolete skills, (to) lack of digital skills, and perceptions that they are less nimble."

She added that the co-payment is "very generous" and can be seen as giving a big push for the SGUnited Jobs and Skills Package, which helps to expand job, traineeship and skills training opportunities for Singaporeans hit by the pandemic.

National University of Singapore Business School associate professor Lawrence Loh said the co-payment will also tilt the balance for many companies towards employing older workers, who are often disadvantaged in the job hunt.

"Older workers are price takers in the job market now, especially amid the pandemic crisis. Their previous jobs will have higher salaries and if these levels are expected in the new job situations, there is certainly a mismatch. The double whammy is that the high pay is coupled with old skills," he said.

"The co-payments will hopefully help defray any retraining costs or even bring up the pay as close to previous levels as possible."

Maybank Kim Eng senior economist Chua Hak Bin said the incentive will also push firms to consider the merits of older workers more seriously, which is important as the population ages, and a failure in this respect can lead to a rise in structural unemployment rates in the mature population.

"There is a risk that firms may retrench older workers because their pay is likely higher than younger recruits'. Older workers may also be more set in their ways and less willing to switch roles if the firm has to change direction, particularly towards adopting new technology."

These same factors could hinder them from getting hired.

So, besides incentives, the workers also have to play their part, Mr Chua said. "Training and reskilling will help, but a mindset change might also be required on the part of the older workers."

Companies that are hiring said the new scheme is encouraging in supporting their efforts, especially towards mature workers.

Hair care firm Beijing 101 Hair Consultants, which has almost 20 job openings, said the incentive can also reduce manpower costs, especially if the mature worker needs more time to pick up the required skills.

Its human resource manager Coco Lim said: "We have mature workers in different roles like hair therapist, customer service officer and roadshow promoter, for example, so it is very much dependent on what the mature workers want and their willingness to learn."

Mr Imran Bustamam, group head of human resources at logistics firm Ninja Van, said: "We do not discriminate when hiring, and have several older employees in various roles across the organisation. All staff across all levels of the organisation are offered training and development initiatives." It has about 100 positions open now.

A DBS Bank spokesman said: "DBS is committed to helping more mature workers adapt to the new normal and encouraging employees to embrace continuous growth and development in their career journey. We have in place proactive professional conversion programmes to help equip employees with the skills and competencies to be future-ready."

Earlier, DBS announced it intends to hire over 2,000 people in Singapore this year.

It is also reskilling employees across departments in eight job roles ranging from back-end banking operations to client-facing ones, to help staff gain the necessary knowledge and competencies to take on new or enhanced roles.

Jobs Growth Incentive scheme prods firms to boost hires via wage savings: Josephine Teo
By Sue-Ann Tan, The Straits Times, 19 Aug 2020

The Jobs Growth Incentive will help companies get very substantial savings on their wage bill, allowing them to be bolder in manpower expansion and bring forward hiring, Manpower Minister Josephine Teo said in a Facebook post yesterday.

She added: "As Singapore gradually reopens our economy and borders, some sectors will recover faster than others, some may be completely transformed. Companies will therefore have to pivot, to position themselves better for the post-COVID-19 world.

"This means new jobs opening up in some areas even as others see job losses. In the growing areas, we want to nudge employers to hire and also train Singaporeans."

The scheme helps stretch budgets for manpower growth to create more good jobs, she said.

Take a company with 10 local staff on average from January to August, which then has two new hires in September. These two new local hires can attract salary support of 25 per cent for the next 12 months for the first $5,000 of their salary.

If one of them is 45 years old, the salary support for the worker will double to 50 per cent, which means up to $45,000 in total for both of them. This is on top of the Jobs Support Scheme help for all 12 staff.

The firm must maintain a local workforce of more than 10 to receive the incentive for the full 12 months. The total payout is reduced proportionally any time someone from the original team leaves.

This means if one of the original 10 workers leaves the firm in October and a third local is hired as replacement, the firm will get the incentive for all three new local hires, but at a 90 per cent rate, as the original workforce shrank by 10 per cent. "That is fair, so companies don't just benefit from a replacement spree," Mrs Teo said.


COVID-19 Support Grant extended; more eligible for $3,000 Workfare payout
By Yuen Sin, The Straits Times, 18 Aug 2020

A grant that helps Singapore residents who have lost their jobs or suffered significant income loss due to the pandemic will be extended till December.

Applications for the COVID-19 Support Grant, which provides up to $800 a month for three months, opened in May and were initially due to close after Sept 30.

Announcing the extension in a ministerial statement yesterday, Deputy Prime Minister Heng Swee Keat said the scheme has disbursed more than $90 million to over 60,000 residents so far.

To qualify for the grant, unemployed applicants must demonstrate job search or training efforts, among other things.

Existing recipients of the grant can also apply to renew their support for another three months, if they remain eligible.

The Ministry of Social and Family Development will announce details early next month, said Mr Heng, who is also Finance Minister.

He noted that Singapore's labour market is likely to remain weak beyond this year. Observers have said that more retrenchments are expected in the coming months.

Said Mr Heng: "We are studying how to continue supporting employees and self-employed persons who are most vulnerable."

Another group that Singapore has to look out for is low-wage workers, he added. He announced that more workers will be eligible for the Workfare Special Payment, a $3,000 cash payout that will benefit lower-income workers.

Currently, those on the Workfare Income Supplement (WIS) scheme for work done last year are eligible for the payout. Going forward, those who were not on WIS last year but who have received or will be receiving WIS for work done this year, can also qualify.

The WIS tops up the salaries of lower-income Singaporeans. Enhancements to the scheme kicked in this year, with the qualifying income cap raised to $2,300 per month. Among other criteria, those aged 35 and above can qualify for WIS. Each eligible individual can only qualify for and receive the $3,000 payment once.

This payment will be given in two equal parts - last month and in October - to workers who were eligible for WIS for their work done last year.

Those who received WIS for work done this year will receive the $3,000 payout from October.

Employees' eligibility for WIS and the Workfare Special Payment will be automatically assessed based on Central Provident Fund contributions made by their employers.

Those who are self-employed will have to declare their income and make their required Medisave contribution by Dec 31 next year for work done this year, or by March 31 next year for work done last year.

Labour MP Mohd Fahmi Aliman welcomed the revised criteria to the Workfare Special Payment, which will benefit workers who are earning less now or who have moved into lower-paying jobs.

National University of Singapore (NUS) sociologist Tan Ern Ser cheered the extension of the COVID-19 Support Grant, but said it is "at best, a stop-gap measure".

"If we agree that the approach of continually dishing out money is not sustainable, then it boils down to partnering businesses to create jobs," he said.

Dr Ong Qiyan, a deputy director at NUS' Social Service Research Centre, said it is critical to ensure that those who have reduced work hours or income are able to attend training programmes which can improve their job prospects.

They may face barriers in doing so, for example, if they lack employer support, she said.

Aviation sector gets extra $187 million in COVID-19 support measures
Airlines, ground handlers, cargo agents and airport tenants will benefit from cost relief
By Calvin Yang, The Straits Times, 18 Aug 2020

An additional $187 million will be pumped into Singapore's hard-hit aviation sector, as part of efforts to extend aid under the enhanced aviation support package till March next year.

This will provide cost relief for airlines, ground handlers, cargo agents and airport tenants in a sector that has borne the brunt of the COVID-19 pandemic, Deputy Prime Minister Heng Swee Keat said in a ministerial statement yesterday.

It will also help local carriers regain air connectivity to the world.

Mr Heng, who is also Coordinating Minister for Economic Policies and Finance Minister, unveiled this as part of a strategy to further support the hardest-hit sectors - aerospace, aviation and tourism.

The move will help these sectors retain core capabilities and position them for an eventual recovery, he said. "These sectors are important parts of our economy, and they are multipliers for other sectors."

In particular, the Republic's position as a global business node depends on its connectivity as an air hub, he stressed.

The Changi air hub and its adjacent industries contribute to more than 5 per cent of the country's gross domestic product and employ over 190,000 people.

The extended financial relief for airlines, ground handlers, cargo agents and other partners at Changi Airport and Seletar Airport would be provided through landing, parking and rental rebates, the Ministry of Transport and the Civil Aviation Authority of Singapore said in a joint statement yesterday.

For airlines, these include: a 10 per cent landing charge rebate for all scheduled passenger flights landing here, a 50 per cent rental rebate for their lounges and offices within Changi Airport and Seletar Airport terminal buildings, and a full rebate on aircraft parking charges at both airports.

Ground handlers will get a 50 per cent rental rebate for their lounges and offices within the two airports' terminal buildings.

There will also be a 10 per cent landing charge rebate for all scheduled freighter flights landing here, as well as a 20 per cent rental rebate for cargo agents tenanted at Changi Airfreight Centre.

The aviation and aerospace sectors have been decimated by the pandemic, with global air travel crippled by border closures and airlines scrapping plane orders.

Yesterday, Mr Heng announced that firms in the badly affected aerospace, aviation and tourism sectors will get 50 per cent of wages paid for seven more months until March under the Jobs Support Scheme (JSS).

To help these sectors recover, the Government will work with firms to support workers with specialised skills and offer further help to retain their core capabilities.

For workers in the aviation sector who cannot work now, the Government has been helping to redeploy them to other areas where their skills are valued.

So far, 500 aircrew have been redeployed to hospitals as care ambassadors, tapping their service skills to support non-clinical work.

The temporary redeployment programme will be scaled up, with some 4,000 new jobs, including permanent roles, to be created in the healthcare sector alone, said Mr Heng. "And we are also creating more jobs in other areas of need."

Aerospace and aviation firms welcomed the extra support, which they believe would help Singapore maintain its status as an air hub.

Mr Lien Whai Cheng, managing director of aircraft maintenance, repair and overhaul firm Coway Engineering & Marketing, said the extended JSS would give companies time to adjust their operations.

Over the past few months, his firm has diversified its business model to cater to other areas such as semiconductors.

Singapore Airlines said the support measures offer "much-needed relief", adding that it will continue to "pursue cost management measures and explore additional means to shore up our liquidity during this time".

"The recovery of air travel and airfreight is a necessary catalyst for the recovery of global trade and economies that have been severely impacted by the COVID-19 pandemic," it said.

Singaporeans to get $320 million in tourism vouchers to boost sector
By Tiffany Fumiko Tay, The Straits Times, 18 Aug 2020

Singaporeans will be given $320 million in "tourism credits" to spend domestically as part of a campaign to prop up local businesses, Deputy Prime Minister Heng Swee Keat announced yesterday.

The credits will be called SingapoRediscovers vouchers, named for the $45 million campaign launched last month to drive local spending to Singapore's eateries, shops, hotels and leisure attractions.

This spending initiative and a seven-month extension to wage subsidies for local workers are the key thrusts of additional support for the battered tourism sector.

Mr Heng, who is also Finance Minister, noted in his ministerial statement that foreign visitor arrivals have dried up due to travel restrictions.

"Local consumption will not fully make up for tourist spending, but I hope Singaporeans will take the opportunity to explore our local culture and heritage, nature, art and architecture," he said, adding that more details on the vouchers will be released next month.

The Jobs Support Scheme, which pays part of the wages for local workers, will be set at 50 per cent support for the hardest-hit aerospace, aviation and tourism sectors for the next seven months.

More targeted help may also be on the way for businesses in the arts and culture and sports sectors, which will also take much longer to resume full activities, Mr Heng said.

"These are important sectors that strengthen our social fabric and diversity," he said.

Things are looking less rosy for the nightlife sector, however.

Mr Heng noted that a small number of businesses, such as those in the nightlife industry, may not be able to open any time soon, due to safe management considerations.

"For these businesses, the Government will help them transition to other activities or ease their exit," he said.

The Ministry of Trade and Industry said more details on this will be provided shortly.

The Straits Times reported last week that the Singapore Nightlife Business Association (SNBA) had appealed to the Government to either allow all nightlife operators to reopen, or help them to pivot, hibernate or liquidate.

About a third of the association's 320 members remain shut as they do not have licences that allow them to operate as food and beverage establishments.

SNBA president Joseph Ong told The Straits Times that the extension of wage subsidies came as a relief, though the industry is awaiting details on other avenues of support.

"The way that DPM put it was exactly what we were proposing: Help us pivot or exit."

He hopes that SNBA's suggestion for business consultants to help firms determine their next steps will be taken on board.

"Some may think closing may be a good thing, but maybe there's a chance to pivot. And for some who want to pivot, it might be best to close," he added.

Ms Francesca Way, co-founder of entertainment and nightlife firm A Phat Cat Collective, said Mr Heng's speech provided a clearer timeline for the industry.

"At least they're upfront about our options, which gives us more clarity on how to proceed," she said.

The collective is looking into licensing requirements and business tweaks that would allow its arcade-themed bar and nightclubs Nineteen80 and Pinball Wizard to reopen.

It will also have to change plans for an upcoming venue that was conceptualised as a house music-centred nightclub.

"Given the current reality, we will probably have to review how we can go into more of a dining concept," said Ms Way.

Expedited approval for businesses applying for change of use and more clarity on the technicalities of licensing and other requirements would be helpful, she added.

Dr Kevin Cheong, chairman of the Association of Singapore Attractions, said the additional support announced for the tourism industry was better than he had expected.

The SingapoRediscovers vouchers will act as an indirect form of discounting for businesses, he noted, as some had said slashing prices would be difficult with capacity limits in place.

Like other lifestyle operators, he expressed hope that the credits would be spread out to help smaller businesses across sectors, rather than having the bulk being used to offset staycation packages.

But how consumers choose to use their credits will also be a good indicator of which businesses are here to stay, Dr Cheong said.

"Market forces will save the ones in demand."

Singapore Tourism Board chief executive Keith Tan said tourism businesses have been introducing safe and attractive experiences and promotions as part of the drive to boost domestic spending.

"Through the SingapoRediscovers vouchers, we hope to rally Singaporeans to enjoy and appreciate what we have in Singapore, while supporting our tourism sector during this challenging time," he said.

Startup SG Founder: Scheme to help start-ups will get boost of up to $150 million
By Choo Yun Ting, The Straits Times, 18 Aug 2020

Up to $150 million will be set aside for a programme that provides mentorship and grants to help start-ups get their innovative business ideas off the ground.

Deputy Prime Minister Heng Swee Keat in his ministerial statement yesterday said that he will enhance the Startup SG Founder programme in phases, as part of efforts to continue to spur innovation and entrepreneurship in Singapore.

The Government will raise the start-up capital grant and continue to provide mentorship to entrepreneurs, supporting start-ups as they contribute to economic growth and the nation's efforts against COVID-19, he added.

The Ministry of Trade and Industry will provide more details later in the week, said Mr Heng, who is also Finance Minister.

The Startup SG Founder programme currently provides mentorship and a start-up capital grant of $30,000 to first-time entrepreneurs with innovative business ideas. Start-ups are required to raise and commit $10,000 as a co-matching fund to the grant.

In his speech, Mr Heng emphasised the importance of Singapore positioning itself to seize growth opportunities in a post-COVID-19 world and continuing to transform its economy, with the pandemic having accelerated structural shifts.

The Republic started its economic transformation five years ago, with the development of industry transformation maps for 23 sectors.

"Let us build on our head start and continue to prepare our workers and businesses for the future," Mr Heng said.

He outlined how it will not be business as usual after the virus pandemic, given factors such as the intensification of the United States-China strategic competition with "tremendous implications on trade, technology and the global order", and the reconfiguration of global supply chains.

Acknowledging how the accelerated digital shift has challenged the viability of current business models and changed jobs, Mr Heng noted the emergence of new areas of growth, such as healthcare, sustainability and artificial intelligence.

"New jobs are being created, requiring new skills and new ways of working," he said.

Mr Heng also highlighted firms which have been able to pivot nimbly to new opportunities during this COVID-19 crisis, leveraging their prior investments in innovation. One of them is retailer Decks, which revamped its website and expanded to other e-marketplaces such as Zalora, Shopee and Lazada during the circuit breaker period, which saw its online sales increase up to 10 times.

While the retail landscape remains soft, Decks is bucking the trend and seeking to expand its physical presence and hire more workers, said chief executive Kelvyn Chee.

"During this COVID-19 period, while the sales for some of our fashion brands have fallen, the casual wear and home wear brands have performed quite well," Mr Chee said, citing Surfers Paradise as one of its brands which have seen brisk business with most people working from home.

Meanwhile, the Emerging Stronger Taskforce, which was set up earlier this year and co-led by Minister for National Development Desmond Lee and PSA International chief executive Tan Chong Meng, is in the midst of prototyping new ideas in areas such as smart commerce and supply chain digitalisation, Mr Heng said.

"Working together with our businesses, we will capture new opportunities, create better jobs, and reimagine our economy, so that we can emerge stronger from the crisis," he said.

Extension of Jobs Support Scheme may help to avoid spike in layoffs: President Halimah Yacob
By Rei Kurohi, The Straits Times, 18 Aug 2020

The extension of the Jobs Support Scheme (JSS) to cover wages up to March next year is particularly important and is a key component of the latest support package for businesses and workers, said President Halimah Yacob.

By extending it in a calibrated and sustainable manner, Singapore will hopefully avoid a sudden spike in retrenchments, she added.

In a Facebook post yesterday, Madam Halimah said Deputy Prime Minister Heng Swee Keat had briefed her and the Council of Presidential Advisers on the Government's proposal to introduce a fifth support package as significant uncertainties and challenges remain ahead.

The package includes, among other measures, an extension of the JSS that varies by industry, with harder-hit sectors such as aviation, aerospace and tourism receiving the most support at 50 per cent wage levels for seven more months.

A few sectors that are managing relatively well, such as biomedical sciences and financial services, will receive 10 per cent wage support for four more months.

Madam Halimah said the JSS extension will provide continued support for businesses and workers amid a weak economic environment, but she cautioned that not every firm can be saved.

"We can't save every business, and we have to be prepared that there may still be more job losses in the next few months," said Madam Halimah.

"But by continuing the JSS support in a more calibrated and sustainable manner, we will hopefully avoid a sudden spike in retrenchments. This will give us more time to create new quality jobs, and for workers to reskill for their new roles."

The President added that the fifth support package will be fully funded from the reprioritisation of resources and does not require an additional draw from past reserves beyond what she had earlier given approval for.

The Government has dedicated close to $100 billion over four budgets since February to support workers and businesses through the COVID-19 pandemic.

President Halimah had earlier given approval for drawing up to $52 billion from the past reserves to fund these measures.

No plans to draw on reserves to fund extra $8 billion needed for new COVID-19 support measures: DPM Heng
The funding for the measures will come from lower government spending in other areas
By Linette Lai, Political Correspondent, The Straits Times, 18 Aug 2020

Singapore has no plans to dig further into its national reserves for another $8 billion that is needed to continue the country's battle against the COVID-19 pandemic.

Instead, the extra expenditure will come out of the coffers of development projects that are being delayed because of the pandemic, Deputy Prime Minister Heng Swee Keat said yesterday in a ministerial statement.

Delays in major construction projects because of the circuit breaker and the need to ensure a safe reopening of the construction sector subsequently have shrunk Singapore's 2020 development expenditure by an estimated $6.9 billion, the Finance Ministry said in an annex to Mr Heng's statement.

Likewise, Singapore's operating expenses are set to decline as well by an estimated $1.5 billion.

The drop is mainly due to lower military expenditure because of pandemic-related delays in projects and the cancellation or deferment of exercises.

Another reason is lower manpower costs as civil servants did not get the usual mid-year bonus this year, said the ministry.

Yesterday's announcement of the additional $8 billion needed is on top of the nearly $100 billion from the earlier four 2020 Budgets unveiled between February and May to tackle the evolving COVID-19 crisis.

The latest aid is for the expanded measures to save jobs, create new ones and help Singapore seize new opportunities for growth in a post-coronavirus world.

"I have briefed the President and the Council of Presidential Advisers on the latest situation and the need for these measures," said Mr Heng, who is also the Coordinating Minister for Economic Policies and Finance Minister.

"I thank them for their earlier support and approval for the use of past reserves to respond to the crisis, which has put us on a strong footing to manage the evolving situation."

Yesterday, his ministry also gave an interim update of Singapore's Budget estimates for the 2020 financial year ending March 31 next year.

With the lower estimated expenditure and revenue plus the extra $8 billion needed, Singapore's overall Budget deficit is forecast to be $74.2 billion this financial year, a tad lower than the $74.3 billion deficit projected in May this year.

Operating revenue is now projected to be $63.7 billion, which is $5.1 billion, or 7.4 per cent, lower than the revised estimate given in May's Fortitude Budget.

The decline is mainly due to the "more subdued economic growth environment due to COVID-19 and lower economic activity during the circuit breaker period".

This, in turn, led to lower than expected revenues of $4.1 billion, primarily from goods and services tax, betting taxes and stamp duty, said the Finance Ministry.

Another major revenue dampener is the extension in the waiver of foreign worker levies announced at the start of this month. It amounted to an estimated $0.9 billion.

At the same time, Singapore is forecast to spend a total of $102.1 billion, which is $8.4 billion, or 7.6 per cent, lower than the May estimate.

Its operating expenditure is expected to be $85.4 billion, which is $1.5 billion, or 1.7 per cent, lower than the sum announced in May.

"The decreases are partially offset by additional expenditure for further COVID-19 support measures such as sector-specific support and measures to bolster social resilience and public health," the Finance Ministry added.

Meanwhile, development expenditure is estimated to be $16.7 billion, or 29. 2 per cent, lower than the sum announced in May.

But special transfers are estimated to rise to $54.5 billion, which is $3.2 billion, or 6.3 per cent, higher than the May estimates.

The increase is mainly due to the extension of the Jobs Support Scheme to cover wages up to March next year. The Net Investment Returns Contribution - the returns from Singapore's invested reserves - is expected to be $18.6 billion. This remains unchanged from the May estimate.

More focused assistance in new round of COVID-19 measures, but there will still be casualties
Firms that don't need extra help should forgo their subsidies for others in greater need, and support for the jobless may need to be extended even further
By Vikram Khanna, Associate Editor, The Straits Times, 18 Aug 2020

With the economy continuing to be buffeted by the impact of the coronavirus - as borne out by the weak second-quarter growth - and with ministers' recent hints of more help on the way, something beyond the support measures in the Government's four Budgets was well anticipated.

That has now come through.

The $8 billion package announced yesterday by Deputy Prime Minister and Finance Minister Heng Swee Keat has three key elements: the extension of wage subsidies to enable companies to survive; more incentives for them to hire, especially older workers; and more help for the unemployed and low-income workers.

The Jobs Support Scheme (JSS), which has been the centrepiece of the Government's support package for the corporate sector, has been extended until March next year.

But its latest version is more targeted and focused.

This makes sense, because the impact of COVID-19 has been highly variable across sectors.

And after the lifting of the circuit breaker measures in June, some businesses were able to resume operations, even if at lower levels of activity.

While many are still struggling, some, such as those in the finance and technology sectors, have managed to remain largely unscathed through the pandemic.

A few, like those in the biomedical sector and e-commerce, have done even better during the pandemic than before it.

Maintaining generous support across the entire corporate sector would have been expensive, wasteful and unfair. It would also have had the effect of artificially propping up unviable companies.

And so now, the wage subsidies under the JSS range from 10 per cent till the end of the year for companies in more buoyant sectors such as infocommunications technology, the biomedical sciences and financial services, to 50 per cent till March next year for the hardest-hit sectors such as aviation and tourism.

Others get varying levels of subsidies. The built environment sector, which includes construction, gets a 50 per cent subsidy for two months, tapering down to 30 per cent after that till next March, while the arts, entertainment, retail, food services, land transport, marine and offshore sectors get a flat 30 per cent subsidy for seven more months.


With this more targeted approach, subsidies under the JSS will more closely match different levels of need by sector.

That said, there will still be companies that do not get enough help, and some that get more than they need.

This is because even within sectors, there is great diversity and some companies may be more resilient than others. For example, within the retail sector, mom-and-pop shops and mid-level retailers are likely to have less staying power than big department stores and supermarkets.

The same difference would hold in the food and beverage sector between small family-run restaurants and big fast-food chains, or in the hospitality sector between five-star hotels, which can offer staycations, and smaller hotels and hostels, which cannot.

It would help if companies that do not need additional support - such as supermarkets and e-commerce giants in the retail sector - voluntarily forgo their subsidies which can then be recycled to those companies in greater need.

Nevertheless, while the more targeted JSS will go some way towards preserving several thousand jobs, there will still be retrenchments, as well as closures, in many of the sectors getting help.

As the Government has previously acknowledged, it cannot save every company or every job.

It is therefore appropriate that the COVID-19 Support Grant, which provides benefits to the unemployed, will be extended to the end of the year. But it may need to be extended further or enhanced, given that unemployment is still rising and the impact of COVID-19 is likely to stretch into next year.

The Self-Employed Person Income Relief Scheme to help self-employed workers may also need to be extended after the last payment goes out in October.


To create jobs, a new initiative in the Government's package is the $1 billion Jobs Growth Incentive (JGI).

Under this scheme, which will last six months, companies will get wage subsidies of 25 per cent of salaries - subject to a cap - for new local hires for one year, and 50 per cent for hires aged 40 and above.

This scheme will be particularly relevant for companies in areas that are growing.

However, the number of takers for the scheme and the amount of new jobs created will depend on whether there is sufficient business to justify new hirings, even with subsidies. If there is, some companies might be tempted to outsource at least some of the work overseas at even cheaper rates - which is now easier to do, given the rise of remote work and the proliferation of global online job platforms such as Upwork, Freelancer and Fiverr that enable this to be carried out.

The scheme would work best for companies where business is growing and the jobs can be performed only locally, as in, for example, manufacturing, construction, warehouse logistics and personal services.

There would also need to be safeguards to ensure that companies do not "game" the scheme, for instance by retrenching first, and then rehiring to benefit from the wage subsidies.

Companies that retrench should not be eligible for the JGI, at least for a minimum period, such as three months.

To finance the $8 billion package, Mr Heng indicated that there will be no further drawdown on the reserves.

Instead, the funds will be drawn from planned development spending on projects that were delayed because of the outbreak.

This is prudent. Drawing on the reserves should be the option of last resort, not first resort.

And while the delayed projects will eventually need to resume, there will, by then, hopefully be less expenditure on emergency support measures as the worst of COVID-19 will be behind us.

But we're not there yet.


No comments:

Post a comment