Sector-specific help, focus on jobs expected in Budget 2021

Singapore

AFTER 2020's multiple support packages to keep the economy afloat amid the unfolding Covid-19 crisis, this year's Budget is expected to be a more modest one, continuing the shift away from firefighting and towards supporting recovery and preparing for the future.

With the labour market recovery likely to take longer, however, jobs will remain a priority.

"Budget 2021 will be more targeted and modest in its support, as the economy slowly emerges out of the pandemic recession," said Maybank Kim Eng senior economist Chua Hak Bin.

BofA securities Asean economist Mohamed Faiz Nagutha similarly expects further support, but "in a more targeted fashion". Broad support will likely be tapered off with the recovery, and to stay in line with the fiscal rule that the budget must be balanced over a government's term, he added, with this being the first financial year after 2020's General Election.

Such tapering has already begun for measures such as the Jobs Support Scheme (JSS), and the government has stressed the need to focus on emerging stronger from the crisis.

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As such, any extensions of support are likely to be for select sectors only, said economists.

Measures in 2020's multiple Budgets "were largely broad-based", said UOB economist Barnabas Gan.

"However, the measures in Budget 2021 will likely be more calibrated and targeted to provide continued assistance to sectors such as travel and hospitality, which have been most affected by the global pandemic."

Besides those two, Dr Chua named catering services as another sector which may need support.

DBS senior economist Irvin Seah sees the possibility of more resources going to the Enhanced Aviation Support Package and tourism support.

"In contrast, support measures for the industries that have outperformed will be allowed to lapse or to taper off in 2021. Many of the temporary measures such as rental waivers, tax rebates, loan deferments, foreign worker levy waivers, etc, are unlikely to be extended," he added.

But he sees a possible extension of the Temporary Bridging Loan Programme, which provides working capital. Such a move will help "ensure that companies will continue to get support on liquidity to enable them to leverage on opportunities in the recovery process", he said.

In its recommendations for the Budget, the Singapore Business Federation (SBF) had called for the scheme to be extended beyond its September 2021 expiry till March 2022 instead.

Even as firms are weaned off crisis measures, resources will still be devoted to employment.

While Budget 2021 is likely to be about "rebuilding and repositioning for growth", it should retain "a still important focus on jobs and tackling skill mismatches given the recognition that the labour market may remain soft for longer", said OCBC chief economist Selena Ling.

Though the economy is on the mend, labour market recovery will lag and stay lacklustre in the first half, said Mr Seah.

"Managers want to be doubly sure about future earnings before increasing headcount."

So while the government "is likely to allow the JSS to expire" when it is due to end in March, there is a chance that it could be extended for the worst-affected sectors only, he said.

Mr Gan similarly expects "a scaled-back version of the scheme to provide more calibrated assistance" to sectors such as trade and hospitality, beyond March.

Dr Chua expects attention to be given to growing sectors instead, with fiscal support shifting to retraining and reskilling retrenched workers to move into growth sectors.

Similarly, beyond the worst-hit sectors, Mr Seah sees the focus moving from saving jobs to creating jobs.

The Jobs Growth Incentive, which provides salary support for new local hires, may be enhanced, he said, suggesting that the maximum support level could be raised to 75 per cent for low-wage workers.

"There is also a need to extend the SGUnited Traineeship scheme to render help to the upcoming cohort of fresh graduates," he added.

He sees training schemes and subsidies as part of general efforts to enhance firms' capabilities, alongside more grants for investment in technology and human capital.

Mr Gan also expects further enhancements to the SGUnited Jobs and Skills Package.

These could include an extension of the Enhanced Training Support Package beyond July 2021, as well as monetary incentives for private-sector companies to redesign jobs and to retrain employees to be future-ready.

Said Ms Ling: "The foreign worker policy is unlikely to be loosened, so training and reskilling or upskilling the local workforce remains the mainstay."

Beyond jobs, and given the focus on positioning for the future, other areas of interest in Budget 2021 could include sustainability and cybersecurity, she said.

To build economic resilience, there could be measures to boost food security and supply chain stability; kickstart the MICE (meetings, incentives, conferences and exhibitions) industry; reinforce Singapore's status as a logistics and business hub; encourage start-ups and innovation; and promote transformation and internationalisation.