S$8b more to buy time for firms, help create and keep jobs

Singapore

A FURTHER S$8 billion in continued Covid-19 support is on the way, including up to seven more months of wage subsidies; a new S$1 billion Jobs Growth Incentive (see Amendment Note) for new hires; and an extended grant for Singaporeans who are unemployed or have seen significant income loss.

The extension of support buys time for firms, while tiering it allows for rationalisation and reduces the fiscal burden, said economists.

The S$8 billion amount will be funded by reallocating monies from other areas, such as development expenditures delayed due to the pandemic, with no plans to draw on past reserves beyond what was approved earlier, said Deputy Prime Minister and Finance Minister Heng Swee Keat in a ministerial statement that was broadcast on Monday afternoon.

Hard-hit sectors will get extra support, including another S$187 million for the aviation sector.

Government measures are being adjusted as the crisis progresses, said Mr Heng. Since the Fortitude Budget in May - an unprecedented fourth Budget in one year - the pandemic has still been spreading in many countries, with severe economic impact.

Singapore's Covid-19 situation is now under control, with the multi-ministry taskforce working towards resuming more activities safely and sustainably, said Mr Heng.

But the global economy remains very weak, and Singapore must stay vigilant, with safe management measures and restrictions on international travel to persist "for some time".

"Together, we must continue to adapt to the rapidly changing situation," he said. First, the government will continue to support jobs and create new ones. The Jobs Support Scheme wage subsidy will be extended by up to seven months, covering wages paid till March 2021, with support levels and duration varying by sector.

"Seven more months is quite generous and will help distressed companies tide over this still challenging period," said OCBC Bank chief economist Selena Ling. But she added that some sectors may have been hoping for more rental relief too.

Firms in aerospace, aviation, and tourism get the most support, at 50 per cent of qualifying wages. The arts and entertainment, food services, land transport, marine and offshore, and retail sectors will get 30 per cent, and most other sectors, 10 per cent.

In a Facebook post, President Halimah Yacob said she and the Council of Presidential Advisers had been briefed the week before by Mr Heng on the proposed support package.

There may be more job losses in coming months, but "continuing the JSS support in a more calibrated and sustainable manner" will hopefully help avoid a spike in retrenchments. "This will give us more time to create new quality jobs, and for workers to reskill for their new roles," she said.

For growing sectors such as biomedical sciences, financial services, information and communications technology, public healthcare, and long-term care, the S$1 billion Jobs Growth Initiative will support firms to increase their local headcount. Subject to a cap, the government will co-pay up to 25 per cent of salaries of new local hires for a year, or up to 50 per cent for those aged 40 and above.

The Covid-19 Support Grant, introduced in May for Singaporeans who are unemployed or have suffered significant income loss, will be extended till December 2020.

With the labour market likely to stay weak beyond 2020, the government is studying how to continue supporting employees and self-employed persons who are most vulnerable, said Mr Heng. More workers will also be eligible for the upcoming S$3,000 Workfare Special Payment.

A second part of the government's strategy is to support the hardest-hit sectors of aerospace, aviation, and tourism to retain core capabilities and prepare for recovery, said Mr Heng. With another S$187 million, the Enhanced Aviation Support Package will be extended till March 2021.

The temporary redeployment programme for aviation sector workers will be scaled up. To boost domestic tourism, S$320 million has been set aside for SingapoRediscovers Vouchers - tourism credits for Singaporeans.(see Amendment Note)

Mr Heng added that he was prepared to provide more support for the arts and culture, and sports. For the small number of firms that may be unable to open soon, for instance in the nightlife industry, the government "will help them transition to other activities or ease their exit".

Third, Singapore must position itself to seize opportunities in a post-Covid world, he said. Up to S$150 million will be set aside in phases (see Amendment Note) to enhance the Startup SG Founder programme.

The Emerging Stronger Taskforce has also been consulting widely and is in the midst of prototyping ideas in areas such as smart commerce and supply chain digitalisation.

In an interim update on the government's current financial year, both operating revenue and total expenditure are expected to be lower, with the overall balance shifting only slightly.

The overall budget balance for FY2020 is now projected to be a deficit of S$74.2 billion, improving S$0.1 billion from the S$74.3 billion deficit projected at May's Fortitude Budget.

Operating revenue is projected to be S$63.7 billion, down S$5.1 billion or 7.4 per cent from the May estimate, due to lower economic activity.

Total expenditure is projected to be S$102.1 billion, down S$8.4 billion or 7.6 per cent from the May figure. Operating expenditure is lower due mainly to lower military expenditure with Covid-19-related delays and cancellations, while development expenditure is lower due to delays in major construction projects.

Amendment Note: An earlier version of this article listed several sectors associated with the new Jobs Growth Incentive. The Ministry of Finance has clarified that the incentive is for all firms that can increase their local headcount, regardless of sector. The MOF also clarified that the S$150 million meant for enhancing the Startup SG Founder programme will be set aside in phases, and that the SingapoRediscovers Vouchers are for Singaporeans only, not permanent residents too.The article has been amended to reflect the changes.