Higher training allowance could entice more workers to reskill before it’s too late

THE SkillsFuture Level-Up Programme – an enhancement to Singapore’s national skills upgrading movement unveiled at Budget 2024 – could not be more timely, especially considering that retrenchments more than doubled in the city-state last year.

To recap, Singaporeans aged 40 and above will get a S$4,000 top-up in SkillsFuture credits and, notably, those that enrol in a full-time course will get a monthly training allowance of up to 50 per cent of their last-drawn pay with a cap of S$3,000. These moves are in line with what the labour movement has been advocating in recent years, since it formed a taskforce to look into issues confronting professionals, managers and executives (PMEs), particularly older ones. The National Trades Union Congress (NTUC) had concluded that PMEs were becoming “increasingly vulnerable” amid the economic restructuring brought on by the Covid-19 pandemic and rapid technological advancements, even if they have traditionally been able to “fend for themselves”.

NTUC had also cited challenges that middle-aged PMEs tend to face when considering reskilling: many are often saddled with financial and family commitments that do not allow them to simply drop everything and switch to a new career. Hence, offering them a training allowance, albeit at half their salary, would no doubt relieve their burden.

Some may wonder why the cap is set at S$3,000.

The cap looks appropriate when one considers the median salary of workers in the 40 to 44 age bracket – it was S$6,167 excluding employer contribution to the Central Provident Fund in 2023, according to data from the Ministry of Manpower. However, a closer look at the breakdown of wages by occupation reveals that the median salary for PMEs in the same age group is S$7,500. Additionally, professionals drew a median salary of S$8,125, while managers and administrators were paid S$10,500.

There may be concerns that a fairly generous training allowance may have a potentially undesirable effect of luring people to casually quit their jobs to pursue a new fancy. Realistically though, not many would consider a job move with a 50 per cent pay cut, especially those with mortgages, unless they have truly run out of options. Moreover, a S$3,000 allowance is just 20 per cent more than the salary at the 20th percentile, which was S$2,500 last year. It is worth noting too that the qualifying income cap for the Workfare Income Supplement will be raised to S$3,000, from S$2,500, next year. It would seem that the scheme is designed to appeal to lower and middle-income workers. In any case, it is almost difficult to imagine older and better-paid PMEs being incentivised to upgrade their skills through this avenue, unless they become involuntarily unemployed. But, would that not be too late? Isn’t the whole point of this exercise to get workers to upgrade and stay skills-relevant and resilient?

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Meanwhile, the authorities are also in the midst of designing a temporary financial support scheme for those made redundant while they undergo training or look for better-fitting jobs, revealed Deputy Prime Minister Lawrence Wong in the Budget speech. This means that there could be a potential overlap in the two schemes for those who are involuntarily unemployed.

At the Budget, DPM Wong also separately announced an injection of S$1 billion over five years to help develop artificial intelligence (AI) expertise in Singapore. This is an important investment that will no doubt help to keep Singapore at the fore, making sure it keeps pace with rapid AI development already under way elsewhere. At the same time, however, it could also mean jobs may get replaced more quickly these days – and this really underscores the importance of reskilling.