SkillsFuture training allowance not meant to replace salary: Indranee

ASKED if the new SkillsFuture training allowance may be too low for white-collar workers, Second Minister for Finance Indranee Rajah said it should not be “so large that it becomes a disincentive to look for a new job”.

“You can become so comfortable just going for more training and more training, and getting an allowance which is effectively like a salary,” she said at a post-Budget roundtable on jobs and upskilling. “That may have the wrong signals and wrong consequences as well.”

Introduced in Budget 2024, the SkillsFuture Mid-Career Training Allowance is for Singaporeans aged 40 and above who enrol in selected full-time courses. They can receive a monthly allowance equal to their average income over the latest available 12-month period, capped at S$3,000.

“It’s not meant to be a replacement of salary that you were earning,” said Indranee.

The S$3,000 cap was determined by considering household expenses, she added. It “still goes a long way” in a household where one spouse is working, and is “very helpful” to singles who are not working.

The amount can be reviewed later, “but we thought that this was the right figure to start with”, she said.

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Indranee was speaking at the ST-BT Budget Roundtable 2024, organised by The Business Times and The Straits Times and sponsored by UOB. The roundtable was moderated by ST associate editor Vikram Khanna.

The training allowance is part of the new SkillsFuture Level-Up Programme for Singaporeans aged 40 and above, with panellists discussing other aspects of the scheme.

Older workers need the support

One question was why younger PMETs (professionals, managers, executives and technicians) seemed to be left out, despite also being vulnerable to job disruptions.

Indranee replied that most workers who have turned 40 would have reached a plateau in their careers. They would have “built up a good, strong base” – but amid a rapidly changing job market, acquiring new skills would allow them to “strike out in a new direction” or deepen their current competencies.

In contrast, younger workers are still acquiring skills and more likely to receive on-the-job training, she noted. When they eventually turn 40, they will gain access to the new schemes too.

Mid-career workers may need more support to go for training because they have heavier financial responsibilities, said fellow panellist Desmond Tan, deputy secretary-general of the National Trades Union Congress.

He said: “Being concerned about losing their jobs is something very real, and yet they have to continue to work because… if they go on training, who is going to support their family?”

UOB senior economist Alvin Liew added that older PMETs may need more help if they are in sunset industries and thus more at risk of losing their jobs. While their skills and experience may still be relevant, they need to be repurposed for up-and-coming industries, he added.

Noting the low SkillsFuture Credit take-up rate, panellists also discussed reasons that workers might be reluctant to reskill, such as a lack of recognition by employers and the difficulty of starting afresh.

To recognise workers’ efforts in reskilling, employers could offer cash incentives to those who undergo retraining and reach a certain level of competency, said NTUC’s Tan.

As for workers’ fears of having to start from scratch, both Tan and Liew stressed that this is not necessarily the case, as some existing skills can be translated into different roles.

“The challenge is actually how do you move from where they are today, and how can we tap their experience and existing skills for the jobs that are in demand?” said Tan.

Nevertheless, they acknowledged that retraining may be challenging in some sectors, and for those who are switching to entirely new industries.

Another topic discussed was the long-standing issue of ageism in hiring. Association of Small and Medium Enterprises (Asme) president Ang Yuit argued that most companies prioritise relevant experience and do not discriminate based on age.

“I think it’s more a case of whether your skills are a match for what the company needs, especially in terms of experience,” he said. “No company would turn you down if you have experience in a needed area.”

Ultimately, said Indranee, employers must move away from a “plug and play mindset” – where they expect graduates to have all the required skills – and embrace reskilling as a norm.

“The reality is that… when you start a job, you are learning, and the best companies are the ones that have continuing and structured programmes for their employees to learn and acquire new skills,” she said.