Singapore’s Budget 2021 was delivered by Deputy Prime Minister Heng Swee Keat on 16 February. Coming after a challenging year where COVID-19 has created major upheavals worldwide, the budget indicates a shift in government measures from “containment to restructuring, while continuing our support for Singaporeans, workers, and businesses.”
Stressing the importance of Singapore’s fiscal response in both containing the crisis, DPM Heng discussed the Ministry of Finance’s interim assessment of the COVID-19 Budget measures. “Our early findings show that the combination of fiscal, monetary, and transitional measures, mounted as a whole-of-government response, has helped avoid a worse recession, avert job losses, and mitigate inequality,” he explained.
“Without the fiscal and monetary policy measures, Singapore’s GDP would have shrunk by at least 12.4%, more than double the contraction we experienced. These measures are also estimated to save or create 155,000 jobs on average over 2020 and 2021, preventing the resident unemployment rate from rising a further two percentage points in 2020.”
Adapting for a re-opening economy
As Singapore re-opened her economy, government measures have shifted from containment to restructuring, while continuing support for Singaporeans, workers, and businesses. Broad-based support has transitioned into more targeted efforts for firms, especially those in the hardest-hit sectors. At the same time, measures were introduced to preserve core capabilities.
The focus was shifted from job retention to job creation, and workers were helped in securing jobs within growth sectors. An Emerging Stronger Taskforce was set up amid the crisis to respond to the new realities.
Reminding us that recovery in the post-COVID-19 world was likely to be “long-drawn, highly uncertain, and uneven across sectors and geographies,” DPM Heng highlighted two structural trends and challenges in the journey ahead.
These were the rising protectionism over supply chains, resources, data, and technology, accelerated by a heightened sense of vulnerability and distrust during the crisis, and the unprecedented levels of public debt globally to finance the extraordinary fiscal responses during the pandemic. These add to concerns over long-term sustainability of debt and risks of inflation over time. The takeaway was that not everything being within our control, Singapore needs to adapt nimbly to the wide range of possible outcomes.
COVID-19 Resilience Package
$11 billion has been set aside for a COVID-19 Resilience Package with three prongs. The first is to safeguard public health and re-open Singapore safely.
The second prong of the Package continues support for workers and businesses where needed. This is through several measures including:
Continuing the Jobs Support Scheme (JSS)
The JSS was introduced at the start of the pandemic with a clear goal to protect jobs and to help firms retain local workers. over $25 billion to the JSS, and supported over 150,000 employers for up to 17 months. The current tranche will continue to cover wages up to March 2021 for most sectors.
In the current budget, the JSS will continue to be provided for, targeted towards sectors that continue to be hard-hit. Tier 1 sectors– aviation, aerospace, and tourism, will have the JSS extended by six months. Firms in these sectors will receive 30% support for wages paid from April to June 2021, and 10% support for wages paid from July to September 2021.
Firms in Tier 2 sectors, such as retail, arts and culture, food services, and built environment, will have the JSS extended at 10% for three months, covering wages paid up to June 2021. For firms in Tier 3A sectors, JSS will continue covering wages up to March 2021, as previously announced. These sectors are generally recovering. Overall, the JSS extension will cost $700 million.
Continuations of previous credit access programmes
DPM Heng mentioned the Temporary Bridging Loan Programme and the enhanced Enterprise Financing Scheme – Trade Loan which remain available until 30 September 2021 to ensure businesses have continued credit access.
Together with the Enterprise Financing Scheme aimed at better supporting loans for local construction projects, these programmes have seen an uptake of more than 20,000 companies taking up over $17 billion of working capital and trade loans.
The third prong of the COVID-19 Resilience Package is to provide more targeted support for the worst-hit sectors, which continue to be adversely affected in 2021. These include the aviation sector, with an allocated $870 million, the land transport sector, with $133 million set aside for the COVID-19 Driver Relief Fund.
It also includes the arts and culture, and sports sectors, which saw an extension of the Arts and Culture Resilience Package and Sports Resilience Package in FY2021 to support businesses and self-employed persons in these sectors. These extensions and enhancements have $45 million set aside for them.
Skilled Human Capital and Talent
One enabler mentioned by DPM Heng in emerging stronger is to develop the skills, talents, and creativity of our people. “Enabling our people to have access to good jobs and job opportunities is the purpose, for developing a strong economy. A vibrant economy creates the jobs and opportunities for our people to be at their best,” he opines.
“The employment landscape is undergoing fundamental changes, and COVID-19 will accelerate these changes. A digital, innovation-driven economy means that businesses will need highly-skilled workers and deep talent. Our people will need to have both broader and deeper skills and creativity.
“The workplace is changing. COVID-19 has forced us to work from home and adopt new ways of collaborating with others,” he continues. Yet, he warns, ”‘Working from Home’ is just a short step to ‘Working from Anywhere’. Yes, anywhere in the world – as long as you have a computer and an internet connection.
“Singaporeans may find more opportunities as the best firms source globally, but will also face stiffer competition from talents who may not even step foot in Singapore.”
DPM Heng stated that in the coming years, a critical part of business transformation will be in job redesign. “With technological advances, many tasks that are physically demanding or repetitive can be better done by machines. With an ageing workforce, we must leverage technology to develop senior-friendly workplaces,” he said.
To support businesses in redesigning jobs, Productivity Solutions Grant – Job Redesign will be enhanced, by raising the Government co-funding ratio from 70% to 80%, till end-March 2022.
SGUnited Jobs and Skills Package
The SGUnited Jobs and Skills package will be enhanced. First launched last year to tackle the anticipated labour market fallout from COVID-19.an additional $5.4 billion to a second tranche of the Jobs and Skills Package, on top of the $3 billion allocated last year, will be added.
Of this, $5.2 billion will be allocated to JGI, to extend the hiring window by seven months, up to end-September 2021. Companies hiring eligible locals will be given up to 12 months of wage support from the month of hire. However, those hiring mature workers, persons with disabilities, and ex-offenders will be given more support – up to 18 months of enhanced wage support.
For workers who require additional support before landing a job, the support for the SGUnited Skills, SGUnited Traineeships, and the SGUnited Mid-Career Pathways Programmes has also been extended.
Through the next phase of the SGUnited Jobs and Skills Package, we have set aside the budget to support the hiring of 200,000 locals this year through the JGI, and provide up to 35,000 traineeship and training opportunities to continue to support jobseekers in upskilling and accessing employment opportunities.
Innovation & Enterprise Fellowship Programme
As Singapore head into a more technologically-intensive and innovation-driven economy, the country must also groom leaders in innovation and enterprise, especially in deep technology areas.
The NRF will be supporting about 500 Fellowships under the new Innovation and Enterprise Fellowship Programme, or IFP, over the next five years, to meet needs in areas such as cybersecurity, artificial intelligence and health tech. It will work with a range of partners, including accelerators, venture capital firms and deep tech startups.
Jeff Lee, Co-Owner & Managing Director, HKBN JOS Singapore, explains that “With these schemes, organisations will have the necessary support on the talent front, on a technical level and better prepare for the adoption of tomorrow’s emerging technologies. These are key areas for businesses especially with regards to their ability to adapt to today’s unpredictable business environment and begin working towards greater success.”
Explains Andy Lee, Managing Director, Singapore, Cisco, Budget 2021 “underlines a pressing need to develop local talent capabilities and bridge the talent gap in the technology sector to meet the current and future needs.
“To address this, greater collaboration is needed between educational institutions, policy makers and companies to increase investments in re-skilling and up-skilling Singapore’s workforce and empower workers with the relevant skillsets to thrive in this new and evolving environment.