ETHOS Issue 22, June 2021
While the human toll of a pandemic is expressed first and foremost in terms of lives lost to the disease, the longer-term wellbeing of Singaporeans is also dependent on the jobs, incomes and livelihoods that have been affected or disrupted by the ensuing economic crisis. For this reason, the Singapore Government has prioritised the protection of “lives and livelihoods”1 in the long fight against COVID-19.
Saving Jobs for Locals
Being prepared is a hallmark of the Singapore Government, which maintains an array of contingency plans— frequently reviewed for relevance—ready to be activated at short notice. Following SARS in 2003 and the Global Financial Crisis (GFC) in 2008–2009, inter-ministerial teams kept plans continually updated in anticipation of the next economic crisis.
The centrepiece of Singapore’s response to the GFC—the Jobs Credit Scheme—was credited with averting a major spike in unemployment at the height of the crisis. Some have argued that the scheme, which provided employers with a wage offset of 12% for every local worker they kept on their books, might even have been too effective. By shielding less-productive firms from the pruning scythe of market forces, it may have left the economy as a whole operating below its potential. But as the COVID-19 pandemic started to bite, this wage offset approach, reincarnated as the Jobs Support Scheme (JSS),2 became a useful rapid-response measure.
Introduced in the Unity Budget on 18 February 2020, JSS support was set at 8% of gross monthly wages. Concurrently, the existing Wage Credit Scheme, which co-funded qualifying wage increases given to local employees, was enhanced with a higher co-funding rate and support cap.
As the COVID-19 outbreak gathered pace globally, it became evident that a much larger intervention would be needed to save businesses and jobs. Many countries across the developed world rushed to implement job protection schemes. Singapore introduced a supplementary budget, called the Resilience Budget, on 26 March 2020. JSS support was stepped up to 25%, 50% or 75% depending on sector, and the qualifying income ceiling raised from $3,600 to $4,600, approximately the median wage in Singapore.
For ease and speed of implementation, support for firms was based on their sector rather than revenue or profit loss. This would also avoid penalising firms that were better able to respond
and adapt to changing market conditions.
For ease and speed of implementation, JSS support for firms was based on their sector rather than revenue or profit loss. This would also avoid penalising firms that were better able to respond and adapt to changing market conditions. Firms in the most badly affected sectors (aviation and tourism) received 75% support; those moderately affected (food services) were given 50% support; firms in the remaining sectors had baseline support at 25% of wages. In recognition of the general disruption to business posed by the “Circuit Breaker”, JSS support was set at 75% for all firms for April and May 2020. The JSS was later extended to March 2021, albeit at lower rates of support, and then to September 2021 for firms in the worst-hit sectors. In total, more than $25 billion was committed to the JSS, supporting over 150,000 employers.
The pandemic’s outbreak affected firms very differently, even among those within the same sector and JSS tier. Most businesses experienced some income loss; revenue for some dropped to nearly zero, while others were unaffected or even saw their earnings grow. The pressing circumstances did not allow for a careful assessment of each firm’s specific situation. The priority at the outset of the pandemic, especially in view of the Circuit Breaker restrictions, was to put firms in suspended
animation, avoiding an indiscriminate cull that would have condemned even viable businesses.3
Wage adjustment—cutting wages to save jobs, rather than cutting jobs to save on wages—was another vital move to keep Singaporeans employed during the crisis. The Ministry of Manpower convened the tripartite National Wages Council (NWC) earlier than usual, in March 2020, to provide guidance to firms on cutting wages in a responsible way. With the COVID-19 situation rapidly evolving, the NWC was reconvened in August 2020 and released a supplementary set of recommendations in October 2020. Observing wage restraint in solidarity with those whose incomes had been affected by the pandemic, the Public Service Division announced that there would be no annual variable bonus for civil servants, although the 13th month bonus would still be paid.
Supporting the Self-Employed
Self-employed persons (SEPs), however, fell outside the ambit of the JSS. The Unity Budget attempted to address this gap with the Self-Employed Training Support Scheme, providing $7.50 an hour (later increased to $10 an hour) in training allowance for approved SkillsFuture Series or sector-specific training programmes. The National Trades Union Congress (NTUC) stepped in with a further top-up for union members. The Government then introduced the Self-Employed Persons Income Relief Scheme (SIRS),
providing $9,000 (disbursed over three payouts) to Singaporean SEPs with less means and family support.
Simplicity and generosity in administering these support measures were the order of the day. Those aged 35 and above in 2018 who had registered as self-employed with the Inland Revenue Authority of Singapore or Central Provident Fund Board (CPFB) were automatically included in the scheme. Others had to apply, as they had not registered as SEPs or did not meet the auto-eligibility criteria. Those who had narrowly missed any one of the eligibility criteria and were facing financial difficulty could also be considered on appeal. When SEPs’ needs became clearer, SIRS was enhanced in the April 2020 Solidarity Budget to automatically include SEPs who also drew a salary of not more than $2,300 a month from employment. In response to ground appeal for more flexibility in the eligibility criteria, the annual property value threshold was also raised from $13,000 to $21,000, allowing some SEPs living in condominiums and other private properties to be eligible for support.
Helping Employers with Foreign Worker Upkeep
The Government’s priority was locals, but foreigners were not neglected. With COVID-19 raging, many employers could not repatriate their foreign workers, due to border closures or lack of flights, but had to provide for their upkeep. With the rapid spread of COVID-19 infection in foreign worker dormitories, many workers were confined to their residences and unable to work, and were understandably anxious about their livelihoods and circumstances at a difficult time. Even if workers could be repatriated, firms would need to keep a core of workers to resume their operations when conditions allowed: otherwise, viable firms could go under, leading to job losses for locals and foreigners alike.
To help employers meet their obligations to their foreign workers, the Government announced that foreign worker levies due in April 2020 would be waived for employers of work permit and S-Pass holders, with employers receiving a further $750 rebate for levies previously paid.
The levy waiver and levy rebate were extended for another month, the latter contingent on employers making an online acknowledgment that they would use the amount received to support their foreign employees. This caveat recognised that while companies that reduced their local employees’ salaries or put them on no-pay leave would receive correspondingly lower payouts in subsequent tranches under the JSS, there was no similar mechanism for the Foreign Worker Levy rebate. Employers were reminded to treat all workers fairly and responsibly, regardless of nationality.
A third round of levy waiver and rebate was announced in the May 2020 Fortitude Budget, for firms that were still unable to restart operations after the Circuit Breaker, as well as all firms in the construction, marine shipyard and process sectors—which had been badly affected by the dormitory outbreaks and consequent disruption to operations. These sector-specific levies were stepped down from October 2020 onwards. Firms in these sectors would continue to receive a $90 rebate until December 2021, to ease the adjustment to more stringent safe management measures.
The implementation of these support measures reflected a balance between fairness and fiscal prudence (by targeting support at affected firms) with expediency in support and administration. While such measures to ease the upkeep of foreign workers were meant to tide firms over the difficult pandemic period, the prevailing policy stance remained: that firms relying heavily on foreign workers should review their workforce strategy and grow their pipeline of local workers for sustainability and resilience in the medium to long term.
The implementation of these support measures reflected a balance between fairness and
fiscal prudence (by targeting support at affected firms) with expediency in support and administration.
The general uncertainty at the outset of the outbreak also called for a time-tested budgetary measure—cash handouts to citizens and households. With employment at risk and income loss rife, such handouts provided help and assurance to households in financial difficulty, while giving a much-needed lift to consumption and aggregate demand. Such measures were based on the principle that everyone would receive something, but the less well-off would receive more. This would balance the intent to foster solidarity with more targeted support for those in greater need.
The Care and Support Package, rolled out with the February 2020 Unity Budget, gave every adult Singaporean $100 to $300 (depending on income and property ownership), with parents of Singaporean children aged 20 and below receiving an additional $100. Seniors received a $100 PAssion card top-up (later converted to an outright cash payment). The Package also included grocery vouchers and household rebates.4
By the March 2020 Resilience Budget, the worsening fallout had prompted a tripling of support under the Care and Support Package to $300–$900. The Workfare Special Payment, a special transfer for low-wage workers announced in the Unity Budget, was increased to $3,000.
The Solidarity Budget of April 2020 added a further cash handout of $300 to all citizens which, together with the earlier announced payment, amounted to a minimum of $600 for every adult citizen—the Solidarity Payment. Permanent Residents and Long-Term Visit Pass-Plus holders received a minimum of $300. A Solidarity Utilities Credit of $100 was also given to all households, in recognition that utilities consumption had risen with more people staying home, especially during the Circuit Breaker.
Another suite of measures was needed to help individuals and households that had run into financial difficulty due to the pandemic. The existing ComCare schemes, which were subject to rigorous means testing, would not be able to handle the anticipated surge in need for a time such as this. The Temporary Relief Fund (TRF) was introduced in April 2020 as an interim assistance scheme for lower to middle-income locals who had lost their jobs or suffered substantial income loss.
Cash handouts were based on the principle that everyone would receive something, but
the less well-off would receive more.
In May 2020, it was superseded by the COVID-19 Support Grant (CSG), which provided income support of up to three months for those who had lost their jobs, were on involuntary no-pay leave for at least three months, or suffered income loss of at least 30%. These measures were timely and impactful: the TRF attracted nearly 600,000 applications.5
Securing Opportunities for Locals
Even with the JSS in place, unemployment and retrenchments were expected to rise. Economic growth for 2020 had been forecast (in August 2020) to come in between -5.0% to -7.0%6 far worse than during the GFC and SARS. The 13.3% year-on-year decline in the second quarter of 2020, during the Circuit Breaker, was Singapore’s largest quarterly economic contraction on record.
Still, opportunities remained. COVID-19 swab testing, temperature taking, the surge in hospital admissions as well as safe distancing requirements created short-term job opportunities. Meanwhile, hiring in the information and communications technology sector continued to be strong, with the pandemic accelerating digitalisation. Recruitment for longer-term needs, such as in the publicly-funded healthcare and early childhood education sectors, could also be brought forward.
Matching workers who had suffered job or income losses with these opportunities was a priority. Initially, short-term job opportunities were given the “SGUnited Jobs” branding, under the broader SGUnited movement.7 Workforce Singapore and SkillsFuture Singapore organised virtual career fairs to match workers with immediate vacancies. The Public Service Division worked with companies to redeploy affected staff. For instance, airline crew were redeployed as patient care ambassadors in hospitals and nursing homes, or as safe distancing ambassadors in transport hubs.
However, there were still fears that there would not be enough jobs to go around. Fresh graduates from the universities, polytechnics and the Institute of Technical Education, were entering a challenging job market. Research from abroad suggested that entering the workforce in a recession could have a long-lasting impact on earnings.8 Besides current jobs, there was a need to create other opportunities for fresh graduates as well as displaced mid-career workers.
This motivated the development of the SGUnited Jobs and Skills Package,9 unveiled in the May 2020 Fortitude Budget. The Package aimed to curate close to 100,000 opportunities for local workers within a year, comprising 40,000 jobs, 25,000 traineeships and 30,000 skills training opportunities. A National Jobs Council, comprising government, union and business leaders, was set up to oversee the design and implementation of the SGUnited Jobs and Skills Package. Under this programme, the Government would co-fund traineeship allowances for fresh graduates and mid-career workers, while providing a training allowance for those enrolled in selected subsidised training programmes offered by Continuing Education and Training centres. This initiative also saw public agencies engage firms and training providers to offer traineeships and skills training programmes. By the end of 2020, nearly 76,000 locals had been placed in jobs or training opportunities through the SGUnited Jobs and Skills Package.10
Labour Market Outcomes
All in, close to $100 billion was set aside in FY2020 to deal with the pandemic: $73.5 billion for workers and businesses, and $10 billion for social and household support.11 The overall budget deficit for FY2020 amounted to $64.9 billion, or 13.9% of GDP: the largest in Singapore’s history. The Government estimated that these budget support measures would save about 155,000 jobs in 2020 and 2021. This would stem the rise in resident unemployment rate by about 1.7 percentage points, and prevent the economy from contracting by a further 5.6% in 2020 and 4.8% in 2021.12
Indeed, these measures are likely to have helped mitigate the impact of COVID-19 on the labour market and economy. While the resident unemployment rate climbed to 4.8% in September 2020, it fell short of the peak during the GFC. By December 2020, resident unemployment had fallen to 4.4%. The number of retrenchments came to over 26,000 in 2020, but the incidence of retrenchment (12.8 per thousand employees) was below that of previous recessionary highs in 2003 and 2009. Resident employment, which had contracted in the first half of the year, turned around in the third and fourth quarters, and recovered to pre-pandemic levels by the end of 2020.
“Suspended animation” has had to give way to helping businesses and
citizens take up new opportunities in areas with strong growth potential.
Looking to the Future: Pivoting to New Opportunities, Addressing Inequality & Social Security
With the pandemic dragging on into 2021, the challenge has been to pivot support for jobs and households to something more fiscally sustainable, and in line with Singapore’s medium-term economic and social policy directions.
The aviation and hospitality sectors are expected to remain weak for some time, notwithstanding progress on vaccine development and rollout. The acceleration of remote working and digital commerce means that some lost jobs will never return. Hence, “suspended animation” has had to give way to helping businesses and citizens take up new opportunities in areas with strong growth potential.
While the JSS has been extended to cover wages paid up to September 2021, support has tapered across the board, and excludes sectors that are faring well, such as ICT and biomedical science. To spur hiring by companies that are able to do so, the Jobs Growth Incentive (JGI) was introduced on 1 September 2020, and extended to end-September 2021. Under this scheme, companies receive 25% wage support for the first $5,000, for up to 12 months for new local hires aged below 40, and 50% wage support for the first $6,000, for up to 18 months for new local hires aged 40 and above, persons with disabilities, and ex-offenders. Some 130,000 new local hires, nearly half of whom were mature workers aged 40 and above, had benefited from this scheme within three months of its implementation.
The fallout of COVID-19 on jobs and incomes has been highly uneven, with the impact on workers mirroring the impact on companies. Those heavily dependent on cross-border tourism and travel have been most badly affected, along with those providing in-person services or whose work requires them to be on site. Data from the Ministry of Manpower’s Comprehensive Labour Force Survey in June 2020 showed that lower-wage workers bore the brunt of income losses, while non-Professional, Managerial, Executive and Technician (non-PMET) workers experienced a larger increase in unemployment rate compared with PMETs.13
While income inequality as measured by the household income Gini coefficient after taxes and transfers fell to a historic low in 2020 due to sizeable government transfers,14 inequality, particularly wealth inequality, remains a concern going forward. There is still a need to uplift low-income households and vulnerable workers, and to shore up precautionary and retirement savings for self-employed workers, many of whom are susceptible to income and job disruptions and may not have built up sufficient CPF savings.
The fallout of COVID-19 on jobs and incomes has been highly uneven, with the impact on workers mirroring the impact on companies.
Strengthening Social Security
Recognising that COVID-19 will impact jobs and incomes well into 2021, the Government has committed to doing “more to support every Singaporean, at each stage of life, to build a stronger and more cohesive society”.15 In this context, it introduced a new COVID-19 Recovery Grant (CRG) to help workers who have lost their jobs, been placed on involuntary no-pay leave or suffered significant income loss.16 Beyond
2021, it is worth considering if CRG or ComCare can be adapted to provide support to those affected over the medium term, especially if the economic effects of COVID-19 linger.
Besides Government support, there may also be other options to smoothen incomes or otherwise help individuals and households to tide over periods of unemployment. While a quick return to employment is preferred, this may not always be possible in a period of heightened economic and job market volatility. One option is unemployment insurance, where workers or employers contribute regular premiums to fund payouts for members who fall into involuntary unemployment. However, this has the risk of blunting incentives to return to employment. Another option is for workers to set aside savings for use during periods of unemployment. This could be mandated or kept voluntary, with incentives such as tax deductions and top-ups to encourage saving. The merits of such precautionary saving have to be weighed against the reduction in take-home pay or retirement savings.
There is also wage loss insurance, which tops up workers’ pay if they move to lower-paying jobs involuntarily. While this has the advantage of encouraging displaced workers to return to employment, such a scheme would also require workers or employers to contribute premiums, reducing take-home pay or profits.
Conclusion: Budget 2021 and Beyond
Budget 2021 has signalled the Government’s intent to engineer a soft landing for the Singapore economy, while equipping businesses and workers for the future. Of the $11 billion COVID-19 Resilience Package announced, $700 million has been set aside to extend the JSS for targeted sectors until September 2021, while $5.4 billion has been allocated to a second tranche of the SGUnited Jobs and Skills Package, of which $5.2 billion will go towards the JGI. Another $900 million has been set aside
for the Household Support Package. At the same time, the Government has stepped up financing support for high-growth enterprises, and is co-funding the cost of technology adoption and digitisation for SMEs.
Singapore has responded nimbly to secure jobs and livelihoods amid the COVID-19 pandemic. What lies ahead is the challenge of navigating towards sustainable recovery and a resilient future in a volatile, post-COVID world.
- Co-Chair of the Multi-Ministry COVID-19 Task Force, Minister Lawrence Wong, said that the Government prioritised “both lives and livelihoods” in an interview with Money FM 89.3 host Elliott Danker on 2 June 2020.
- See https://www.iras.gov.sg/irashome/schemes/ businesses/jobs-support-scheme--JSS-/.
- Notably, the business community was part of a groundswell of civic consciousness prompted by the pandemic. The Ministry of Finance reported in June that more than 130 companies had returned a total of $97 million in JSS payments for April and May,
while over 250 companies had pledged to decline future payments. Other companies donated their JSS payments to charitable causes. Firms also joined with Singaporeans from all walks of life in making donations in cash or kind to support the needy
and vulnerable, or in showing appreciation for frontline workers in the COVID-19 fight.
- Grocery vouchers were disbursed to citizens living in 1- or 2-room HDB flats, along with additional utilities rebates for HDB households, and Service and Conservancy Charges rebates of between 1.5 to 3.5 months for all HDB households, depending on
- A small number returned their payouts either because they had submitted incorrect information or no longer needed the support. Verifying employment status and income proved challenging during the Circuit Breaker period, where it was difficult to contact
employers or firms’ human resource departments. As with all such schemes, the Government had to be alert for possible fraud, and managed to uncover several such cases.
- The eventual change in real GDP for 2020 was -5.4%.
- SGUnited is an initiative to foster resilience and solidarity among Singaporeans through volunteerism and community action, in response to the COVID-19 pandemic.
- See, for instance, Lisa Kahn, “The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy”, Labour Economics 17, no. 2 (2010): 303–316; Philip Oreopoulos, Till von Wachter, and Andrew Heisz, “The
Short and Long-Term Career Effects of Graduating in a Recession”, American Economic Journal: Applied
Economics 4, no. 1 (2012): 1–29.
- See https://www.ssg-wsg.gov.sg/sgunitedjobsandskills.html.
- Heng Swee Keat, Budget Statement, 2021.
- Heng Swee Keat, Written Reply to Parliamentary Question by Ms Foo Mee Har, February 1, 2021.
- Heng Swee Keat, Ministerial Statement, October 5, 2020. See also Christopher Saw et al., “Impact of the Circuit Breaker and Budget Measures in Response to COVID-19”, Economic Survey of
Singapore Second Quarter 2020 (MTI, 2020), 42–48. According to the MAS Macroeconomic
Review October 2020, monetary policy would help reduce economic contraction by another 1.1% in 2020 and 0.8% in 2021.
- Real median gross monthly income from work for full-time employed residents declined by 0.4% between June 2019 and June 2020, compared with a 4.6% decline for income at the 20th percentile. The PMET unemployment rate rose by 0.6 percentage points
to 3.5% in June 2020, compared with a 1.7 percentage point increase in the non-PMET unemployment rate to 6.4% over the same period. This corroborates the results of a study by DBS bank, which found that lower-income earners (those earning $2,999
and below), and those with less savings, formed the bulk of bank customers whose incomes had declined substantially.
- This was the lowest since the Government began tracking the Gini coefficient in 2000.
- Halimah Yacob, Address for First Session of the Fourteenth Parliament, August 24, 2020.
- Compared with CSG and SIRS, support under CRG is lower, while eligibility criteria have been tightened to target support at those who need it most. Applicants must also show they have been actively seeking job or training opportunities or, in the
case of the self-employed, have reached out to potential clients. See: https://www.msf.gov.sg/assistance/Pages/covid-recovery-grant.aspx.