Singapore Extends Jobs Credit Scheme By Six Months

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Tuesday, Singapore Prime Minister Lee Hsien Loong announced the extension of the Jobs Credit Scheme that was set to expire in December, by another six months as complete withdrawal of the scheme would add pressure on companies.

The Jobs Credit Scheme was introduced in the Singapore Budget 2009 to encourage businesses to preserve jobs amid the economic downturn. Businesses receive a cash grant based on the Central Provident Fund contributions they have made for their existing employees. The jobs credit was paid at 12% of the wage cost for each eligible employee with S$2500 cap.

With two additional payments to employers in March and June 2010, the government will incur S$675 million, Lee said. This will be funded from the Government budget instead of past reserves.

In a speech delivered to a National Trades Union Congress Conference, Lee said the NTUC used the package to work closely with employers to cut costs to save jobs, instead of cutting jobs to save costs. He added that the economy is now recovering, and some companies are hiring again. "But if we withdraw the Jobs Credit completely and suddenly, companies may have difficulties adjusting," said Lee.

Going forward, additional payments will be at stepped down rates, the Ministry of Finance said in a statement. Payment in March 2010 will be at 6% of salary of employees on the payroll in January 2010 and June 2010 payment will be made at 3% of salary of employees on the payroll in April 2010.

Lee said unemployment numbers tend to lag behind the economic recovery. "Budget 2010 will introduce and enhance programmes to support companies' efforts to grow, innovate and compete based on improved productivity."

According to the Ministry of Manpower, the unemployment rate stabilized in the second quarter following five straight quarters of increase. The jobless rate stood at a seasonally adjusted 3.3% in second quarter, the highest since the June quarter of 2005.

Yesterday, the Ministry of Trade and Industry raised the GDP forecast for 2009. The ministry estimates the city-state economy to shrink in the range of 2.5% to 2% this year compared with 4% to 6% contraction estimated in July. Official data showed an annual growth of 0.8% for the Singapore economy during the third quarter of 2009, compared to a 3.2% contraction in the preceding quarter.

On Monday, the Monetary Authority of Singapore maintained the current policy stance of a zero percent appreciation of the Singapore dollar nominal effective exchange rate or S$NEER policy path. There will be no change to the width of the policy band and the level at which it is centred, the central bank said. "Against continuing weakness and uncertainties in the external economic environment, the strength of the recovery in the Singapore economy is expected to be moderate beyond the initial uplift."

Tuesday, Singapore Prime Minister Lee Hsien Loong announced the extension of the Jobs Credit Scheme that was set to expire in December, by another six months as withdrawal of the scheme would add pressure on companies. (Market News Provided by RTTNews)