Jobs Credit Scheme (Extension)19 Oct 2009
Date: 19 October 2009
Question No. 184 (by Mr Teo Siong Seng, Nominated Member of Parliament):
To ask the Minister for Finance (a) if the Government will consider extending the Jobs Credit Scheme beyond the current year to give local enterprises support and confidence to sustain their business and to continue saving jobs in view of the uncertain economic recovery; and (b) when will the Government announce its decision to withdraw or extend the scheme so that businesses can do forward planning and budgetting for the next financial year.
Question No. 188 (by Mr Liang Eng Hwa, MP for Holland-Bukit Timah GRC):
To ask the Minister for Finance (a) whether the Resilience Package such as the Jobs Credit Scheme and the Special Risk-Sharing Initiative has achieved the results it intended; and (b) what factors would be taken into account when deciding whether these measures should be extended or fine-tuned.
Question No. 213 (by Mdm Ho Geok Choo, MP for West Coast GRC):
To ask the Minister for Finance given that it may take three years or so for the Singapore economy to register healthy growth figures, what plans does the Government have with respect to the Jobs Credit Scheme.
Reply by Finance Minister Tharman Shanmugaratnam:
As PM has announced on 13 October 2009, the Jobs Credit scheme has been extended for half a year, with two more stepped-down payouts in March and June 2010. Whereas the Jobs Credit is currently calculated based on 12% of an employee’s salary (up to the first $2,500), the two additional Jobs Credit payments will be based on 6% and 3% of the salary. The Special Risk-Sharing Initiative (SRI) expires in January 2010, and the Government will monitor the situation in the coming months before deciding what should follow it.
As PM also stated, the Government will be introducing and enhancing other measures suitable to a phase to support companies in their efforts to grow, restructure and raise productivity. The measures will take into account the proposals of the Economic Strategies Committee. They will also complement SPUR, which was introduced as a two-year programme and will be kept for the full period until end 2010.
Mr Liang Eng Hwa had asked if the Resilience Package measures such as the Jobs Credit and SRI had achieved their intended results. The Package is generally assessed as having mitigated the scale of economic decline that Singapore would have faced and helped avert major job losses. Despite the sharp fall in our GDP resulting from the global recession, unemployment went up moderately and local employment actually increased by 7,000 in the same period.
The Jobs Credit scheme in particular has been strongly supported by both employers and workers. A survey conducted by MOM from May to July 2009 showed that the scheme was having a positive impact in helping companies and workers cope with the downturn. About 3 in 4 (73%) companies which had earlier plans to lay off workers reported they would postpone or reduce the number of workers to be laid off, as a result of Jobs Credit.
Reducing the immediate loss of jobs has not been the only benefit of the Jobs Credit however. Companies receive Jobs Credits based on the number of local workers they employ, but the money they receive can be used in many ways to help their business and employees. On the evidence we can gather this has included using the money to avoid or reduce wage cuts; invest in their people; pass on the savings to consumers; or pay suppliers on time. It is not possible to estimate the full impact of the scheme with any precision, but whichever way companies use the Jobs Credit, the scheme amounted to a significant fiscal injection that would have had a multiplier effect on the economy and thereby helped support more jobs.
The Special Risk-Sharing Initiative (SRI) has also proved beneficial. It has helped to stimulate bank lending to SMEs and ensure that a broader segment of companies have access to credit to sustain their operations. In the first eight months of the enhanced Government measures to share risks with banks (from February to September 2009), the 16 Participating Financial Institutions (PFIs) registered loans worth about $4.9 billion under the various SME financing schemes. This is about seven times the value of loans approved in the same period last year.
SMEs especially have benefited from the SRI. More than 90% of the loans approved were granted to SMEs, and these loans accounted for about 70% of the total loan quantum approved.