Categories
Economy

No half measures for Singapore

Having decided that this is no time for half measures, Singapore has come up with a surprisingly large stimulus package to take the edge off the coronavirus-induced economic pain.

While it may not stave off a recession, powered mainly by the panic in the global financial markets, Singapore’s response is among the most focused and forceful globally.

The total stimulus of about $55 billion represents roughly 11 per cent of Singapore’s gross domestic product (GDP), making it the largest among advanced economies after Germany and Britain.

By that measure, Singapore’s stimulus is way bigger than some of its closest competitors.

For instance, Hong Kong’s $22.4 billion aid package is about 4 per cent of its GDP. South Korea’s $13.7 billion stimulus is just 0.6 per cent of its GDP.

In the Asean region, only Malaysia has pledged more – a stimulus package of $89 billion, nearly 18 per cent of the country’s GDP.

Singapore’s political leadership has taken a risk in forking out such a large amount from a shrinking economy – a risk made more manageable by salting away large reserves in good times.

Nevertheless, economic thinking that champions free markets considers the state an inefficient conduit of income distribution.

Singapore, however, has a reputation of efficiently targeting policy measures, unlike places like Malaysia and India where fiscal leakages have been a perennial problem.

That may have been a source of confidence in the decision-making process, allowing Singapore to boldly confront the crisis with the full force of the resources available.

Despite the pace at which the economic outlook has deteriorated, prompting a second official downgrade of GDP growth in less than six weeks, the framework of the stimulus package shows no signs of haste or desperation.

Headline numbers may suggest the bulk of the stimulus is targeted at business and industry.

But the way the aid is designed will ultimately benefit the unemployed and those who may get retrenched.

The threat to jobs is real.

DBS Bank estimates total retrenchments this year will top 24,500, up from an annual average of about 14,500 in a normal year.

Referring to the stimulus, OCBC Bank’s head of treasury research and strategy Selena Ling said: “The focus is still squarely on protecting jobs, incomes and the livelihoods of Singaporeans.”

For instance, the wage offsets will help with cost relief for companies and, as a result, may protect jobs. “That’s where the up to 75 per cent wage offset will come in, very quickly and very usefully, over the next few months,” Ms Ling said.

Compare this with the US$2 trillion (S$2.9 trillion) rescue package which includes a US$500 billion fund to help industries, and a comparable amount for direct payments of up to US$3,000 apiece to millions of American families.

Several Republicans insist the Bill does not ensure that laid-off workers would not be paid more in unemployment benefits than they earned on the job.

Some Democrats have called it “a historic corporate giveaway”.

Singapore’s package, on the other hand, is more targeted.

“It is in line with the philosophy of the Singapore Government – to provide targeted help when needed, and to make good use of resources, not frittering away fiscal resources they have accumulated,” Ms Ling said.

The hardships of average Singapore families have not been forgotten.

The Government is tripling the handout each individual gets, as well as parents of young children, and also giving cash top-ups to PAssion cards, aimed at helping individuals.

Yet these particular measures will in turn help the worst-hit segments of the service sector that accounts for about two-thirds of the nation’s GDP and employment.

The payments to citizens will boost consumer confidence and their purchasing power, in turn helping the retail sector and other service providers.

The overall fiscal deficit will rise to $39.2 billion, or 7.8 per cent of GDP, according to DBS Bank’s estimates.

Still, given Singapore’s track record of fiscal prudence, a historically high deficit is unlikely to shake investor confidence in its economic management.

In fact, Singapore’s “whatever it takes” stance is probably what is really required to put a floor under this economic downturn, which has largely been a crisis of confidence.

The supply chain disruptions caused by measures to contain the spread were made worse by panic in the financial markets.

Then desperation by certain central banks virtually froze lending and borrowing.

DBS senior economist Irvin Seah said there could be more downside risks to the global outlook.

“Singapore is heading into uncharted waters, which calls for unprecedented fiscal push to buffer the economy from the incoming storm,” Mr Seah said.

The Monetary Authority of Singapore stands ready to do its part, while the Government has promised more measures if the situation demands it – whatever it takes to overcome an unprecedented crisis.

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Categories
Politics

10,000 jobs to be created over a year, $800 a month to be given to those who lose job amid Covid-19 outbreak

SINGAPORE – Some 10,000 jobs will be created over the next one year to provide employment for locals amid the downturn, while those who lose their jobs due to the coronavirus outbreak can receive a monthly cash grant of $800 for three months.

The unemployment assistance will be for low- and middle-income workers.

A new programme to help fresh graduates entering the job market will also support up to 8,000 traineeships across both large and small enterprises, Deputy Prime Minister Heng Swee Keat said in Parliament on Thursday (March 26).

“First-time job seekers may be concerned about the current job market. These include our students who have just graduated or are graduating from ITE (Institute of Technical Education), polytechnics and universities this year,” he said.

Companies that offer traineeships targeted at local first-time job seekers this year will be able to receive funding from government agency Workforce Singapore under the new SGUnited Traineeship programme.

This will include science and technology traineeships in research and development labs, deep-tech start-ups, accelerators and incubators, said DPM Heng, who is also Finance Minister, in announcing the Supplementary Budget.

More details will be given by the Ministry of Manpower soon, he said.

Also, the SGUnited Jobs initiative to create about 10,000 jobs over the next one year will start with the public sector recruiting for longer-term roles in essential services as well as short-term, temporary jobs.

“Our agencies have been planning our manpower needs early, and there is a range of jobs which we need to fill in emerging areas. We will accelerate hiring plans to fill these roles, while giving our people meaningful employment opportunities,” said Mr Heng.

These include roles in areas such as social services, early childhood education and infocomm technology.

Temporary jobs to handle the increase in Covid-19-related operations will also be available in roles such as health declaration assistants and temporary management support officers, as well as transport ambassadors, as announced earlier this week.

Together with the Singapore Business Federation and other trade associations and chambers, private-sector job opportunities will also be identified in firms recruiting in preparation for the eventual economic recovery, or to cope with disruptions to their labour supply.

An SGUnited Jobs virtual career fair will be launched on Friday with more than 2,200 job vacancies in short-term temporary jobs that are immediately available.

As the impact of Covid-19 on the economy deepens, some workers will lose their jobs or see their incomes significantly reduced, noted DPM Heng, announcing several measures to tide them over.

Low- and middle-income employees who are retrenched or lose their contracts early as a result of Covid-19 can receive a cash grant of $800 a month for three months while they search for a job or attend training.

This applies to Singaporeans and permanent residents aged 16 and above with a monthly household income of up to $10,000 or per capita household income of up to $3,100 a month before becoming unemployed. It does not cover those who were on internships or who are self-employed.

They must also live in a property with an annual value of up to $21,000, and not currently receive ComCare Short-to-Medium Term Assistance or ComCare Interim Assistance.

Applications will be open from May to September this year via social service offices (SSOs), while those who need financial assistance in April can contact SSOs or community centres to apply for assistance from a new Temporary Relief Fund.

In addition, the Government will exercise more flexibility when considering applications for the social assistance scheme ComCare during this period.

A total of 63,900 residents were unemployed as of December last year, according to Ministry of Manpower data.

DPM Heng said a total of $145 million will be set aside for these schemes and increased flexibility for ComCare applications.

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