The Singapore government intends to support the hiring of 200,000 locals and 35,000 trainees in 2021. This was part of an additional allocation of $5.4 billion for a second tranche of funding for the SGUnited Jobs and Skills Package announced by Deputy Prime Minister (DPM) Heng Swee Keat during his Budget 2021 address.
“Looking ahead, as companies and industries transform and move into new growth areas, people will need new knowledge, and skills and agility to take on these new jobs,” said Heng.
The SGUnited Jobs and Skills Package is part of a suite of measures introduced by the government last year to expand job, traineeship and upskilling opportunities to support Singaporeans affected by the economic impact of Covid-19. The scheme received an allocation of $3 billion in 2020.
Of this $5.4 billion, $5.2 billion has been allocated to extend the Jobs Growth Incentives (JGI) qualifying window to end-September 2021. The scheme provides one year of salary support for each new local hire by employers who successfully increased their local workforce. Kicking off last September, the window for the scheme was initially intended to close in February 2021.
DPM Heng, who is also minister of finance, also announced that the SGUnited Skills, SGUnited Traineeships and Mid-career Pathway Programmes will be extended. The Covid-19 recovery grant will also continue to be made available for workers who have lost their jobs or experienced significant income loss.
The Job Supports Scheme has also been extended. Aviation, aerospace and tourism will receive 30% support from April to June 2021 and 10% from July to September. Retail, arts and culture, food services and built environment will receive 10% support for 3 months, covering wages up to June 2021.
In the long-run, the government is looking to ensure a manageable mix of local and foreign workers. The sub-dependency ratio ceiling for manufacturing will be cut from 20% currently to 18% in 2022 and to 15% in 2023. The ratio refers to the proportion of S-pass holders firms can employ.
"Manufacturing is a significant pillar of our economy. To achieve our vision of being a global advanced manufacturing hub, firms must make it a priority to develop a strong, highly-skilled local core in their workforce," DPM Heng told parliament today.
SEE: A budget for recovery and beyond
While foreign workers will always be needed -especially those with deep skills - he also said that Singapore should moderate its reliance on foreign workers and create good jobs for local workers.
The wage credit scheme, which subsidises wage increases given to local employees earning up to $4000, will also be extended for a year at a co-funding level of 15%. The Capability Transfer Programme, which hopes to facilitate capability transfer from foreign specialists to locals, will be extended to end-September 2024.
Heng also noted that the Tripartite Workgroup on Lower-Wage Workers has been looking into ways to uplift wages and prospects for these workers. The aspiration, he says, is to introduce some form of progressive wages in every sector of the economy. Details are expected during the Ministry of Manpower’s Committee of Supply (COS).
Hopes and fears
Firms have been particularly bullish about the enhanced support for reskilling. “The Budget also 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,” said Andy Lee, managing director, Singapore, Cisco. He sees greater collaboration between companies, educational institutions and policymakers being key to upskilling.
Some larger firms have already moved to reskill their workers of their own initiative. “The Singapore government’s various programmes to develop deep and future-ready capabilities in workers is in line with our existing and future People programmes,” said Brandon Coate, head of human resources, HSBC Singapore. In 2020, he remarks, 3,650 HSBC Singapore employees took part in a collective 105,300 hours of training.
The extension of the SGUnited traineeships is also likely to provide some relief to tertiary students worried about their future employment prospects. Ng Chia Wee, a third-year Politics, Philosophy and Economics (PPE) student at the National University of Singapore, notes that what graduating students need is certainty. He observes that there had previously been worries among the student body as to whether the scheme would be extended in light of the present economic downturn.
Ng recognises that many undergraduates may be worried about turning to SGUnited, since this is a temporary measure that only buys them time in the very short-run. Still, he believes that the continuation of the scheme would provide students with a valuable stepping stone to more long-term careers as well as the opportunity to develop skill mastery going forward.
But the move to reduce the quota of S-pass holders in manufacturing could tighten the manpower shortages faced by SMEs. Such companies often face difficulties finding local workers to perform jobs like construction despite the various policies encouraging local hiring, since such roles are often looked down upon by Singaporeans.
"These stricter foreign manpower rules will likely dampen the economic recovery, as firms will not be able to hire as readily to capitalise on any demand upswing," warn Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye.
But tightening foreign manpower requirements in the manufacturing sector could be less painful due to the higher labour productivity and growing technology adoption in the sector. Employment in manufacturing has fallen 17% from 540,000 in 2013 to 447,000 in 2020 despite output growing by 26% in the same time.
Sandeep Kaul, co-founder and CEO of Singapore-based startup Hipla Technologies, sees the reduction in S-passes providing a further lever for automation in the SME space going forward. He sees this bringing new opportunities for young tech businesses working in emerging technologies like Artificial Intelligence and the Internet of Things (IoT).
"I think the budget is very well-balanced and there is something for everyone. The extension of the Job Support Scheme will surely help young companies like us onboard senior and experienced talent locally," he tells The Edge Singapore.
Adrian Sham, partner at employer solutions, Grant Thornton Singapore, was more critical. "I would have liked more initiatives to support Singaporeans compete with the 'stiffer competition from talents who may not even step foot in Singapore'," he remarked, citing DPM Heng's reference to foreign workers hired remotely from overseas. Sham told the press that he would have preferred to see more policies fleshed out to help businesses find the right talent whilst protecting Singaporeans.
“The way forward is neither to have few or no foreign workers, nor to have a big inflow. We have to accept what this little island can accommodate. To strike a balance, we must focus on enhancing the complementarity of local and foreign manpower, and step up on industry transformation,” said Heng in his speech. He vowed to continue reviewing Singapore’s S Pass framework to ensure complementarity between local and foreign workforces.
Despite a disrupted post-Covid economy presenting many challenges for Singaporean workers, Heng sought to convey a message of hope. "Singaporeans should not be fearful. There are many strengths in Singapore that will enable us to create good jobs here. But to access these, we have to learn and adapt," he exhorted.
