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SINGAPORE: Singapore's labour movement is calling for the Jobs Credit scheme to be phased out gradually, while the Employers Federation (SNEF) said it hopes that the government will continue with it for another six months.
The scheme, which was designed to help firms save jobs during the global economic downturn, will end in December.
The government had set aside S$4.5 billion for the one-year Jobs Credit scheme to help companies cope with the economic crisis, and the National Trades Union Congress (NTUC) said it has received positive feedback.
Said Halimah Yacob, deputy secretary general of NTUC: "Companies' feedback has been extremely positive - many of them say the jobs credit have actually helped them to save jobs.
"(A company said it) had surplus workers but they did not want to retrench those workers because they were really skilled workers. So what they did was they did a costing and showed that with the Jobs Credit and the Skills Programme for Upgrading and Resilience (SPUR), the cost here was less than the factories in the other parts of the world."
Said Josephine Teo, assistant secretary general of NTUC: "Jobs Credit has been a big help. It has allowed (companies) to have breathing space to regroup, refocus and also to plan for the rebound."
Under the Jobs Credit scheme, employers received a 12-per-cent cash grant of the first S$2,500 of wages to keep local workers on their payroll.
The latest payment of S$890 million for Jobs Credit was made on September 30, and the final payment is due in December.
Finance Minister Tharman Shanmugaratnam emphasised in his Budget speech this year that the Jobs Credit scheme was equivalent to a nine percentage point cut to the Central Provident Fund.
The SNEF said the scheme had achieved its main purpose of encouraging companies to keep their workers during the economic crisis.
"For the last year, the Jobs Credit scheme has helped companies quite a bit," said Stephen Lee, president of SNEF. "That is one of the key initiatives that have helped the companies to preserve more jobs so the Jobs Credit scheme has achieved what it was set out to do. Companies welcome that and they would like to see the scheme continue in some form at least for a while.
"Many companies understand that the Jobs credit scheme was designed to be a temporary scheme and it was clearly communicated. So there is of course expectation that it will go away but we would like to see it taper away rather than disappear altogether at the end of this year."
Some employers and analysts feel that the pickup in the economy has not really taken hold.
Said Teo: "Even in the midst of the Jobs Credit being able to help many companies, we have not been able to avoid restructuring and retrenchments completely. So this worry about us breeding a dependency mentality is overstated."
A recent survey of 180 companies by SNEF showed that a quarter of the firms were still implementing measures to avoid retrenchments.
23 per cent of the companies reported that they would still hire regardless of the outcome of the Jobs Credit Scheme, while another 29 per cent said they would freeze headcount regardless of the Jobs Credit outcomes.
Said Lee: "So far whatever improvement we have seen is largely driven by government stimulus package and the real economy has not shown sufficient improvement on the road to recovery. So it is still a bit iffy.
"So we hope the government will be able to continue with the Jobs Credit scheme. So far the economic pickup we have seen has not resulted in strong job creation."
Analysts said it is still too early to tell if the government would use reserves again if it decides to extend the Jobs Credit scheme for another half a year.
Co-director of the Asia Research Centre at Nanyang Business School, Tan Khee Giap said: "As the economy recovers next year, which I believe it will, then our Budget may not have to be such a big deficit as it was for 2009.
"So it would be too premature now to say that we would have to go back to the President to withdraw from the Reserves. But the major concern for analysts is that we don't want this Jobs Credit scheme to become a handout or entitlement."
DBS Bank's Research analyst Irvin Seah argued that the Jobs Credit may be extended for another six months and will be refined to focus on the lower wage workers.
In a research paper, he said the government may extend the scheme to cover only workers earning below S$2,500.
Specifically, companies would be entitled to the subsidy of 12 per cent of the salary of workers that they employed below S$2,500 per month.
He also said that while the monetary subsidies are not directly passed on to the workers, it would help to provide some form of interim job security for them.
Singaporeans will get a better picture of how the country's economy has been fairing when the Trade and Industry Ministry releases its advance GDP estimates for the third quarter of 2009 on Monday.
The country's economic outlook and the employment situation would be key factors which the government will examine carefully before coming to its decision on the future of the Jobs Credit scheme.
The government is expected to announce its decision on the scheme next Tuesday.
- CNA/yb
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