Safeguards in place to prevent Jobs Growth Incentive abuse: Josephine Teo

Safeguards in place to prevent Jobs Growth Incentive abuse: Josephine Teo

Singapore workers at lunch time
People walk out of their office building as they head for their lunch break in Singapore on Sep 30, 2020. (File photo: AFP/Roslan Rahman)

SINGAPORE: Safeguards are in place to prevent companies from abusing the Jobs Growth Incentive (JGI), Manpower Minister Josephine Teo said on Wednesday (Oct 14) in Parliament.

The JGI is a wage subsidy scheme aimed at encouraging firms to hire more locals. Under the S$1 billion programme, the Government will co-pay between 25 and 50 per cent of wages for local hires, depending on their age. 

Measures in place to prevent abuse include tying the payout to the net increase in a company’s headcount, as well as checks by the Inland Revenue Authority of Singapore (IRAS), Mrs Teo said.

She was responding to a question by Member of Parliament Murali Pillai on the safeguards available to ensure companies do not lay off existing employees while using the JGI to recruit new workers.

READ: Extension of Jobs Support Scheme among S$8 billion worth of measures announced by Heng Swee Keat

A firm with no net growth in jobs will not receive JGI payouts, and firms that initially expanded their local headcount but subsequently reduced it below the original level would also stop receiving future payouts, Mrs Teo said.

To ensure that the local workforce growth is meaningful, there must be an increase in the number of local employees in jobs that pay at least S$1,400 in gross monthly wages as well, she added. 

“There may be valid reasons why a firm that receives the JGI has to later let existing employees go, such as retirement or voluntary resignations,” Mrs Teo said, adding that it would “create significant rigidity” if the authorities demanded that the firm promises not to lay anyone off. 

READ: Firms must maintain workforce strength to get Jobs Growth Incentive wage subsidy for new hires

And in practice, firms would probably moderate their new hiring than deal with the risk of support being withdrawn, she said.

“We take a practical approach, where a firm’s JGI payout is reduced in proportion to the number of existing employees that left the firm after the scheme started in September 2020," she said.

"This gives the firms assurance of funding support while signalling early that they should make the efforts to retain existing employees even as they bring in new hires."

Mrs Teo also pointed out that IRAS has an “anti-gaming” framework to identify risk and prevent abuse of grant scheme, and the agency uses data analytics and risk profiling systems to identify cases.

“We view any attempt to abuse grant schemes very seriously, and will not hesitate to report any malpractices or abuses to the police for investigation and possible prosecution,” she said. 

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Source: CNA/rp(cy)

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