Budget 2012 immediate concerns

Budget 2012 immediate concerns

Rising costs for businesses and individuals and PMET unemployment are some of the immediate concerns that need to be addressed, say observers, ahead of Friday's Budget.

SINGAPORE: Budget 2012 will be delivered on Friday and it comes at a time of an uncertain economic landscape.

While the government has said that the focus will be on the long-term competitiveness of Singapore, those Channel NewsAsia spoke with said there are immediate concerns that need to be addressed.

One thing cropped up among all those interviewed - rising costs not just for businesses but also the individual.

And the call to up wages remains a constant.

While productivity improvement is seen as a long-term solution, observers said the government can introduce some interim measures.

For example, subsidise the pay for low wage workers, only for the short-term, so companies have time to work on improving productivity.

Mr Inderjit Singh, MP for Ang Mo Kio GRC, said: "What I'm suggesting is that we should start thinking of a wage that is reasonable, that the government supports in the short-term... Employers will have to take over in the long-term and they can only do that by productivity improvements."

There are also calls to continue the focus on the middle income group and Professionals, Managers, Executives and Technicians (PMETs) who are increasingly bearing the brunt of the downturn.

One labour economist even proposes the radical idea of an Income Tax Credit for PMETs during the course of their job search.

Dr Randolph Tan, head of the Business Programme at SIM University, said: "They can be awarded an income tax credit so that when they find a job, that could be used to defray whatever income tax liability they may have in their new job. So it's to give them a credit before they start on a new job.

"I think it's something the government should start exploring because dealing with PMET unemployment is not as straightforward as dealing with unemployment of the lower income groups."

Dr Tan also suggested a targeted job matching scheme for PMETs.

"Job matching is not as simple as having a job fair because the nature of PMET unemployment is that you are dealing with people who are probably a lot more qualified and don't need a lot more educational upgrading," said Dr Tan.

"What you want is to match them to employers and to expectations as well. They may not be able to command immediately the wage that they want but that's not a reason for them to stay unemployed or underemployed because then they won't be able to contribute to the workforce," he said.

For businesses, observers said the days of cheap foreign labour are over.

Businesses acknowledge that, but want to see a more targeted approach to how the government decides on the foreign worker quota.

Mr Chan Chong Beng, President of the Association of Small and Medium Enterprises, said: "A lot of SME owners say 'you can cut off or reject my new applicants but please don't cut off those that have been with us for three to five years because we have trained them'.

"A lot of SMEs don't have certificates of training but they have their own in-house way of doing things and if you give them new workers and reject the old ones it will add costs to them. It's going to force them to go into re-training... and that will reduce their productivity."

And for productivity to improve, so too the training for workers.

Mr Chan said the Association of Small and Medium Enterprises is in talks with the Workforce Development Authority to offer customised training for SMEs.

"You send them for training and when they come back you have to re-train them! I give you an example, say retail, they have a structured module, but SMEs, they are small, most of the workers multi-task. So what they train there may not be relevant to the current business," said Mr Chan.

President of the Singapore Chinese Chamber of Commerce and Industry Teo Siong Seng echoed this call.

He said: "The government can also consider funding these trade associations... So that these trade associations can have tailor-made training programmes for their members. I still think that... many of these associations can provide a good job together with government funding to provide training and upgrading for workers".

Those Channel NewsAsia spoke with also called on the government to continue with the Skills Programme for Upgrading and Resilience (SPUR) scheme.

The scheme provides course fee support for companies and individuals and absentee payrolls for companies that send their workers for training.

"I think the most important thing for employees is not to become unemployable as a result of the structural changes that occur during a downturn," said Dr Tan.

"In the current situation... it's also a good time for SMEs to look at hiring better people instead of trying to retrench because if you (retrench too many people), when the pickup comes, you just don't have the momentum to carry," Mr Chan added.

Another item on the wish list - help with relocation and rental costs.

UniSim's Dr Tan said the government should not rule out the possibility of a CPF cut, if needed.

"We have also had CPF cuts which had worked in previous downturns, despite the fact that they were considered much too blunt an instrument, but they still worked. I think it's important to consider them as part of a larger arsenal of tools in which to deal with a potential slowdown," he said.

Last year's Budget came at a time of exceptional economic growth. A S$3.2 billion Grow and Share package was provided for households with more going to low and middle income families.

This time round, observers said the economy is not going to be as bad as the 2008/2009 recession. What the impending downturn will give is the government ample time to act, should a recession hit.

Source: CNA/cc