The #SGBudget2022 includes a S$500mn package to support jobs and businesses, the hiring of mature workers, and more; and adjustments to minimum qualifying salaries for Employment Pass and S-Pass holders, among other new measures. Report by Priya Sunil and Lester Tan.
Minister for Finance Lawrence Wong delivered his maiden #SGBudget2022 speech in Parliament on Friday (18 February), what he noted is a "first step in renewing and strengthening Singapore’s social compact in a post-pandemic world," and in realising the nation's "vision of a fairer, more sustainable, and more inclusive society."
Budget 2022, themed "Charting our new way forward together", sets out key plans to:
- Invest in new capabilities;
- Advance our green transition;
- Renew and strengthen our social compact; and
- Develop a fairer and more resilient revenue structure.
Key highlights for HR and employers to note are summarised below.
#1 S$500mn Jobs and Business Support Package for affected sectors, hiring of mature workers
To support workers and businesses in sectors that are "still struggling" as Singapore recovers, the minister introduced a S$500mn Jobs and Business Support Package.
As part of this package, a Small Business Recovery Grant will be provided for SMEs that have been most affected by COVID-19 restrictions over the past year, such as those in the F&B, Retail, Tourism and Hospitality sectors.
SMEs in the eligible sectors will receive a payout of S$1,000 per local employee, up to a cap of S$10,000 per firm. Local sole proprietors and partnerships in eligible sectors, as well as SFA-licensed hawkers, market and coffeeshop stallholders, who do not hire local employees, will also receive a S$1,000 payout.
In addition, workers who continue to face income loss due to COVID-19 can apply for the COVID-19 Recovery Grant, which has been extended to the end of 2022.
Minister Wong also shared that the Jobs Growth Incentive will be extended by six months, to September this year, with "stepped-down support rates reflecting the improved labour market conditions."
This extension will cover those who face greater difficulty finding jobs, such as mature workers who have not been employed for six months or more, persons with disabilities, and ex-offenders.
Aside from this Package, the Government will be extending targeted assistance for the aviation sector. "This includes measures to ensure public health and safety at the airport, as well as to preserve core capabilities. We must preserve and enhance our status as an international aviation hub," Minister Wong explained.
More on this aviation support package will be shared at the Committee of Supply (COS).
Minister Wong then shared: "As our economy reopens, the harder-hit sectors should progressively see improved prospects. Meanwhile, these support measures will provide temporary relief for our businesses and workers.
"We are also closely monitoring the risk of rising inflation and cost of living. The rise in prices comes after an extended period of low inflation over the past decade. It has been driven mainly by the recovery in global demand amidst continuing supply chain dislocations, and especially by the rise in energy prices."
In helping businesses "tide over the current period of higher prices", and to support companies with their cashflow needs, the Government will extend the Temporary Bridging Loan Programme and the enhanced Trade Loan Scheme, with revised parameters, for another six months, from 1 April to 30 September this year.
Access to Project Loans for the domestic construction sector will also be extended for another year, from 1 April this year to 31 March next year, which is on top of the Foreign Worker Levy rebates that construction firms are receiving currently, Minister Wong added.
#2 Enhanced support for Company Training Committees, new SkillFuture Career Transition Programme
Minister Wong elaborated on support that will be provided to employers and workers in building up their capabilities.
First, he said: "We continue to invest significantly in education, to help every child achieve their full potential. Through SkillsFuture, we are also empowering and equipping Singaporeans for their lifelong journey of acquiring new skills, and sharpening existing ones.
"To support this, we are transforming our Institutes of Higher Learning, or IHLs, which include the Autonomous Universities, into institutes for continual learning. We will review the programming in our IHLs, and enhance their provision of quality continuing education and training. The Minister for Education will say more about this at the COS."
Second, the Government will grant a waiver of the Skills Development Levy requirement for the qualifying period of 1 January 2021 to 31 December 2021, in efforts to better support the smaller and micro enterprises.. This is estimated to double the number of eligible employers, from 40,000 today to 80,000.
The deadline to claim the credit will also be extended by a year, to 30 June 2024, to give employers more time to use the credit.
Third, the Government will be setting aside about S$100mn to support the National Trades Union Congress (NTUC) in its efforts to scale up the Company Training Committees, of which a part will go into a new grant which will be administered by NTUC, to support companies that have set up CTCs to implement their transformation plans.
"Besides the CTCs, we will continue to extend our outreach, especially to smaller companies, through other platforms. This includes partnering with industry leaders or Queen Bee companies to provide training and advice to smaller companies, and working closely with the Trade Associations and Chambers as well as the Singapore Business Federation" Minister Wong added.
Fourth, the minister noted that under the SGUnited Mid-Career Pathways Programme, there have been company attachments for mid-career workers to undergo skills upgrading with a training allowance.
Moving forward, he said, the Government will make such company attachments for mature mid-career workers a permanent feature in Singapore's training and placement system. Trainees under the programme will receive a training allowance of up to S$3,800 per month, for the duration of the attachment. This allowance will be co-funded by the Government and the host organisation.
Last, Minister Wong introduced a new SkillsFuture Career Transition Programme (SCTP), a Train-and-Place Scheme which will "continue to enhance our provision of high-quality, industry-oriented training courses".
This scheme commence from 1 April 2022 and will replace the SGUnited Skills and SGUnited Mid-Career Pathways – Company Training programmes, which will both expire on 31 March 2022.
Key features of the SCTP include:
- Industry-oriented courses (three to 12 months in duration) delivered by Continuing Education and Training (CET) Centres and programme partners, to help individuals secure employment in sectors with good hiring opportunities. These courses will contain elements of actual industry experience (e.g. work attachments or industry projects).
- Enhanced pre- and post-training support services, such as skills and training advisory to help individuals select suitable courses, employment facilitation and career coaching activities.
- Additional course fee support of up to 95% of total course fees for Singapore Citizens who meet the following criteria:
- ComCare Short-to-Medium-Term Assistance (SMTA) recipients;
- Workfare Income Supplement (WIS) recipients;
- Long Term Unemployed (LTU); or
- Persons with Disabilities who are registered with SGEnable
#3 Qualifying salaries, levies, and dependency ratios adjusted in E- & S-passes, and work permits
Beyond the initiatives above, the Government has also adjusted the regulations for Employment Passes and S-passes, as well as work permits holders in Singapore. This, according to Minister Wong, is to ensure that “local and foreign professionals” can be combined – while offering that “extra advantage to excel amidst intense global competition, and to create many more good jobs, and career choices for Singaporeans”.
Employment pass (EP)
From September 2022, the minimum qualifying salary for new EP applicants will be raised from the current S$4,500 to S$5,000.
For the financial services sector, which has higher salary norms, this will be raised from the current S$5,000 to S$5,500.
The qualifying salaries for older EP applicants, which increase progressively with age, will also be raised in tandem.
For renewal applications, changes will be applied from September 2023 to give businesses sufficient time to adjust.
“Beyond the qualifying salary, we will refine how we assess EP applications, to improve the complementarity and diversity of our foreign workforce, and also to increase certainty and transparency for businesses,” Minister Wong added.
S pass (SP)
The minimum qualifying salary for SP applicants will likewise be raised, albeit in three phases.
In the first phase, the minimum qualifying salary for new SP applicants will increase from the current S$2,500 to S$3,000 in September 2022. There will also be a higher minimum qualifying salary of S$3,500 introduced for the financial services sector.
The qualifying salaries for older S Pass holders will similarly be raised in tandem.
The second and third phases will see the minimum qualifying salary for new SP applicants raised in September 2023, and again in September 2025.
“The specific salary values will be announced closer to the implementation date, based on the prevailing local wages then. Similar to EP, the changes will apply to renewal applications one year later, to give businesses time to adjust,” the Minister shared.
In addition to qualifying salaries, the number of SP holders will be regulated with sub-Dependency Ratio Ceilings and levies – whereby the Tier One levy will be raised from the current S$330 to S$650 by 2025.
Work permits (WP)
This work permit policy applies to those in the construction and process sectors. It will be adjusted to spur greater productivity improvements and support more manpower-efficient solutions. This will help transform the sectors that have been more heavily dependent on foreign workers.
Applied only to those in the construction & process sectors, the latest work permit policy will see the dependency ratio ceiling (DRC) reduced from the current 1:7 to 1:5. Further, the current man-year entitlement (MYE) framework will be replaced with a new levy framework that “will encourage firms to support more offsite work and employ more higher-skilled work permit holders”.
The aforementioned changes will take effect from 1 January 2024. Any further details about the foreign work policy will be elaborated by the Minister for Manpower at the COS.
#4 Progressive wage model to be extended to more sectors in Singapore to financially aid lower-wage workers
Singapore’s progressive wage model (PWM) will not only be extended to the retail, food services, and waste management sectors, but also to in-house cleaners, security officers, landscape workers, administrators, and drivers across all sectors. This is to “do more to uplift lower-wage workers”, Minister Wong said.
On that note, companies employing foreign workers will be required to pay all their local employees at least the local qualifying salary, which is currently set at S$1,400 per month.
In addition to the PWM. the Government will also launch a progressive wage mark (PW Mark) to accredit firms that pay progressive wages, and the local qualifying salary. From March 2023, all eligible suppliers of the Government have to be accredited with the PW Mark.
#5 CPF contribution rates for workers will continue to increase in 2023 to boost Singaporeans’ retirement adequacy
According to Minister Wong, Singapore’s employer and employee CPF contribution rates for workers aged 55 to 70, will continue to increase in 2023 whereby employers will be provided with a similar offset. This means that workers in that age group will see a total increase of three to four percentage points in their CPF contribution rates over these two years.
This has come after the Government “implemented the first increase this year, and has been providing employers with a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contributions,” Minister Wong said.
On top of that, the CPF Basic Retirement Sum, or BRS, will be raised by 3.5% per year for the next five cohorts turning 55 from 2023 to 2027. This is to “provide members with higher monthly CPF payouts in their retirement years”.
That said, Minister Wong highlighted that there is no requirement for members to top up their CPF if they are unable to set aside their BRS.
“Those who set aside the BRS when they turn 55 in 2027 will receive payouts of close to S$1,000 per month when they are 65, and these payouts will continue for the rest of their lives. This will give them greater assurance for their basic retirement needs,” he explained.
Snapshot of other updates announced at Singapore's Budget 2022
Goods and Services Tax to increase to 9% by 2024
Singapore’s goods and services tax (GST) was slated to increase from 7% to 8% in 2022. However, according to Minister Wong, this increase will be delayed to 2023 – and have another 1% increase, from 8% to 9%, in 2024.
“The revenue from the increase in GST will go towards supporting our healthcare expenditure, and to take care of our seniors,” the Minister shared.
That said, Minister Wong reiterated that the Government “will continue to absorb GST on publicly-subsidised healthcare and education”, and provide Town Councils with an additional S$15mn per year to absorb the additional GST payable on service and conservancy charges.
On top of that, there will be no increase in government fees and charges for one year from 1 January 2023.
“This will apply to license fees, as well as fees charged by Government agencies for the provision of services. This includes school fees, ITE and Polytechnic fees, and charges in public carparks,” Minister Wong explained.
However, should locals require support in managing the GST increase, the Government has added S$640mn to its already approved S$6bn assurance package for assistance in terms of payouts, and more over the next five years for the majority of households, and about ten years for the lower-income households.
In detail, the package aims to allow:
- Every adult Singaporean to receive cash payouts totalling S$700 to S$1,600.
- Eligible seniors to receive a special GSTV – Cash (Seniors’ Bonus) totalling S$600 to S$900.
- Eligible HDB households to receive additional U-Save rebates totalling S$330 to S$570, depending on flat type.
- All Singaporean children and seniors to receive MediSave top-ups totalling S$450.
- All Singaporean households to receive two tranches of CDC vouchers worth S$200 each in 2023, and 2024 which can be used at all participating heartland merchants and hawkers, as well as major supermarkets.
For households that may require further assistance, Minister Wong shared that they can approach their Citizens’ Consultative Committees (CCC) for assistance as the CCC ComCare Fund will be topped up by S$5mn over five years, the Self-Help Groups will also be provided a total of S$12mn over four years.
In terms of the GSTV, locals can note that it has three components: a cash payout, MediSave top-up, and utilities rebates. These, according to Minister Wong, will be enhanced in three ways:
- The service and conservancy charges (S&CC) rebate will be made a permanent component of the GSTV scheme.
- The Assessable Income threshold for GSTV will increase from S$28,000 to S$34,000.
- The quantum of the GSTV will be adjusted with cash payouts to S$500 for those residing in homes with Annual Values of S$13,000 and below; and to S$250, for those residing in homes with annual values of between S$13,000 and S$21,000.
Other than individuals, the Government has also looked at how it can help businesses in Singapore cope with the GST hike.
With that, Minister Wong shared that the Government is setting aside close to S$40mn, under the productivity solutions grant, for businesses to apply for subsidised accounting and point of sale solutions.
Household Support Package
As part of this Package, the Government will double the GST Voucher – U-Save rebates for the rest of this year. Eligible HDB households will receive additional rebates of up to S$285.
Further, children below the age of 21 will be provided with a top-up of S$200 each in their Child Development Account, Edusave Account or Post-Secondary Education Account. This will be on top of the annual Edusave top-ups they already receive.
Next, an additional set of S$100 CDC vouchers will also be distributed this year, to support all Singaporean households in their daily expenses, and the vouchers can be used at participating heartland shops and hawkers.
All these will amount to a significant package of S$560mn to help Singaporeans with their utility bills, children’s education, and daily essentials, Minister Wong shared.
Read the full updates in Minister Wong's Budget 2022 statement here.
"We are starting the year on a positive note. Our economy has rebounded strongly from our worst recession since independence. We worked together to cushion the effects of COVID-19.
We planned, we consulted, we took action. We committed close to S$100bn over the past two years to support Singaporeans and businesses through the uncertainties of COVID-19. The close tripartite partnership between the unions, employers, and the Government enabled us to take decisive and timely actions to preserve jobs and create new ones even through this crisis."
These measures, he noted, have borne fruit, with Singapore's resident unemployment rate dropping to 3.2%, close to pre-COVID levels. The median income of full-time employed residents also grew by around 1% in real terms last year, after a decline of 0.4% in 2020.
Minister Wong further shared that Singapore expects to see "steady recovery" in 2022, adding that the country will "continue to benefit from the pick-up in the global economy. This will be supported by more widespread vaccination and booster efforts in the major economies like the US and Eurozone. The recovery of our key trading partners in the region will also support our growth."
That said, he acknowledged that 2022 is not free of risks.
"The global economy is still vulnerable to pandemic-related risks, and further supply-chain disruptions. Geopolitical and security risks loom, including the rising tensions in Eastern Europe. We may also see a slowdown in external demand as the major economies scale back their pandemic support, and central banks tighten their accommodative monetary policies to deal with the threat of inflation.
"We will continue to watch these potential threats. We stand ready to respond should the situation turn for the worse. Barring fresh disruptions, I expect the Singapore economy to continue to do well. Our economy should grow by 3% to 5% this year. Our investment pipeline is also strong. This will support our efforts to create more good jobs and secure the livelihoods of all Singaporeans at all levels of the workforce."
Lead image / MCI's YouTube streaming of the Parliament Sitting, 18 February 2022, where Budget 2022 was announced
Infographics / MOF