The COVID-19 pandemic has continued to cause major disruption in many sectors of the Singapore economy. The severe economic impact brought about by the protracted COVID-19 pandemic has resulted in Singapore's worst performance (quarterly) on record. Over the past four Budgets, the Singapore Government has dedicated close to SGD 100 billion in support measures.
As some of the measures introduced in the previous Budget Statements will soon lapse, the Government has set aside an additional SGD 8 billion to buoy an uncertain economy. The August Ministerial Statement continues to advance the Government’s three-pronged strategy by:
- supporting jobs and creating new jobs;
- providing further support for sectors that are most affected; and
- positioning Singapore to seize opportunities / growth in a post COVID-19 world.
We set out some of the key measures from the August Ministerial Statement below.
- The Jobs Support Scheme will be extended by up to seven months, providing wage support for employers up till March 2021 at rates determined based on the forecasted recovery of the various sectors.
- Under the new Jobs Growth Incentive, the Government will co-pay up to 50% of wages for new local hires over the period of one year if the workers are hired within the next 6 months. Businesses will be entitled a wage co-payment of up to 25% for every new local hire aged below 40, and up to 50% for every new local hire above the age of 40.
- The Enhanced Aviation Support Package, which provides targeted relief to airlines, ground handlers and the cargo sector will be extended until March 2021.
- The Startup SG Founder programme will be enhanced with the introduction of a new "Train" track, under which Singaporeans will be entitled to participate in a 3-month venture building programme under the mentorship of Accredited Mentor Partners. Additionally, the existing startup capital grant under the "Start" track will be increased from SGD 30,000 to SGD 50,000, on the basis that the startup commits SGD 10,000 as a co-matching fund to the grant.
In more detail
Extention of Jobs Support Scheme ("JSS")
The JSS was first introduced during the Unity Budget and enhanced in the subsequent Resilience, Solidarity and Fortitude Budgets. The scheme helps businesses retain and pay local employees (i.e., Singapore citizens and permanent residents) by providing different levels of wage subsidies, depending on which tier the business is in.
Over the 10 month period ending August 2020, the scheme has funded between 25% to 75% of the first SGD 4,600 of wages for each local employee. It was announced during the August Ministerial Statement that the JSS will be extended by up to seven months, covering wages up to March 2021. The support provided in the months ahead will be tapered according to the recovery forecast of the various sectors.
The following rates of support will apply:
- Tier 1 businesses will receive 50% of wage support for the months from September 2020 to March 2021;
- Tier 2 businesses will receive 30% of wage support for the months from September 2020 to March 2021; and
- Tier 3 businesses will receive 10% of wage support for the months from September 2020 to December 2020, followed by 10% or 0% from January 2021 to March 2021. The lower rate will apply for sectors that are managing well, including biomedical sciences, financial services and information and communications technology sectors.
Business that are not permitted to resume on-site operations will be entitled to Tier 1 JSS for the months of September 2020 to March 2021, or until on-site operations are allowed to resume, whichever is earlier.
Companies can expect to receive the wage support in two tranches, in March 2021 and June 2021.
In July 2020, the Inland Revenue Authority of Singapore ("IRAS") released administrative guidance to clarify that payouts under the JSS are not taxable as these payouts are intended to provide cashflow support to help businesses retain local employees.
Jobs growth incentive ("JGI")
In a bid to encourage hiring amid protracted uncertainty in the job market, the Government has announced the JGI, which commits SGD 1 billion to incentivise businesses to increase their headcount of local employees within the period from September 2020 till end February 2021. An increase in the headcount of employees must be accompanied by an increase in jobs paying a minimum of SGD 1,400 in wages. To qualify, the firm would need to have been established by 16 August 2020.
Under the JGI, the Government will co-pay the wages of new local hires for one year at the following rates:
- Up to 25% of the first SGD 5,000 of gross monthly wages for new local workers aged below 40; and
- Up to 50% of the first SGD 5,000 of gross monthly wages for new local workers aged 40 and above.
In total, qualifying firms will be able to receive up to SGD 15,000 for each local worker aged below 40, and up to SGD 30,000 for each local hire aged 40 and above. Firms should ensure the eligibility criteria continues to be met for the 12-month period to avail of the full amount of support.
To encourage rentention of workers, JGI payouts will be reduced if any person employed by the firm in August 2020 leaves after August 2020.
Eligible firms can expect to receive quarterly payouts under this scheme automatically from March 2021.
Enhanced Aviation Support Package
Introduced in Budget 2020 and subsequently enhanced under the Resilience Budget on 26 March 2020, the relief measures under the Enhanced Aviation Support Package have been extended until March 2021. The Enhanced Aviation Support Package provides targeted relief to airlines, ground handlers and the cargo sector as follows:
Details of relief
The extension of the Enhanced Aviation Support Package demonstrates the Government’s unwavering commitment in supporting its aviation sector. While the COVID-19 pandemic has yet to show signs of slow-down, the relief provided under the support package should provide some assistance to the aviation sector as it weathers these uncertain times.
Startup SG Founder programme
Administered by Enterprise Singapore, the Startup SG Founder programme was established in 2017 and seeks to encourage innovation and enterpreneurship by providing first-time enterpreneurs with startup capital grants and mentorship support. As part of the August Ministerial Statement, the Government has set aside up to SGD 150 million to enhance the programme as follows:
- The Startup SG Founder programme will introduce a new track, termed the "Train" track. Under this track, Singaporeans are entitled to a 3-month venture building programme under the mentorship of Accredited Mentor Partners. New enterpreneurs under this programme will receive support on various issues such as commercialising their ideas into scalable businesses.
- The pre-existing "Start" track will be enhanced. From 25 September 2020, Enterprise Singapore will provide startups under the track an enhanced startup capital grant of SGD 50,000, as compared to the previous SGD 30,000. Startups are still required to commit SGD 10,000 as a co-matching fund to the grant.