Friday, 29 Mar 2024

Extra job support generous and will help workers: Economists

The measures announced on Thursday to stem job losses and create opportunities for workers displaced by the Covid-19 pandemic are generous and will reduce the fallout in the labour market, economists said yesterday.

Still, they expect the unemployment rate to climb higher this year given the already difficult business environment even before the pandemic.

“It will still be very tough for some businesses to survive when revenue is completely obliterated,” said Maybank Kim Eng senior economist Chua Hak Bin.

He expects 40,000 to 50,000 workers to lose their jobs this year, though most will be foreigners.

United Overseas Bank economist Barnabas Gan noted the types of job assistance rolled out in Thursday’s supplementary budget are similar to those in the 2009 Resilience Package to counter the impact of the global financial crisis, although more than twice the level of support is being given to the latest efforts against Covid-19.

Deputy Prime Minister Heng Swee Keat had unveiled on Thursday an enhanced Jobs Support Scheme which provides employers a wage subsidy of 25 per cent for each local employee on the first $4,600 of monthly wages, with higher support of 50 per cent for those in food services, and 75 per cent for those in aviation and tourism. The original scheme had an 8 per cent wage subsidy.

Mr Heng, who is also Finance Minister, had also introduced the SGUnited Jobs initiative to create about 10,000 jobs in the next one year.

In 2009, employers received a 12 per cent cash grant on the first $2,500 of employees’ wages, and the Government said it would expand recruitment and expected to offer 18,000 public sector jobs in the next two years.

Still, the unemployment rate then rose by more than 1 percentage point to 3.3 per cent in September 2009, compared with 2.2 per cent a year earlier.

Mr Gan said: “Given that companies have seen some stress in 2019 largely because of United States-China trade tensions and headwinds in the external environment, we are likely to see further softness in the Singapore labour market.”

Dr Chua said that many jobs affected in the 2009 crisis were in the financial sector, but this time, the impact is more widespread.

“Wages in the affected sectors are lower, but they employ more people, such as in food and beverage, retail, hospitality and freelancers,” he said.

DBS senior economist Irvin Seah said the extent of the rise in unemployment will depend on the financial health of individual companies.

“The onus is still on employers to be responsible, though the Government will support them,” he added.

OCBC Bank chief economist Selena Ling said she doubts the Government can fully offset the potential rise in unemployment, “or that it is their role to do so”.

“They have said tax revenues are going to fall, so they cannot just blindly go and employ everybody. They have to balance what they are trying to achieve with what is sustainable in the medium term.”

Manpower Minister Josephine Teo said yesterday it is too early to say how large an impact the new measures will make, but she assured Singaporeans that “if we need to do more, we will find some ways to do it”.

Speaking to reporters after observing virtual networking sessions between employers and jobseekers at Workforce Singapore’s office, she said the expected number of job vacancies and retrenchments this year had been a concern even before the covonavirus outbreak.

Jobseekers or those displaced are likely to face some difficulties this year, she added. Therefore, the Government is not depending on any one single scheme but rather a whole range, with the top priority being to support employers to keep as many local employees as possible.

Mrs Teo said: “In doing so, we hope to minimise the number of businesses that will have to implement other cost-cutting measures, like wages, and possibly even displacing some of their workers.”

She added: “If you can keep that number as low as possible, then you have a better chance of helping (displaced workers) to move on to something else.”

Some employers said the extra help announced on Thursday will enable them to retain workers.

Ms Mint Lim, director of enrichment centre and social enterprise School of Concepts, said she has to pay her team of 20 full-time staff even though lessons have been suspended following a government directive. “The wage subsidy will allow us to keep our staff,” she added.

Meanwhile, she is also looking to hire graphic designers and marketing staff to boost the centre’s e-learning platform, which she is implementing earlier than planned.

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