Budget 2020: Stabilisation and Support Package

On 18 February 2020, the Singapore Budget for 2020 was presented to Parliament by the Finance Minister, Mr. Heng Swee Keat. The budget 2020 provides a strategic vision to “Advance as One Singapore”, consistent with Singapore’s goal to respond to challenges in a new decade and seize new opportunities.

 Budget 2020: Stabilisation and Support Package

As part of the budget, a $4.0 billion Stabilisation and Support Package was introduced to provide assurance and support to workers and enterprises in this time of economic uncertainty. In addition to providing cash flow support, the Package supports firms to retain and retrain workers, and share productivity gains with them. Sectors more directly affected by the COVID-19 outbreak will receive additional support.

Our article will be exploring the Stabilisation and Support Package in more detail.

1) Jobs Support Scheme

The Jobs Support Scheme (JSS) will help enterprises retain their local employees during this period of uncertainty. It is a temporary scheme for 2020. All active employers, except for Government organizations (local and foreign) and representative offices, are eligible for the JSS.

Employers will receive an 8% cash grant on the gross monthly wages of each local employee (applicable to Singapore Citizens and Permanent Residents only) from of October to December 2019, subjected to a monthly wage cap of $3,600 per employee.

Please note employers do not need to apply for the JSS. The grant will be calculated and based on their CPF contribution data. Employers can expect to receive the JSS payment from the Inland Revenue Authority of Singapore (IRAS) by 31 July 2020.

Table 1: Illustration of Jobs Support Scheme computation

 

October 2019

November 2019

December 2019

Total

Wages paid to local employee (excluding employer CPF)

$3,000

$3,300

$4,500

$10,800

Qualifying wage (capped at $3,600)

$3,000

$3,300

$3,600

$9,900

Jobs Support payout to employer (8% of qualifying wage)

$240

$264

$288

$792


2) Enhancement to Wage Credit Scheme

The Wage Credit Scheme (WCS) will be enhanced in the Singapore Budget 2020.  WCS supports enterprises embarking on transformation efforts and encourages employers to share productivity gains with workers, by co-funding wage increases. 

A summary of the changes to WCS is in Table 2 below.

Table 2: Summary of Changes to WCS

Scheme

Existing WCS
as announced in Budget 2018

Enhanced WCS
as announced in Budget 2020

Qualifying years2

  • 2018, 2019, 2020
  • 2019, 2020

Level of co-funding

  • 20% of qualifying wage increases in 2018
  • 15% of qualifying wage increases in 2019
  • 10% of qualifying wage increases in 2020
  • 20% of qualifying wage increases in 2019
  • 15% of qualifying wage increases in 2020

Gross monthly wage ceiling

  • $4,000
  • $5,000

Qualifying wage increases

  • Increases in gross monthly wage of at least $50 given to Singaporean employees in the qualifying year, up to a gross monthly wage level of $4,000, will be co-funded.
  • In addition, increases in gross monthly wage of at least $50 given in 2017, 2018 and 2019 up to a gross monthly wage level of $4,000, and sustained in subsequent years of the scheme, will be co-funded.
  • Increases in gross monthly wage of at least $50 given to Singaporean employees in the qualifying year, up to a gross monthly wage level of $5,000, will be co-funded.

 

  • In addition, increases in gross monthly wage of at least $50 given in 2017, 2018 and 2019 up to a gross monthly wage level of $5,000, and sustained in subsequent years of the scheme, will be co-funded.


Employers do not need to apply for WCS.

  1. Employers will receive payouts automatically in the month of March after the qualifying year (Y+1), for qualifying wage increases given to their employees in the qualifying year (Y). This is the existing process.
  2. Employers who benefit from additional wage credit arising from the Budget 2020 enhancements will receive a separate supplementary payout in the second half of 2020. Letters will be sent to all qualifying employers to inform them of the supplementary payout.

There are some qualifying conditions which need to be met for the Wage Credit Scheme to apply:

All employers giving wage increases to Singapore Citizen employees who:

  1. Are earning a gross monthly wage of $5,000 and below;
  2. Should have received CPF contributions from a single employer for at least 3 calendar months in the preceding year (The three months minimum employment duration need not be continuous);
  3. Should have been on the employer's payroll for at least 3 calendar months in the qualifying year (The three months minimum employment duration need not be continuous); and
  4. Have at least a $50 gross monthly wage increase.
  5. Must not also be the business owner of the same entity (i.e. sole proprietor of the sole proprietorship, or a partner of the partnership, or both a shareholder and director of a company)

Illustration of Wage Credit Computation

Raising of Government Co-Funding Ratio

  • Under the enhanced WCS, if an employer increases the gross monthly wage of an eligible employee by $100 each year from 2017 to 2020, and sustains these wage increases through to 2020, the Government will co-fund 20% of the total qualifying wage increase of $300 in 2019, and 15% of the total qualifying wage increase of $400 in 2020.
  • This means that the Government will co-fund $1,4403 of the total $8,400 new and sustained wage increases in 2019 and 2020. This amount of co-funding from the Government is $4205 higher than that under the current WCS.

 Raising of Gross Monthly Wage Ceiling

  • Under the current WCS, wage increases above the gross monthly wage of $4,000 will not count toward qualifying wage increases.
  • The enhanced WCS supports increases in gross monthly wage of at least $50 given in 2017, 2018 or 2019 up to a gross monthly wage level of $5,000 and sustained in subsequent years of the scheme.
  • This means that if an employer increases the gross monthly wage of an eligible employee earning $4,700 in 2016 by $100 each year from 2017 to 2020, and sustains these wage increases through to 2020, the Government will co-fund 20% of the total qualifying wage increase of $300 in 2019, and 15% of the total qualifying wage increase of $300 in 2020.
  • The employee will receive a total of $8,400 in new and sustained wage increases in 2019 and 2020, of which the Government would have co-funded $1,260.

Full details on the Singapore Budget 2020 and Stabilisation and Support Package can be found on the government website here.

1Wages paid to business owners will not be eligible for the grant.

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