Photo: singaporebudget.gov.sg

On Thursday (26 March), a large-scale supplementary budget was announced by Deputy Prime Minister Heng Swee Keat in order to provide assistance to businesses, workers, and families to weather through the current predicament caused by the COVID-19 pandemic. The supplementary budget, called the Resilience Budget, amounts to S$48.4 billion.

Earlier in February, the country unveiled Budget 2020 also with stimulus packages for the economy to cushion the damages done by COVID-19. This earlier budget had S$6.4 billion allocation, with S$5.6 billion going towards propping up businesses and workers. The new Resilience Budget will add towards Budget 2020.

In general, there are three attack points of the new budget, which are helping businesses, workers, and families.

DPM Heng said that “the Resilience Budget will address the three Cs on the mind of every business owner now – cash flow, cost, and credit.” The measures will address business problems such as cash flow, business costs, and credit which have all taken a hit due to the pandemic.

As for measures targeted towards families, DPM Heng said, “Many Singaporeans are concerned about how they will pay their bills and household expenses if their livelihoods are affected during this uncertain period…We will put more cash in the hands of all families to help them cope.” Therefore, among the measures to support families are (1) helping with daily expenses, (2) strengthening the network of support and (3) offering greater flexibility on fees and loans.

As for the measures targeted towards workers, the focuses of the measures are to (1) save jobs, (2) help self-employed people, (3) help lower-income workers, (4) helping the unemployed, and (5) helping jobseekers. The primary focus here, however, is to help the unemployed. Hence, the measures of unemployment grant and wage subsidies came to light.

In the Resilience Budget, an unemployment grant of S$800 per month over three months is eligible to unemployed low-and-middle-income workers from households whose per capita household income is less than S$3,100 per month. In 2019, the average resident household size was 3.16 persons per household. With a threshold of S$3,100, this suggests a total household income of S$9,300.

Last year, there were 62.5 per cent of households with household incomes of not more than S$9,000 with the inclusion of CPF contributions. From this, there could be approximately 60 per cent of households which are eligible for the S$800 unemployment benefit lasting for three months.

Assuming each working parent earning an average of S$4,500 with household income of S$9,000, the unemployment benefit of S$800 would only amount to 17 per cent of their salary even with CPF contributions. The average earning of S$4,500 is the approximate reported median wage of full-time residents in Singapore with CPF contributions included. From this, the unemployment benefit of S$800 is around two-thirds of the salary of an outsourced resident cleaner with the lowest pay of S$1,200.

Therefore, the unemployment grant needs an increase. Based on a study by several researchers in Singapore, S$1,379 is the income needed for elderly aged 65 and above living in single households to have a basic standard of living. Similarly, elderly aged between 55 to 64 living in single households would need S$1,721.

Those in the younger age groups would need higher amount for a basic standard of living. The proposed unemployment benefit covers only around 45 per cent to 60 per cent of the budget needed to have a basic standard of living, which is insufficient.

A thing to note is that, for those who are currently on public assistance, such as ComCare Interim Assistance or ComCare Short-to-Medium Term Assistance (SMTA), they will not be eligible for the unemployment benefit.

For this unemployment benefit scheme, S$145 million will be allocated, on top of the Temporary Relief Fund and the ComCare scheme. If the unemployment benefit is bumped up to S$1,700, the total required expenditure will rise to a sum of S$308 million, which is only S$163 million more. This increase will then provide sufficient cushion for those who become unemployed during this time. Also, higher amounts should go to those on public assistance.

Furthermore, another measure to support unemployed workers is wage subsidies. The Government has stated that it will help co-fund 25 per cent of the wages of local workers under the extended Jobs Support Scheme. The Government will also co-fund wages in the tourism and aviation sectors as well as the wages in the food services sector by 75 per cent and 50 per cent respectively.

Denmark, a country whose GDP per capita is similar to Singapore’s, is also subsidising the wages of all workers by 75 per cent.

Under this Jobs Support Scheme, S$15.1 billion will be utilised to aid more than 1.9 million local workers in the country. Should the total increase to S$30 billion, it will form another 6 per cent of GDP.

The present S$55 billion budget accounts for 11 per cent of GDP. Whether higher wage subsidies are required to safeguard wages and jobs of workers in the country, this is worthy question to be pondered upon.

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