Singapore has responded to the widening Covid-19 pandemic with further support for businesses, workers and households.
Another $33 billion under the Fortitude Budget – the fourth round of measures since February – was announced by Deputy Prime Minister and Finance Minister Heng Swee Keat in Parliament yesterday.
Taken together with the earlier Unity, Resilience and Solidarity Budgets, the Government will commit a staggering $92.9 billion, or almost 20 per cent of Singapore’s gross domestic product, to deal with the fallout from the coronavirus.
President Halimah Yacob has given her in-principle support for a further draw of $31 billion from past reserves.
“This is a landmark package, and a necessary response to an unprecedented crisis,” said Mr Heng.
The financial reinforcement comes amid gloomy official forecasts that the country’s economy will shrink by up to 7 per cent this year, potentially making it the worst recession since its independence in 1965.
Preliminary estimates put the resident unemployment rate at 3.3 per cent in March, the highest since the global financial crisis in 2009.
And while the Government sets aside $3 billion each year as buffer in the Contingencies Fund and Development Contingencies Fund, this time it has factored in an additional $13 billion to deal more quickly with what Mr Heng called “unprecedented uncertainty, across all fronts”.
Under the Constitution, the Finance Minister may make advances from the Contingencies Funds in the event of urgent and unforeseen expenditure needs, and if the President agrees.
But unlike its predecessors, the Fortitude Budget has particular economic and political significance.
Politically, it is important that the Government is in a position to address and settle many of the immediate economic, health, social and other concerns that Singaporeans have before the end of its current term.
Trade and Industry Minister Chan Chun Sing noted in an interview with Bloomberg TV last week that Parliament has to be dissolved by next January, and an election held by April.
Economically, yesterday’s Budget clearly laid out not just how Singapore will exit from the extended circuit breaker with its economy intact, but also how it will prepare businesses and workers for the future.
Here, the Government must strike a delicate balance between protecting lives and livelihoods.
While the measures taken to date have helped bring down infection numbers and reduced suffering from lost incomes, extending support for too long will cause the economy to ossify. Workers could also become demotivated.
In the United States, whose Congress approved a weekly US$600 (S$850) unemployment benefit to each individual in March, millions of Americans now qualify for payments that are greater than their lost earnings. There are fears that this will discourage work.
The Government here, on the other hand, has staggered its Budget announcements, taking into account businesses, industry associations and workers’ feedback each step of the way.
This means that measures are targeted and can be quickly adjusted amid fluid developments.
An example is the Jobs Support Scheme (JSS), which provides wage subsidies to employers to retain their local workers.
At this late stage of the circuit breaker, the most generous support should be maintained only for industries that are still closed in the initial stages of reopening.
For such firms, which include shops, gyms and cinemas, Mr Heng said the Government will continue providing 75 per cent of salary support until August – for up to the first $4,600 of Singaporean workers’ wages – or when these firms are allowed to reopen.
Also, the classification of firms in different JSS tiers has been refined. The level of wage support for firms in sectors that are more severely impacted – such as construction and aerospace – will be increased.
At the same time, it is important to position Singapore for the post-pandemic world. Hence, a large part of Mr Heng’s speech was devoted to transformation, creating jobs and upskilling for the future.
Social and economic changes accelerated by the crisis, such as working from home, e-commerce, telemedicine and online education, have given Singaporeans a glimpse of the opportunities that abound.
Several initiatives announced yesterday will help realise them.
Under the new Digital Resilience Bonus, companies in the food and beverage and retail sectors can look forward to a payout of up to $5,000 if they adopt PayNow Corporate and e-invoicing, as well as business process or e-commerce solutions.
Stallholders in hawker centres, wet markets, coffee shops and industrial canteens will also get bonus payouts of $300 a month, over five months, for adopting e-payments.
More than $500 million will be allocated to support businesses in their digital transformation.
Separately, a new $2 billion jobs and training package, dubbed the SGUnited Jobs and Skills Package, will provide 40,000 jobs, 25,000 traineeships and 30,000 skills training opportunities for workers affected by the Covid-19 economic slowdown.
Unemployed mid-career job seekers will not be left out – another 4,000 traineeships for them will come from a new scheme called SGUnited Mid-Career Traineeships.
There will be casualties despite the best efforts. Jobs will be lost. Once shops and restaurants reopen, the market must decide if some of them still have a future.
But the worst thing governments can do now is to stand in the way of inevitable economic change and creative destruction. Instead, they must help people find new jobs, lower barriers to hiring and shore up training support.
Mr Heng gave his assurance yesterday that while the Government cannot protect every job, it will protect every worker.
He said: “Our promise to workers is this. As long as you are willing to pick up new skills and adapt, to access available opportunities to work or learn, the Government will provide our strongest support to help you.”
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