How best to move forward in the next phase?
NUS Business School’s Sumit Argawal noted an important distinction between the first 4 budgets and the $8 billion packages announced by DPM Heng Swee Keat.
Unlike the first 4 budgets, the $8 billion packages will not be funded by a drawdown on strategic reserves. Instead, it will be funded by a reallocation of funds from projects that have been delayed due to COVID-19.
The Government may be signalling that they are looking ahead to economic growth instead of another stimulus to bail firms and workers, Dr Argawal said.
The Government has been focused on how to get workers back to work quickly. They have considered factors such as age, reskillability, upskillability, and the ability to find jobs. And they have also considered who need more protection and support.
The $8 billion packages, Mr Heng unveiled on Monday (17 August) is intended to
- support jobs and create new ones
- provide support for the hardest-hit sectors
- position the economy for future growth in this new normal
An incentive to seek employment
The approach adopted by Mr Heng is “pragmatism at its best,” said Dr Argawal.
It incentivises “return to work” through these ways:
- Workers must show proof of a job search to be eligible for the COVID-19 Support Grant.
- Workers who have found new employment in 2020 will now be eligible for the Workfare Special Package.
- Older workers, more vulnerable to long-term unemployment when laid off, will get more wage support in high-growth sectors under the Jobs Growth Incentive. They will be given a second shot in firms that might enjoy an uplift when the winds of recovery pick up in biomedical sciences, financial services and info-communications technology.
Aviation, Aerospace, Built Environment and Tourism
The classification of industries into 3 different tiers will see more support for those that need more help. Sectors like the aviation and aerospace sector, tourism and built environment are strategic sectors. These sectors will provide a stronger uplift with their multiplier effect when the economy eventually recovers.
To this end, Mr Heng has announced an additional S$187 million for the aviation sector and the redeployment of workers to other areas of need. He also allocated S$320 million in tourism credits to spur domestic tourism.
“The added support will boost the confidence of investors and domestic consumers in Singapore,” Dr Argawal said. “Success in bolstering these industries will reduce job losses in these sectors while stimulating employment and consumption in other sectors, which are part of their value chain.”
“Besides the multiplier effect, it is also worth noting that aviation and aerospace are crucial industries that enable a small but open and connected economy like Singapore to thrive,” Dr Argawal added.
With the S$8 billion packages, Singapore is now moving forward in stimulating economic growth.
The storm is calming but this national effort cannot let up.