news-concerns_raised_over_jobs_credit

Channel NewsAsia - 12 October 2009
Concerns raised over possible abuse of Jobs Credit Scheme

SINGAPORE : The government is looking into whether the Jobs Credit Scheme fits into its long—term economic strategy for Singapore.

It will announce its decision on the future of the scheme on Tuesday.

But a more immediate concern for some workers is whether the scheme, which helps companies offset a portion of wage costs, is being abused.

This was raised at a dialogue with Minister in the Prime Minister’s Office and Second Minister for Finance and Transport, Lim Hwee Hua, on Sunday.

It was Mrs Lim first ministerial walkabout since taking office in April. And her morning in Bishan began with a trolley race with Deputy Prime Minister and Home Affairs Minister Wong Kan Seng — who is also MP for the area — and Education and Second Defence Minister Dr Ng Eng Hen.

This was followed by a quick game of woodball.

Then it was on to more serious business — a dialogue with residents at the local community club.

Questions ranged from neighbourhood issues, to concerns over public transport and the Jobs Credit Scheme.

One resident asked: "What happens if an employer who is given the Jobs Credit misuses or abuses these subsidies?"

Mrs Lim responded: "In a way, putting money back to the employers comes with the expectation that they will do what is in their best effort to reduce the need to retrench. But some businesses, in all fairness, would still need to restructure anyway. So I think we would need to look at the specifics of the case."

Mrs Lim said retrenchments may not indicate abuse of the system.

She added that abuse was also hard to define, as the subsidies go into the company’s cash flow. And it is up to the company to decide how it wants to use the government wage subsidy.

Speaking to reporters later, Mrs Lim added that it is "technically difficult" to define what counts as abuse, as the scheme is a "blunt instrument" where the firm can decide how it wants to use the government wage subsidy.

She explained: "Because it is basically cash to companies, it is technically difficult to define what is abuse, because it goes into cash flow. You also cannot judge that once a company has retrenched workers, it must be abusing the system, because some of them might just need to be restructured.

"So I think it would be difficult to judge it quite quickly. But I think there is enough peer pressure out there for companies to feel like, if they had retrenched at the word go, they would feel quite bad about it. But if it is because of business circumstances, regardless of how hard they have tried, they still needed to retrench, then I think we would have to let market forces work its way."

Mrs Lim also noted recent calls on the ground for the Jobs Credit Scheme to be extended, but she said that whether that happens depends on the economic outlook. However, Mrs Lim also stressed that the scheme was meant to be a short—term measure to save jobs, and in the longer term, the focus should be on improving worker productivity.

On concerns that stallholders would be left jobless should wet markets be taken over by supermarket chains, Mrs Lim said the challenge would be to help them get new skills and find alternative jobs.

She said: "The challenge for them, and for government, is not very different from those who have been rendered jobless from restructuring. So it is the same thing as those where the manufacturing activity has changed and they are now retrenched. We would then have to find new ways of re—skilling them, finding them alternatives so that they can continue to earn an income as well."