Extending Wage Credit Scheme
Ministry of FinanceSpeakers
Summary
This question concerns whether the government will extend the Wage Credit Scheme beyond 2017 and increase the co-funding quantum, as raised by MP Louis Ng Kok Kwang. Minister Heng Swee Keat explained that the scheme co-funds wage increases for Singaporean employees earning $4,000 and below to encourage productivity. He noted that co-funding was reduced from 40% to 20% to provide transitional support without creating a permanent reliance on government aid. The Minister highlighted targeted restructuring schemes, such as the Capability Development Grant, as additional resources available to firms during economic slowdowns. He affirmed that the Government will calibrate future support by monitoring business conditions while sustaining the necessary impetus for long-term economic restructuring.
Transcript
12 Mr Louis Ng Kok Kwang asked the Minister for Finance whether the Ministry will consider (i) extending the Wage Credit Scheme beyond 2017 in light of the global economic slowdown and (ii) increasing the quantum of 20% co-funding by the Government.
Mr Heng Swee Keat: The Wage Credit Scheme (WCS) was introduced in Budget 2013, as part of a Transition Support Package, to help businesses cope with rising wage costs in a tight labour market, so that they can free up resources to invest in productivity and share the productivity gains with employees. Under this scheme, the Government co-funds 40% of wage increases for Singaporean employees earning gross monthly wages of $4,000 and below, over the period 2013 to 2015.
To provide more time for firms to restructure, the WCS was extended in 2015 for another two years from 2016 to 2017. This was in recognition that some businesses may require more time to adjust to rising business and wage costs. The support level was reduced to 20% to avoid Government support becoming a crutch even as we extended help to ease the transition within a tight labour market.
In the past few years, we have also stepped up targeted support for restructuring, through enhancements to schemes, such as the Capability Development Grant and the Partnership for Capability Transformation. We will continue to monitor business conditions closely and calibrate our support for businesses, taking into account both short-term cost concerns and the need to sustain the impetus for restructuring.