THE Jobs Credit scheme, which is aimed at helping companies retain workers, has limitations, said West Coast GRC MP Ho Geok Choo in Parliament on Tuesday.

While it helps to keep companies afloat, it does not target firms most likely to lay off workers, she said.

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Madam Ho, who called for "new thinking and new action" to tackle Singapore's worst recession, suggested that a feedback mechanism be set up to allow all companies to inform the government ahead if they are laying off workers.

Speaking during the debate on the Budget Statement in Parliament, Madam Ho said the government can then devise specific measures on how to better assist such companies, such as referring them to other business assistance schemes that the firm might not know of, or to business consultants who can help manage their costs better.

Their consultancy fees can be funded or co-funded by the government.

"If companies do retrench staff, we can stop or reduce the Jobs Credit payments to them. We can monitor their staff levels on a monthly basis through the CPF payroll," she suggested.

She said companies should use the downturn to diversify and send their staff on training programmes where they can acquire the necessary or new skills.

"In the long run, retrenchment will be very costly. Once business picks up, the company that has retrenched will find it has lost key skills and valuable trust as a reliable employer. Obtaining them again won't be easy or fast," she said.

"The potential employee will prefer to find employment in another company that seems to treat workers more holistically and humanely, instead of just treating them as costs to be managed; manpower to be shed when times are bad."

She also suggested an "Older Worker Jobs Credit Scheme" to encourage the hiring of older workers.

Firms should be given double the government contribution if they hire an older worker; this works out to a contribution of 24 per cent of a worker's pay, capped at $2,500, she said.

"To prevent companies from abusing this scheme, I suggest we make it only applicable for new recruits and not people who have been retrenched from the same company," she added.

With the recession biting deep, Madam Ho said firms should also look into ways to encourage the retention of jobs undertaken by Singaporeans and Permanent Residents, such as "requiring the employment of a certain number of them before foreigners can be hired".

"Yes, foreigners contribute to Singapore's economy as well, but we as a government have a duty, first and foremost, to assist our citizens and permanent residents in all ways possible," she said.

Citing news reports about growing number of people applying for Permanent Residency status, Madam Ho suggested that the the eligibility criteria be tigtened.

"If we don't, Singaporeans and PRs will be even more hard pressed in the competition for jobs at this critical juncture, and pay could be even more reduced," she said.

"Some of these applicants could be highly-skilled, and I agree that certain highly skilled foreigners can contribute to our economy, but ultimately, this is a bad recession and we have to find ways to increase our own skill sets in order to also undertake those kinds of high skilled employment currently undertaken by these foreigners."

In her speech, Madam Ho also cautioned: "By all means give help to the needy but we must ensure that we don't in the process make being needy a new growth industry and acceptable career.

"What remains a constant is that while it's New Age to have a bleeding heart but as relevant is what MM (Minister Mentor Lee Kuan Yew) once said: 'we have to be careful not to bleed to death'."