Jobs Credit gives twin boost to economy, says Finance Minister
By
Sue-Ann Chia, Senior Political Correspondent
Mr Tharman was responding to 54 MPs who took part in the debate dominated by four issues: using the reserves, Jobs Credit, helping the retrenched and boosting domestic demand. -- ST PHOTO: SAMUEL HE
IN CRAFTING the Budget this year, Finance Minister Tharman Shanmugaratnam had one thing in mind - getting 'maximum bang for the buck'.
And he believes the $4.5 billion Jobs Credit scheme surpasses that goal, by giving the economy a big fiscal boost as well as enhancing job security for locals.
Finance Minister Tharman Shanmugaratnam gave four reasons the Jobs Credit scheme is better than a CPF cut, or having the Government pay the employers' CPF contribution into workers' accounts.
1 It gives bosses a greater incentive to keep lower and middle-income workers, as $2,500 is the median salary here.
In comparison, the estimated impact of the Americans' US$885 billion (S$1.3 billion) stimulus package is 1.8 per cent of its 2009 GDP as only 30 per cent of the sum will be used this year.
Britain's £20 billion (S$44 billion) package is about 1 per cent of its GDP this year. As for China, its 4 trillion yuan (S$880 billion) will be spread over a few years, amounting to about 2 to 3 per cent of its GDP this year.
'What we are essentially doing is injecting $4.5 billion into the economy in a way that will not only have a significant multiplier effect but will help preserve the interests of Singapore workers,' Mr Tharman said yesterday in his wrap-up of the three-day Parliament debate on the Budget Statement.
This amount is is almost 2 per cent of the gross domestic product (GDP). It is a a key plank of the Budget's $20.5 billion Resilience Package to battle Singapore's worst economic crisis since independence. Proportionally, it is bigger than the stimulus package in most nations, including the United States, Britain and China.
But it is the right size, Mr Tharman said, adding: 'There is a consensus internationally now that fiscal responses have to be larger than normal to counter the cyclical downturns and they must be focused on speedy implementation so that a real impact can be felt in 2009'. Hence, the Singapore package 'is large, timely and front-loaded' to make a significant impact this year, he said.
He also defended dipping into past reserves to partly fund the Resilience Package, saying it was the right move to do so now than use up available savings first. 'Moving on a Big Bang measure now and leaving nothing to use subsequently would be irresponsible.'
The minister dwelt at length on the much-debated Jobs Credit scheme which some MPs doubted would be effective in saving jobs. The scheme gives companies cash, amounting to 12 per cent of the first $2,500 of local workers' monthly wages, a move aimed at encouraging them to retain workers.
Mr Tharman argued that while it was not possible to avoid a rise in retrenchment, the scheme will still 'make a difference to the pace and scale of job losses'. He also disagreed with opposition MP Low Thia Khiang and Nominated MP Siew Kum Hong that it would not work.
He said many companies have given feedback that it could make a difference in minimising or deferring layoffs. Dismissing suggestions that profitable companies should not be given the cash grant, he said: 'If we do this, we will only be weakening the ability of the business sector to create employment not just now but in the future.
The Budget, he said, was designed for measures to be rolled out quickly this year and achieve 'broad-based impact'. Hence, he was against cutting the GST, arguing that it neither reduces business costs nor encourages people to spend. Any cut would also mean a reduction in revenue to fund social support schemes for the needy.
'What we're doing is...not just to meet short-term needs but also to strengthen the chances of recovery and strengthen Singapore for the long term,' he said.
