SINGAPORE - The Government is extending the Wage Credit Scheme (WCS), which was set to expire this year, to 2016 and 2017, but at half the current rate of subsidy.
The move is to give Singapore employers more time to adjust to the tight local labour market as they continue to restructure, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in his Budget Statement on Monday.
In the next two years, the Government will co-fund 20 per cent of the wage increases that are given to Singaporean employees earning a gross monthly wage of up to $4,000, said Mr Tharman.
This is down from the current 40 per cent subsidy for the unchanged wage segment.
In addition, if wage increases given in 2015 are sustained in 2016 and 2017, employers will continue to receive co-funding, at the new rate of 20 per cent.
Reducing the level of co-funding phases out the WCS gradually, said Mr Tharman. "The Scheme is intended to help businesses through this restructuring, and we will not retain it for the long term," he said.
The move will cost the Government $1.8 billion over the two years.
Businesses in Singapore are restructuring in a tight labour market, leading to wages rising. Through the Wage Credit Scheme, the Government has been helping businesses by co-funding wage increases during this period of transition.
This allows businesses, particularly small and medium enterprises, to free up resources to invest in productivity, and to share productivity gains with their employees.