Wage subsidy scheme spurs many firms to hire more locals

27,000 local employers hired about 130,000 in Jobs Growth Incentive's first three months

A wage subsidy scheme launched in September last year has spurred many companies to hire more locals, including mature workers.

The hiring has been widespread, spanning different sectors, signifying a broad-based recovery, said Manpower Minister Josephine Teo while sharing the 20th edition of her jobs situation report yesterday.

She said that, in all, some 27,000 local employers hired about 130,000 locals with the support of the Jobs Growth Incentive (JGI) in the scheme's first three months.

Mrs Teo added that, at the median level, these companies hired two local employees each from September to November last year. They had hired a median of one local worker each during the same period in 2019. "This suggests that the JGI is helping them boost local hiring," she said.

Nearly 99 per cent of the employers were small and medium-sized enterprises, and they tapped the JGI to hire a large number of workers who were not employed and many who came from a different sector to the one they joined.

The scheme was launched last year to encourage firms to hire local amid the slowdown, when the Jobs Support Scheme - which lapses for several sectors today - started to taper off. The JGI has been extended until September, with an additional $5.2 billion allocated.

Eligible employers receive 25 per cent wage support for each local, non-mature hire for up to 12 months under the JGI and up to 50 per cent wage support for up to 18 months if they hire mature workers, persons with disabilities and former offenders.

Close to half of JGI-supported hires were aged above 40 and a third were above 50. "This is an indication that the strong government support for employers hiring those aged 40 and above is having an effect on this group of employers," said Mrs Teo.

About half of those hired were not employed, and more than a quarter had been out of work for more than six months. Some firms may have feared these workers were out of touch, but the many employers who benefited from the JGI were prepared to consider them, said Mrs Teo during a visit to the Pacific Logistics Group.

The hiring was broad-based, with growth sectors such as wholesale trade, professional services and infocomm accounting for four in 10 hires.

Six in 10 of those hired with JGI support ended up earning the same as or higher wages than their previous jobs, said Mrs Teo.

Although 130,000 locals were hired over three months last year, the MOM statistics showed that more than 110,000 were employed by 26,000 firms from September to October, meaning that only 20,000 were hired in November.

Mrs Teo said this was to be expected, as many businesses were backfilling job positions that were lost due to the Covid-19 pandemic in the first two months of the JGI.

"In the months ahead, if there is sufficient hiring momentum, I think it will require more effort in terms of jobs and skills matching," said Mrs Teo.

Assistant secretary-general of the National Trades Union Congress Desmond Choo, who was also at the company visit, said the JGI helps lower risks for businesses and improves their cash flow, allowing locals to be employed so they do not lose their skills.

Meanwhile, unemployment rates have gradually fallen from 4.8 per cent among residents last October to 4.3 per cent in January.

Mrs Teo urged employers to be open-minded towards hiring job seekers from diverse backgrounds - especially in a tighter job market - so that their businesses can grow.

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A version of this article appeared in the print edition of The Straits Times on April 01, 2021, with the headline Wage subsidy scheme spurs many firms to hire more locals. Subscribe