SINGAPORE - Budget measures to combat Covid-19 last year helped cushion the recession, saved or created some 155,000 jobs over 2020 and 2021, and shaved the rise in unemployment rate by 1.7 percentage points.
A total of $27.4 billion in grants - 18 times the amount given out in 2019 - was used to shore up beleaguered firms. Support was tilted towards harder-hit sectors, smaller firms and lower-income households, which mitigated the uneven impact of the pandemic and reduced inequality.
In its interim assessment of the impact of Covid-19 Budget measures released on Thursday (Feb 11), the Ministry of Finance (MOF) called the early data "encouraging". But it cautioned that the pandemic is not over and much uncertainty remains.
"The vaccine approvals at the end of 2020 boosted confidence, but wide-scale implementation of vaccination programmes globally remains challenging.
"The path to recovery will therefore likely be more long-drawn than expected," it said.
Deputy Prime Minister Heng Swee Keat said that while many of the schemes are ongoing, the report, which comes ahead of his Budget statement next Tuesday, shows they have helped to cushion the impact of the recession.
"Overall, the Covid-19 support measures have made a significant difference to keep our people safe and preserve our livelihoods. Job losses were averted, and shocks were cushioned. More help went to support families in need, which went some way to mitigate inequality," he said.
"The interim analysis is encouraging, as it showed that the schemes are achieving the outcomes that they were designed for.
The Government rolled out five Budgets last year, committing close to $100 billion, or 20 per cent of GDP, in measures to mitigate the impact of Covid-19.
Such measures, together with an accommodative monetary policy stance, halved the fall in GDP, which would have been at least 12.4 per cent had there been no policy support, according to estimates by the Monetary Authority of Singapore.
GDP shrank by 5.8 per cent for the whole of last year according to advance estimates by the Ministry of Trade and Industry, an improvement on its earlier forecast of a contraction of 6.5 per cent to 6 per cent made in November.
Of the $27.4 billion in grants given to businesses last year, about 80 per cent was for the Jobs Support Scheme (JSS) of wage subsidies to retain local workers.
Total fiscal support, including the JSS, helped save or create about 155,000 jobs on average over 2020 and 2021.
Under the JSS, those in the hardest-hit sectors such as aviation and tourism were among the "Tier 1" businesses eligible for the highest level of wage subsidies.
The Government covered 75 per cent of qualifying local wages in these businesses until last August, and another 50 per cent of salaries from September 2020 to March 2021. Support for other sectors tapered off to between zero and 30 per cent.
Firms were also kept afloat by financing schemes. Over 20,000 of them - 90 per cent of which were micro and small enterprises - had access to loans worth more than $17 billion from March to December.
Efforts were also made to promote job creation and reallocate workers into growth opportunities, said the MOF.
Nearly 76,000 job seekers and fresh graduates were placed into jobs, traineeships and training opportunities under the SGUnited Jobs and Skills Package as at December. The top five sectors for these placements were: information and communications, healthcare, manufacturing, professional services, and food services.
In September and October - the first two months of the Jobs Growth Incentive (JGI) scheme to spur employers to hire locals - 110,000 job seekers were hired by 26,000 employers.
Jobs aside, calibrated support for households also helped mitigate inequality.
Each household member received an average of $2,000 from Covid-19 measures such as the Care and Support Package (CSP), Self-Employed Person Income Relief Scheme (Sirs), Covid-19 Support Grant (CSG) and Temporary Relief Fund (TRF), with lower-income households and those living in smaller Housing Board flats getting more help.
The broad-based CSP accounted for 70 per cent of the benefits received, while lower-income households had extra support through programmes such as the Workfare Special Payment and grocery vouchers.
After taking into account Covid-19 measures and other taxes and transfers, Singapore's Gini coefficient - a measure of income inequality - fell from 0.452 to 0.375 last year, lower than 0.398 in 2019 and dipping below 0.4 for the second year in a row.
A Gini coefficient above 0.4 usually signals large income inequality.
"The redistributive impact in 2020 can be attributed to the design of the Covid-19 social support schemes, which were tilted to provide more help to those with lower incomes and who may lack other forms of support," the MOF explained.
Mr Heng said the Government has put in its "best effort" to support workers, businesses and their families during this difficult time.
The pandemic has created and accelerated many structural changes, and he will set out in his Budget statement how Singapore can emerge stronger from the crisis, he added.
"We will work together to build a Singapore that is economically vibrant, socially cohesive and environmentally sustainable," he said.
"At the same time, we need to continue to maintain fiscal discipline and strengthen our sense of togetherness."