Covid-19 Budgets cushioned impact of recession, saved jobs

The measures saved or created 155,000 jobs; $27.4b in grants used to shore up affected firms

Budget measures last year to combat Covid-19 helped cushion the impact of the recession, saved or created some 155,000 jobs over last year and this year, 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 companies. 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 yesterday, 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 vac-cination 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 on 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 gross domestic product, in measures to mitigate Covid-19's impact.

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. GDP shrank by 5.8 per cent for the whole of last year, according to advance estimates.

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 155,000 jobs on average over last year and this year. Under the JSS, those in the hardest-hit sectors such as aviation and tourism were among the businesses eligible for the highest level of wage subsidies.

The Government covered 75 per cent of their qualifying local wages until last August, and another 50 per cent of salaries from last September to next month.

Firms were also kept afloat by financing schemes. Over 20,000 companies - 90 per cent of them micro and small enterprises - had access to loans worth more than $17 billion from March to December.

Nearly 76,000 job seekers and fresh graduates were placed in opportunities under the SGUnited Jobs and Skills Package as at December. In September and October - the first two months of the Jobs Growth Incentive scheme to spur employers to hire locals - 110,000 job seekers were hired by 26,000 employers.

Calibrated support for households also helped mitigate inequality. Each household member got an average of $2,000 from measures, with more for the lower-income. Singapore's Gini coefficient - a measure of income inequality - fell from 0.452 to 0.375 last year.

Mr Heng said he will set out in his Budget statement how Singapore can emerge stronger from the crisis. "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."

A version of this article appeared in the print edition of The Straits Times on February 12, 2021, with the headline 'Covid-19 Budgets cushioned impact of recession, saved jobs'. Subscribe