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Budget 2015: Extended use of employment credit schemes a ‘serious cause of concern’, says NMP

SINGAPORE — The extended use of three employment credit schemes is a “serious cause of concern” when employment growth is already healthy, said Nominated Member of Parliament (NMP) Associate Professor Randolph Tan today (March 3) as MPs debated the Budget Speech in Parliament.

TODAY file photo of office workers at Raffles Place.

TODAY file photo of office workers at Raffles Place.

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SINGAPORE — The extended use of three employment credit schemes is a “serious cause of concern” when employment growth is already healthy, said Nominated Member of Parliament (NMP) Associate Professor Randolph Tan today (March 3) as MPs debated the Budget Speech in Parliament.

The three schemes he flagged were the Special Employment Credit (SEC), Temporary Employment Credit (TEC) and the Wage Credit Scheme (WCS).

Comparing the WCS to the Jobs Credit Scheme (JCS), he noted that the latter was instrumental in lifting Singapore from recession in 2010, and was in effect for a mere 18 months, comprising S$4.3 billion spread out over 6 quarterly payouts. In comparison, the WCS, first announced in Budget 2013, will run much longer and amount to an estimated S$9.1 billion by 2017, and S$7.3billion in its first three years.

“The extent to which the total amount of these employment credits exceeds the JCS is too large to ignore,“ he said. “Although they do have the effect over shifting relative wages in favour of local workers, they also actually end up delaying the adjustments that businesses should make in order to complete restructuring.”

“There is a second problem with the extension of employment credits during times when employment growth is already healthy. This is that it would limit the options available in times of real labour market weakness,” Prof Tan added.

During the debate, MPs such as Mr Liang Eng Hwa (Holland-Bukit Timah) and Mr Heng Chee How (Whampoa) also raised concerns on the slow productivity growth.

Mr Liang described many SMEs as “being down to bare bones” in their productivity efforts. He said the new SkillsFuture initiative would be a long term strategy to complement productivity measures, while Mr Heng suggested more training for mature workers.

NMP Chia Yong Yong, however, raised concerns about SkillsFuture, asking how outcomes can be tracked, and how the Government can ensure that there is no wastage in spending for the programmes. She noted that it is unlike investments in infrastructure, where tangible outcomes can be seen.

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