SINGAPORE — The array of government initiatives to help companies have not, for various reasons, achieved their objectives of easing the economic restructuring efforts and, worse, some schemes could distort the labour market and have adverse impact, Members of Parliament (MPs) said yesterday.
Citing schemes that subsidise pay hikes and wages for older workers, Nominated MP Randolph Tan, who is an economist, said that while these help in shifting relative wages in favour of local workers, they end up delaying adjustments that businesses should make in order to complete restructuring.
Among the examples he gave was the Wage Credit Scheme (WCS), which co-funds wage increases for Singaporean workers and is aimed at improving productivity.
The other examples were the Special Employment Credit (SEC), which improves the employability of low-wage older workers by offsetting their wage costs, and the Temporary Employment Credit, which alleviates the rise in business costs related to higher employer Medisave contribution rates.
Giving out such credits during times of healthy employment growth would render them impotent and limit the options in times of real labour market weakness, added Associate Professor Tan.
“The extent to which the total amount of these employment credits exceeds the Jobs Credit Scheme is too large to ignore,” he said.
While the Jobs Credit Scheme, which was instrumental in lifting Singapore out of recession in 2010, cost S$4.3 billion over 18 months, the WCS — announced in Budget 2013 and extended this year until 2017 — will run for much longer and amount eventually to an estimated S$9.1 billion.
Turning to how payouts under the SEC leapt from S$100 million in 2011 to an estimated S$497 million yearly from 2012 to next year, Assoc Prof Tan questioned the extent to which the labour force participation rate among mature workers should be raised, given that such a development could compromise alternative roles that older Singaporeans play.
For instance, grandparents who take care of children enable women in the prime of their lives to contribute to the workforce, resulting in spillover economic benefits, he said.
Meanwhile, Ms Foo Mee Har (West Coast GRC) highlighted that despite government spending on schemes to support economic restructuring in recent years, these have served only to subsidise equipment, wage and training costs, and have not improved competitiveness and productivity.
She noted that productivity growth remained sluggish at 0.3 per cent per annum between 2010 and last year, which is far from the 2 to 3 per cent target set out by the Economic Strategies Committee.
“As we are now at the halfway mark of our 10-year restructuring journey, we should consider whether changes are needed in the productivity narrative and strategies,” added Ms Foo.
Citing the low take-up rates for various pro-business initiatives rolled out by the Government, Nominated MP Thomas Chua, who is also president of the Singapore Chinese Chamber of Commerce and Industry, said small and medium enterprises are more concerned about how they can directly benefit from these policies rather than the outcomes sought.
news source & image credits: todayonline.com