Flawed Job Credit Scheme benefits employers more than workers
February 17, 2009 by admin
Filed under Politics & Society
By Fang Zhi Yuan and Jeremy Koh
The much vaunted Job Credit Scheme which costs taxpayers $4.5 billion dollars to save jobs will help employers more than workers.
Speaking in Parliament today during the Budget debate, Workers’ Party MP Low Thia Kiang criticised the Jobs Credit scheme, saying it will indirectly favour big companies which may still be profitable and have no intention of retrenching workers.
“Are we using our reserves to increase the profits of profitable companies in this downturn?” he asked, citing the $6.8 million annual cash grant Sheng Siong supermarket will get under the scheme, which pays employers a cash grant of 12 per cent of the first $2,500 of a worker’s wage to keep him on the payroll. (read full report here)
The Job Credit Scheme provides a blanket grant to all companies without assessing their financial situation on the ground and could end up helping big government-linked companies like NTUC instead of smaller SMEs where help is more acutely needed.
Larger companies with more workers on their payroll will use up more cash grants from the Job Credit Scheme which may be used to finance other aspects of their operations instead of benefitting the workers directly.
The employers can enjoy the best of both worlds by not retrenching workers to qualify for the cash grant and yet still impose other cost-saving measures like shorter work-weeks and wage cuts which will have a detrimental impact on the ordinary workers.
There should be more fine-tuning done to the present scheme to ensure that Singapore workers will truly benefit from it.
Government-linked companies like DBS and NTUC should be exempted from the scheme since they have pledged earlier not to retrench workers. Big corporate firms who are still making a profit in spite of the economic downturn should not qualify either.
Instead, there are other putative measures which can be put into place to prevent companies from retrenching workers such as mandating the companies through legislation to provide a monthly retrenchment fund to sustain each retrenched worker till they find another job. Special leeway can be given to struggling companies to retrench workers if they had to close down without doing so.
The Job Credit Scheme should be applied solely to Singapore citizens and not to PRs to encourage companies to keep their Singapore workers. A clear distinction must be made between Singaporeans who have served National Service and whose families are here together with them and PRs, most of whom are only here to work and do not intend to make Singapore their permanent home.
The recent report on the spike in the number of foreigners applying for PRs to ward off the threat of retrenchment gives us an indication of how the scheme can be easily manipulated by foreigners and PRs alike in their desperation to keep their jobs in Singapore.
The interests of Singapore citizens must come first before anybody else. Retrenchment will affect a Singapore worker with a family to feed more adversely than a PR or foreigner who can easily return to their native land.
When our economy recovers, the PRs and foreigners will naturally flock to our shores en masse again. We do not have to worry about not having enough PRs to boost our “human stock” as Singapore still remains the favored destination for job seekers in the region.
On the other hand, if we do not give sufficient help to our retrenched workers to tide them over this difficult period, it will have serious repercussions on the next generation. His children may not be able to continue school and may even have to enter the work-force early to supplement the family income.
Given the high cost of studying in local universities, how many of our undergraduates have to postpone their studies or drop out of their courses altogether because their parents cannot afford their tuition fees ? And yet we have PRCs and Indian students who are studying here on government-sponsored scholarships.
Though there are various schemes such as Workfare and SPUR available to help unemployed/retrenched workers, some may not be aware of the appropriate channels to turn to for help and the administrative hassles involved may become a barrier instead to those in need of urgent assistance.
The government should set up an immediate retrenchment package to cater to retrenched workers. The moment they are retrenched, they should be allowed to “borrow” from the CPF accounts to tide them over the difficult period on top of a monthly government grant for basic sustenance so that their families will continue to have a roof over their heads and need not go hungry.
Upon finding a new job, the worker can repay his “CPF loan” on a monthly basis back to the CPF board. There is no reason to prevent Singaporeans from drawing on their own savings for rainy days when even our reserves have to be used to fund the “Resilience Package”.
While saving the jobs of workers remain the paramount concern of the government, much more can be done to ensure that vulnerable Singaporeans do not suffer extraordinary hardship during such extraordinary times.
February 17, 2009 by admin
Filed under Politics & Society
By Fang Zhi Yuan and Jeremy Koh
The much vaunted Job Credit Scheme which costs taxpayers $4.5 billion dollars to save jobs will help employers more than workers.
Speaking in Parliament today during the Budget debate, Workers’ Party MP Low Thia Kiang criticised the Jobs Credit scheme, saying it will indirectly favour big companies which may still be profitable and have no intention of retrenching workers.
“Are we using our reserves to increase the profits of profitable companies in this downturn?” he asked, citing the $6.8 million annual cash grant Sheng Siong supermarket will get under the scheme, which pays employers a cash grant of 12 per cent of the first $2,500 of a worker’s wage to keep him on the payroll. (read full report here)
The Job Credit Scheme provides a blanket grant to all companies without assessing their financial situation on the ground and could end up helping big government-linked companies like NTUC instead of smaller SMEs where help is more acutely needed.
Larger companies with more workers on their payroll will use up more cash grants from the Job Credit Scheme which may be used to finance other aspects of their operations instead of benefitting the workers directly.
The employers can enjoy the best of both worlds by not retrenching workers to qualify for the cash grant and yet still impose other cost-saving measures like shorter work-weeks and wage cuts which will have a detrimental impact on the ordinary workers.
There should be more fine-tuning done to the present scheme to ensure that Singapore workers will truly benefit from it.
Government-linked companies like DBS and NTUC should be exempted from the scheme since they have pledged earlier not to retrench workers. Big corporate firms who are still making a profit in spite of the economic downturn should not qualify either.
Instead, there are other putative measures which can be put into place to prevent companies from retrenching workers such as mandating the companies through legislation to provide a monthly retrenchment fund to sustain each retrenched worker till they find another job. Special leeway can be given to struggling companies to retrench workers if they had to close down without doing so.
The Job Credit Scheme should be applied solely to Singapore citizens and not to PRs to encourage companies to keep their Singapore workers. A clear distinction must be made between Singaporeans who have served National Service and whose families are here together with them and PRs, most of whom are only here to work and do not intend to make Singapore their permanent home.
The recent report on the spike in the number of foreigners applying for PRs to ward off the threat of retrenchment gives us an indication of how the scheme can be easily manipulated by foreigners and PRs alike in their desperation to keep their jobs in Singapore.
The interests of Singapore citizens must come first before anybody else. Retrenchment will affect a Singapore worker with a family to feed more adversely than a PR or foreigner who can easily return to their native land.
When our economy recovers, the PRs and foreigners will naturally flock to our shores en masse again. We do not have to worry about not having enough PRs to boost our “human stock” as Singapore still remains the favored destination for job seekers in the region.
On the other hand, if we do not give sufficient help to our retrenched workers to tide them over this difficult period, it will have serious repercussions on the next generation. His children may not be able to continue school and may even have to enter the work-force early to supplement the family income.
Given the high cost of studying in local universities, how many of our undergraduates have to postpone their studies or drop out of their courses altogether because their parents cannot afford their tuition fees ? And yet we have PRCs and Indian students who are studying here on government-sponsored scholarships.
Though there are various schemes such as Workfare and SPUR available to help unemployed/retrenched workers, some may not be aware of the appropriate channels to turn to for help and the administrative hassles involved may become a barrier instead to those in need of urgent assistance.
The government should set up an immediate retrenchment package to cater to retrenched workers. The moment they are retrenched, they should be allowed to “borrow” from the CPF accounts to tide them over the difficult period on top of a monthly government grant for basic sustenance so that their families will continue to have a roof over their heads and need not go hungry.
Upon finding a new job, the worker can repay his “CPF loan” on a monthly basis back to the CPF board. There is no reason to prevent Singaporeans from drawing on their own savings for rainy days when even our reserves have to be used to fund the “Resilience Package”.
While saving the jobs of workers remain the paramount concern of the government, much more can be done to ensure that vulnerable Singaporeans do not suffer extraordinary hardship during such extraordinary times.
