Singapore Budget 2020 is set to be announced on Tuesday, Feb. 18 by Heng Swee Keat, the Deputy Prime Minister and Minister for Finance, Singapore, at the backdrop of a looming threat of coronavirus.
Even before the outbreak of coronavirus hit the Singaporean economy, the country was reeling from the ripple effects of the US-China trade war. Singaporean employers, workers, and business owners are awaiting the upcoming budget as it is expected to be a “strong” budget that will guide the country into the next decade during this tumultuous time of health emergencies, consequences of a global trade-war, and regional challenges such as an aging workforce, the need to upskill the existing workers, and gearing up for a future of work that is heavily influenced by the direction in which digital and technological transformation takes the city-state.
A coronavirus relief package, a hike in GST, and a substantial spending package with an overall deficit of $5.78 Bn, are some of the expectations from the upcoming Budget 2020 announcement.
Coronavirus looms over Budget 2020
With 60 confirmed cases of the virus Covid-19, the coronavirus has spread outside of China and into Singapore. Last week, the government of Singapore raised the national disease response level to Orange which is the second-highest level and incidentally was also the level assigned to Sars epidemic in 2003.
The GDP gap might widen to 1.5 percent of the GDP in the year that will begin on April 1. This would be the highest gap since the 1.7 percent shortfall from back in 2001.
The DBS has brought down its growth predictions for Singapore to 0.9 percent as opposed to 1.4 percent. Nomura Holdings has also reduced its predictions from 1.3 percent to 0.3 percent. According to Prime Minister Lee Hsien Loong, the economic impact of the coronavirus is worse than during the SARS pandemic of 2003.
Prior to the budget announcement, Wong has said that the impact of coronavirus is going to be felt not only by particular sectors such as tourism and hospitality, but also the larger fabric of the economy.
“We are preparing for a strong package in the coming budget to help our companies as well as to help our workers stay in their jobs,” Wong has shared, according to regional media reports. “We are preparing for that, we are anticipating that and that’s why we will announce what the appropriate measures are, in the Budget.”
The tourism, transport, and hospitality industry are the worst hit sectors by the coronavirus who will be receiving targeted support and specific measures in order to tackle an impending economic slowdown, according to Heng Swee Keat, Deputy Prime Minister, who is also the Finance Minister and will be announcing the budget on Tuesday, Feb. 18.
The budget is set to address employers’ short-term cashflow requirements, retaining and training employees in the upcoming months and also helping the companies by assisting them in wage costs.
The details of the relief package will be announced during the government’s budget speech by the finance minister.
As the air traffic at Changi Airport slows down and hotel reservations get canceled, Heng said that it is time that Singaporeans are prepared in a “fast-evolving” situation.
“I want to assure Singaporeans that we are ready to take action, and that we will have a strong Budget that will help us manage this challenge,” he said.
Preparing for an aging workforce
In 2015, one in eight Singaporeans was above 65. In 2030, that will increase to about two in eight. What does this mean for Singapore? For starters, healthcare spending will increase as the population ages. The employers and businesses in Singapore need to prepare for this.
At present, the qualifying income cap for the Workforce Income Supplement which is a permanent program under which the retirement savings of low-income workers is $2,000 a month, according to the Budget 2016. Depending on their age and income, eligible workers would also receive higher payouts under this scheme of up to $3,600 a year.
The Manpower Ministry has engaged with Human Capital Partners and Tripartite Alliance Award winners in order to identify employers who are focused on expanding their businesses and staying competitive in this digital age by investing in progressive employment practices.
The Adapt and Grow program is designed to help out those Singaporeans who have been affected by economic restructuring. Those who are facing an impending job loss due to the transforming nature of the workforce, can leverage this program in order to upskill themselves, find new jobs and enter new and fast-growing sectors.
As far as taking care of the seniors in the workforce is concerned, it is not only about enhancing the retirement plans but also about ensuring that employers are upskilling the existing aging workforce so that they can remain at work for longer and also changing job roles and expectations as suitable for the seniors’ level of experience.
The upcoming budget is expected to focus on promoting volunteerism and helping seniors with their needs during retirement, according to Indranee Rajah, Second Minister for Finance and Education, from the Prime Minister’s Office.
“We will certainly have something in the Budget to promote volunteerism across the board, but we will also be looking to see what we can do for seniors,” said Indranee Rajah. “We also want to make sure that retirees have assurance in retirement.
The RSVP Singapore, is an organization for senior volunteers and was founded in 1998,which partnered with the Ministry of Culture, Community and Youth (MCCY) in 2019 in order to grow senior volunteerism in Singapore as a part of the SG Cares movement.
Indranee has also indicated that the Budget 2020 would include a focus transforming the nation’s industries and the workforce in addition to ensuring that the needs of Singaporeans are met along with ensuring a sustainable environmental and financial ecosystem.
Investing in the future workforce
In the meantime, the government has collectively decided to invest in the future. It is precisely why the Ministry of Finance has highlighted that employers must invest in developing skills that would be instrumental in the workplace of tomorrow. That would in turn help in transforming the economy, building new infrastructure, and strengthening the social support networks while all the time keeping the nation’s security and success as a top priority.
When thinking of the future, in Singapore’s Budget 2020, the goal of the Ministry of Finance is to develop mechanisms through which unsustainable financial burden does not get transferred from one generation to the next.
The resource allocation thus needs to take place in a way that sectors which are in need today get the required investments in addition to there being enough resources for the future.
For Indranee Rajah, the government’s focus is to boost business innovation, empower employers to go regional and build capabilities in a way that workers are upskilled and reskilled enough to be able to take on new opportunities and job roles, as brought about by the rapidly changing landscape of future of work.
Transform, support, and sustain, seems to be the mantra for this year’s upcoming budget.
“We must see the national budget as a strategic financial plan to position ourselves for the future,” said Indranee Rajah during a pre-Budget dialogue session hosted by the government.
Plans for the gig economy
Even though the gig way of working is fast becoming a way of life wherein many companies are experimenting with a blended approach, only one in 10 organizations in Singapore have policies and processes to cater to the needs of a contingent workforce, according to a survey conducted by KellyOCG Asia-Pacific.
Companies such as Grab and Go-Jek have paved the way forward for an increasingly agile and prevalent gig workforce in Singapore. About 9.3 percent of all employed residents were classified as independent contractors or “own account workers” as per the Ministry of Manpower’s terminology. Experts say that the rise of the gig economy has proven to be beneficial for companies, workers, and consumers, however, it is time to introduce certain rules and regulations that would ensure that workers in the gig economy are future-ready.
GST hike and financial stability
Indranee Rajah also noted that the Goods and Services Tax hike that was planned for sometime between 2021 and 2025 would go a long way in ensuring that there is financial sustainability in the country. The government’s focus would increasingly move towards catering to older workers’ needs in addition to supporting younger families.
“Over the past decade, government expenditure has more than doubled. While our operating revenue has also grown, it is still outstripped by our growing spending needs,” said Indranee.
To take a page out of the Deputy Prime Minister’s facebook post, the Budget 2020 is an opportunity for Singapore to take a look back at what went well, identify what worked, step into the future as a stronger economy.
"Each Budget builds on past Budgets, and lays the groundwork for future Budgets. It also reflects our responsibilities as a nation, our hopes as a society and our priorities for our people," Heng Swee Keat wrote on his Facebook page. "As we come close to the end of a decade, Budget 2020 provides us with the opportunity to look back at Singapore’s progress, draw on key lessons and plan our future to take Singapore forward together."
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