Deputy Prime Minister and Finance Minister Heng Swee Keat released Singapore’s Budget statement for the financial year 2020 (FY20) yesterday, which would see an overall deficit of $10.9 billion.
The Budget was aimed at relieving the potential economic and financial pain stemming from the ongoing international health emergency, Covid-19.
We approached Singaporean finance professional Chiam Sheng Shi, 30, to comment on how the Budget could affect a regular citizen or PR. His comments may be well-placed, given how he holds a CFA and is also the personal finance lead at robo-advisory firm, Endowus.
THE CHALLENGES THAT SINGAPORE FACES
To provide some context on the challenges that Singapore faces, Chiam remarked that while the coronavirus outbreak presents a clear and present danger to economic growth, “as a developed country with an ageing population, Singapore has been facing [structural] challenges with labour force growth”.
“Low labour force growth can be attributed to declining birth rates and policies lowering foreign workers quota,” said Chiam.
“The high birth rates after Singapore’s independence and extensive use of foreign labour in the 1980s and 1990s is very different from what we observe now.
“Economic growth (FY20E: -0.5 per cent to +1.5 per cent, FY19: +0.7 per cent) has been low the past few years, and while this has not led to meaningful change in unemployment rates, wage growth has been low.”
UPSKILLING — THE PANACEA TO A POTENTIAL DOWNTURN?
To this, our government is doubling down on one major push — upskilling and training. In Chiam’s opinion, “the government’s budget is more focused towards training employees who are more at risk of being retrenched and also supporting businesses in training their workers”.
Chiam believes that “the government realises that the upskilling process of employees takes more time and companies also need help to reengineer job scopes to increase productivity, which is why the SkillsFuture Enterprise Credit is in place”.
Indeed, an entire appendix to the Budget — “Developing our People” — was dedicated to this, which showcased the next “bound” that the government was undertaking to further the five-year-old SkillsFuture policy.
Aside from a $500 top-up to the SkillsFuture Credit (which can be used from October 2020), the government has also made it financially more attractive for firms to hire mid-career professionals who are making career transitions and/or retraining in their 40s and 50s by supporting 20 per cent of the professional’s salary over the course of six months.
WHAT ABOUT IMMEDIATE AID TO OUR POCKETS?
Chiam pointed out that “the GST Vouchers, as well as the one-off cash payouts will be helpful for the man on the street, especially for those with children and with bigger households”.
“The short term pain of a potential recession is alleviated by the various packages and handouts, such as Skillsfuture Work-Study Programme, the various cash vouchers paid out and service and conservancy charges (S&CC) rebates,” he added.
The Care and Support package is perhaps the most anticipated component of the Budget, with the government handing out up to $300 to each Singaporean (citizen and PR), depending on their income levels.
For more Singapore Budget 2020 stories, visit here.