Jobs Credit - Does it Really Help?

This time in the Parliamentary discussion on the Jobs Credit, I found Low Thia Khiang’s persuasions compelling. He pointed that it may not be the only kind of tool the government can use to tackle the crisis.

Since it represents the main plank in the overall scheme of help, I must admit that Jobs Credit seems to tilt towards a supply-side initiative with the subsidy working more for the employers. For the average Singaporeans in general, the trickle down benefits may be less obvious though clearly all Singaporeans are saved from a CPF cut. With a cut, ramifications may be deeper since many Singaporeans rely on their CPF to pay mortgages.

In certain angle and perspective, the Jobs Credit is a blunt tool that cut across all employers, MNCs and SMEs, profitable and unprofitable and it benefits all companies absolutely blindly. In a certain way, this help will seem untargeted. The $4.5 billion must really save many jobs and assuming 100,000 jobs are saved, each job saved cost the government $45,000. The maths becomes more staggering if 50,000 jobs are saved, the cost to government is $90,000 per job saved. Again, if we are to look at the jobs saved, what is the average salary for those who lost their job? If we are saving those who are earning on average $2500 a month, for an entire year, their salary is $30,000 a year. Compare this to how much the government pays to save a job. The maths just does not add up, if we examine from this angle. From another angle, if the companies are really in deep trouble and on the brink of collapse because of cash flow, 3 months collection of a wage subsidy will do little to help. Will that really put companies to re-think? Yes, for a short term, they may hold off but in a longer run, if a trim of idle resources is necessary it must not be allowed to fester as it may become cancerous and unsustainable for a business. It is unreasonable for government to expect companies to hold off retrenchment when it does not make business sense to keep idle resources.

Agreed, that the $4.5 billion is to be used to spur companies to refrain them from retrenchment and for them to have help through wage subsidy for a year. However, the problem of saving the companies who are already doing poorly as a result of poor demand and dry pipelines cannot be saved with a wage subsidy. Poor demand for business will still persist if the macro-economics do not improve. Question therefore is will help applied directly and pointedly to those who needs it be better than applied broadly to all including some who may not need it.

As the argument goes, there is probably more ways the government can think of to help those average Singaporeans who really lost their jobs and by putting cash directly to help them may spur consumption. Nonetheless, the Jobs Credit is still a laudable measure, exceptional for a time like this one.- unforgettable. The help given to companies, small and large, profitable and unprofitable should not become forgettable.