Out-Law / Your Daily Need-To-Know

Singapore Budget 2022: new employment support measures announced

01 Mar 2022, 1:41 am

Singapore has announced a number of measures to support employers and workers as part of the country’s 2022 budget.

Mayumi Soh of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons said: “It is important that employers review the new measures to better understand how they will be impacted and take any necessary action."

The budget (95-page / 880KB PDF) includes a S$500 million (US$372m) Job and Business Support Package. Small and medium enterprises (SMEs) badly hit by Covid-19 will get S$1,000 (US$742) per local employee, up to a maximum of S$10,000 each firm. Eligible firms must have an annual operating revenue of less than S$100m, or employ less than 200 employees as of 31 December 2021, among other criteria.

The package covers SMEs in business sectors including food and beverage, retail, performing arts and arts education, tourism, hospitality, conventions and exhibitions businesses. Operators of sports facilities, cinemas, museums, art galleries, historical sites, indoor playgrounds and other family entertainment centres are also included.

Eligible local sole proprietors and partnerships and hawkers, market and coffeeshop stallholders licensed by the Singapore Food Agency, will get a one-off payout. These businesses do not hire local employees, so are not entitled to the employee-specific grants.

Workers who lost jobs or have been placed on involuntary no-pay leave due to the pandemic will be able to apply for the Covid-19 Recovery Grant, which has been extended until the end of the year and will provide up to S$700 per month for three months. The Jobs Growth Incentive, which supports the hiring of mature and vulnerable workers, will be extended by six months to September, with stepped down support rates.

The end of the Temporary Bridging Loan Programme (TBLP) and enhanced Trade Loan Scheme will be extended from 1 April to 30 September. The TBLP was launched in March 2020 to provide working capital to businesses during the pandemic, while the Enterprise Financing Scheme Trade Loan supports finance needs of local businesses. Project loans to the domestic construction sector through the enhanced Enterprise Financing Scheme will also be extended for another year, from 1 April to 31 March 2023.

The government will increase the personal income tax payable by higher earning Singaporean resident taxpayers from 2024. Tax will be charged at 23% on chargeable income above S$500,000 up to S$1 million, while income in excess of S$1m will be taxed at 24%. This is higher than the 22% tax currently charged on income above S$320,000. Income above S$320,000 up to S$500,000 will continue to be taxed at 22%.

The government will co-fund 50% of pay increases in 2022 and 2023, 30% of pay increases in 2024 and 2025, and 15% of pay increases in 2026, through a new Progressive Wage Credit Scheme. Finance minister Lawrence Wong said an initial S$2 billion would be set aside in 2022 to fund the scheme.

Subsidies will apply to local workers including Singaporeans and permanent residents who are earning a gross wage of up to S$2,500 a month. There is a lower co-funding rate for those earning above S$2,500 and up to S$3,000, which is 30% for wage increases in 2022 and 2023, and 15% for increases in 2024. Employers would be required to increase their gross wages by an average of at least S$100 in a year to qualify for the support for that year. The Inland Revenue Authority of Singapore will automatically pay the allowance by the first quarter of the year following the wage increases.

The existing Workfare Income Supplement scheme will also be enhanced, including higher maximum annual payouts of S$2,100 to S$4,200, increasing the qualifying income cap from S$2,300 to S$2,500, and extending the scheme to younger workers aged 30 to 34.

The Central Provident Fund (CPF) contribution rates for workers in Singapore aged 55 to 70 will continue to increase, following the recommendations of the Tripartite Workgroup on Older Workers. The first increase was already implemented this year, where employers were provided with a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contributions. The next increase will continue in 2023, and employers are expected to receive a similar offset. Workers aged 55 to 70 will receive a total increase of 3%-4% points in their CPF contribution rates over the two years, subject to the usual statutory caps.

The government has also announced that the Employment Pass (EP) minimum qualifying salary will be raised from S$4,500 to S$5,000. For the financial service sector, this will be raised from S$5,000 to S$5,500. These changes will apply to new EP applications from 1 September, and to renewal applications from 1 September 2023.

The minimum qualifying salary for foreign workers on S Passes will be raised to S$3,000 and S$3,500 in financial sectors. The minimum qualifying salary for new S Pass applicants will be raised again in September 2023 and in September 2025. The specific salary values will be announced at a later date. The tier 1 levy for S Pass holders, which has a quota of up to 10% of the total workforce, will also be adjusted to S$650 by 2025 from the current S$330.

Work permit policies for the construction and process sectors, which are heavily dependent on foreigners, will be changed. From January 2024, the proportion of foreign workers a firm can employ will be reduced from 87.5% to 83.3%.

The existing Man-Year Entitlement framework, which refers to the total number of work permit holders allocated to a contractor for specific projects, will be replaced by a new framework to encourage firms to support more off-site work and employ more highly skilled work permit holders. It will be effective from January 2024.

According to Singapore’s Ministry of Manpower, local employers who hire migrant workers living in dormitories or to work in construction, marine shipyard and process sectors will need to buy a Primary Care Plan (PCP) to cover the workers’ healthcare costs. It will be part of requirements for these workers to get or renew their work passes. The cost of the PCP ranges from S$108 to S$138 per worker a year. It is expected to cover most of a migrant worker’s primary care needs.