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07 Apr 2020
Economic downturn
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Job support scheme

In his third stimulus budget for 2020, finance minister Heng SK announced that the government will be providing a grant to cover 75% of the payroll for April 2020, i.e. the month that all non-essential workplaces have to be closed due to the circuit breaker. This grant is given on condition that the employer does not put any of the employees on no pay leave or retrench them. 

In a webinar on the economic stimulus, one participant asked the question - if I have 10 workers and I placed 2 of them on no-pay leave (which was already arranged ahead), will it affect the grant for the 8 workers that are still being employed?

The panelists, comprising of officials working for government agencies, could not give an answer. They will refer it to the next webinar where an official from the ministry of manpower would be around.

This is clearly messy. It will create confusion with many companies that have to put some workers on no-pay leave to reduce their operating expenses. Some of them have their revenues drop by 50% or more. 

The generous grant of 75% applies only to the month of April. In subsequent months, it will reduce to 25% of payroll for most establishments. Some of them will get a higher grant, if they are from certain industries that are hard hit by the downturn.

After April, many businesses have no choice but to resort to no-pay leave or retrenchment to reduce their operating expenses. 

I have suggested earlier that businesses should be encouraged to put their workers on no-pay leave, instead of retrenching them, to reduce their operating expenses. The workers can apply to the government for a loan to cover their loss of income due to the no-pay leave, or to withdraw this sum from their CPF account.  This approach would work better for the businesses and their workers. It will indeed cost less to the government, unless the government wish to forgive a proportion of the loan (which would be welcomed).

The approach adopted by Heng SK is problematic for the businesses and workers.

Tan Kin Lian

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