On the back of the COVID-19 pandemic, the government implemented several new job schemes in 2020 to help companies keep and expand their workforce. Many of these job schemes provide government support in addition to existing schemes.
As the global economy recovers, the new job schemes can give businesses in Singapore an advantage in gearing up for growth by expanding their headcount at a lower cost.
In this article, we do a bit of number crunching on several jobs schemes to find out how much government salary support businesses can get for hiring a full-time employee in 2021.
#1 Jobs Growth Incentive (JGI)
The Jobs Growth Incentive (JGI) was extended during Budget 202. In summary, the JGI provides between 25% and 50% salary support for local employees under 40-years-old and 40 and over respectively.
There are certain other eligibility criteria and considerations that we have to factor in, and this article covering the JGI in-depth goes through it.
In general, here’s an overview of the salary support business will get for new employees.
|Employees hired between Mar 2021 to Sep 2021||Below 40||40 and Above|
|Salary Support Cap||$5,000||$6,000|
|Salary Support Duration||12 months||18 months|
Example 1: Hiring a 39-year-old full-time local employee at a salary of $5,000
The business will receive the full 25% of salary support for their new employee, not including the employer’s CPF contributions.
The person’s gross wage and CPF will amount to $5,850 ($5,000 + $850 in 17% employer’s CPF contributions).
|Hiring a 39-year-old at $5,000 salary||Gross wage + CPF||JGI salary support||Cost after JGI salary support|
|Total monthly cost to employer||$5,850||$1,250||$4,600|
|Total cost to employer over 12 months||$70,200||$15,000||$55,200|
Hiring this employee would give the business over 21% “discount” over a 12-month period.
Example 2: Hiring a 40-year-old full-time local employee at a salary of $6,000
If a business hired a 40-year-old employee at a salary of $6,000 instead, they would receive even more in salary support.
In this example, the employee’s gross wage and CPF adds up to $7,020 ($6,000 + $1,020 in 17% in employer’s CPF contributions). The JGI lasts up to 18 months for employees above 40.
|Hiring a 40-year-old at $6,000 salary||Gross wage + CPF||JGI salary support||Cost after JGI salary support|
|Total monthly cost to employer||$7,020||$3,000||$4,020|
|Total cost to employer over 12 months||$84,240||$36,000||$48,240|
|Total cost to employer over 18 months||$126,360||$54,000||$72,360|
Hiring this employee would give the business close to 43% “discount” on the employee’s wages over an 18-month period.
#2 Professional Conversion Programme (PCP)
For businesses that hire mid-career PMETs who need to undergo skills conversion (either internally or externally) to fit into the role, the Professional Conversion Programme (PCP) is an ideal scheme. Employers are to be from sectors with “growth potential” such as Healthcare, InfoComm Technology and Financial Services.
The PCP courses usually last between 3 months and 24 months, depending on the programme and job requirements.
The PCP provides salary support of up to 70% (capped at $4,000 a month) for employees below 40 and up to 90% (capped at $6,000 a month) for employees aged 40 and above. In addition, businesses have to pay for the PCP courses that employees enter as well – while receiving subsidies of up to 70% and 90% of the course fee for those aged below 40 and those aged 40 and above respectively.
The salary support funding for PCP was adjusted with the introduction of the JGI, such that the disbursements will be spread out over a longer period. This is so employers will not too all the funding support at one go and instead see the disbursement over a longer period of retaining the employee.
Example 3: Hiring a 39-year-old full-time local employee at a salary of $5,000 and using the PCP
This employee will now be eligible for both the PCP and the JGI. We assume the PCP training to last 12 months.
In the example, we will disregard the extension, and just rely on a standard 12-month disbursement period. So, note that in reality, businesses will get the same amount, but when they receive the funding may be very different.
|Hiring a 39-year-old at $5,000 salary||Gross wage + CPF||JGI salary support||PCP salary support||Cost after JGI + PCP salary support|
|Total monthly cost to employer||$5,850||$1,250||$2,800||$1,800|
|Total cost to employer over 12 months||$70,200||$15,000||$33,600||$21,600|
Without spreading out the PCP salary support, the “discount” the employer receives would be about 70% of the employee’s wage. This is why spreading out the disbursements make sense.
Remember that employers may not be able to fully deploy their employees who are on PCP training during the first 12 months. They will also have to fork out at least 30% of the employee’s course fees, which will add to their cost.
Example 4: Hiring a 40-year-old full-time local employee at a salary of $6,000 and using the PCP
While PCP courses can last up to 24 months, we will just use a 12-month timeframe in our example.
|Hiring a 40-year-old at $6,000 salary||Gross wage + CPF||JGI salary support||PCP salary support||Cost after JGI + PCP salary support|
|Total monthly cost to employer||$7,020||$3,000||$5,400||$8,400|
|Total cost to employer over 12 months||$84,240||$36,000||$64,800||($16,560)|
|Total cost to employer over 18 months||$126,360||$54,000||$64,800||($7,560)|
Looking at the table, employers can actually receive money for hiring an employee who earns $6,000 a month. This definitely gives us a good reason why the PCP disbursements are to be extended over a longer timeframe.
While this may look quite fantastic, the PCP programme lasts 12 months in the example, and employers may not be able to fully deploy their employees in the time. Employers also have to fork out at least 10% of the PCP course fees.
#3 Jobs Support Scheme (JSS)
The Jobs Support Scheme (JSS) was the main salary support programme in 2020. Fortunately, it is winding down (because that means Singapore is successfully combating COVID-19). The JSS provides salary support for employees up to the first $4,600 of monthly salary.
Nevertheless, the JSS was also extended for six months during Budget 2021 – mainly for sectors that are still facing COVID-19-related headwinds, such as the Aviation, Aerospace, Hospitality, Retail, Arts and Culture and other sectors. These are typically classified as Tier 1 and Tier 2 sectors, and the JSS was not extended for Tier 3A or Tier 3B sectors.
|Month of Payout||Payout based on salary paid in:||Tier 1||Tier 2|
[Extended during Budget 2021]
[Extended during Budget 2021
Example 5: Hiring a 39-year-old full-time local employee at a salary of $5,000
While Tier 1 and Tier 2 sectors may not tend to consider hiring, those that do receive salary support from JSS that is stacked on top of the JGI. Employers who are eligible for JSS are typically not also eligible for PCP as the industries they support tend to be different. JSS supports industries that are not coping well yet, while PCP is more for growth industries.
In the first 3 months, the business gets 30% of salary support from JSS, and this drops to 10% in the next 3 months. Thereafter, no salary support will be provided under the JSS scheme.
|Hiring a 39-year-old at $5,000 salary||Gross wage + CPF||JGI salary support||JSS salary support||Cost after JSS + JGI salary support|
|First 3 months|
|Total monthly cost to employer||$5,850||$1,250||$1,500||$3,100|
|Total cost to employer over first 3 months||$17,550||$3,750||$4,500||$9,300|
|Next 3 months|
|Gross monthly salary||$5,000||$1,250||$500||$3,250|
|Employer’s CPF contributions||$850||N.A.||N.A.||$850|
|Total monthly cost to employer||$5,850||$1,250||$500||$4,100|
|Total cost to employer over next 3 months||$17,550||$3,750||$1,500||$13,300|
|Total cost to employer over first 6 months||$35,100||$7,500||$6,000||$21,600|
|Total cost to employer over 12 months||$70,200||$15,000||$6,000||$49,200|
Stacking both the JGI and JSS allows employers to get a 30% “discount” on their new hire – paying $49,200 instead of $70,200.
Of course, there could be a variation where the employee is also a senior and will get further government support to offset their salaries. But these are calculations we can take on our own after understanding the possible permutations of salary support.
Finally, these are just four schemes we discussed, and there could be other eligible schemes such as the Senior Employment Credit (SEC), which provides a payout worthof up to 2% of a senior hire’s salary, as well as the PMAX or SkillsFuture Enterprise Credit (SFEC), for offsetting employee training, which business can tap on as well.
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