Guide To Understanding The Jobs Growth Incentive (JGI) For Companies Hiring Local Workers

This article was first published on 7 September 2020 and updated to provide latest information. The Jobs Growth Incentive (JGI) has been extended during Budget 2021 to end-September 2021.

To encourage Singapore companies to keep and accelerate their hiring of local employees, the Singapore government introduced multiple job schemes in 2020. This includes the Job Support Scheme (JSS), SGUnited Traineeships Programme and the SGUnited Mid-Career Pathways Programme.

Initially introduced on 17 August 2020 to promote local hires, Deputy Prime Minister and Finance Minister Heng Swee Keat extended the Jobs Growth Incentive (JGI) during Budget 2021 to end-September 2021.

Read Also: 5 Reasons Singapore Businesses Should Consider Hiring In 2021 To Expand

What Is The Jobs Growth Incentive (JGI)? 

The Jobs Growth Incentive (JGI) is a salary support scheme that provides employers with 25% or 50% salary support, depending on the age, for new local employees hired between September 2020 to February 2021. This salary support for the new local hires will last up to 12 months for workers below 40 and up to 18 months for workers over 40, persons with disabilities and ex-offenders.

The idea is to encourage companies that were already thinking of hiring or considering expansion to bring forward their hiring initiative since this would entitle them to salary support via the JGI. Both Singapore Citizens and Singapore Permanent Residents (PRs) are eligible for salary support under the JGI. 

How Much Is The Salary Support For The Jobs Growth Incentive (JGI)? 

The salary support for the Jobs Growth Incentive (JGI) is: 

  • 50% for local workers aged 40 and above,
  • 50% for local workers who is 1) a person with disabilities (PwD) or 2) an ex-offender, and
  • 25% for local workers who are below the age of 40.

This will apply to the first $5,000 of gross monthly wages paid to the new local hires under 40, and first $6,000 of gross monthly wages paid to new local hires above 40, or who is a person with disabilities or an ex-offender. Gross monthly wages include local employee mandatory CPF contributions, but exclude employer’s CPF contributions.

Since the salary cap for older workers, persons with disabilities and ex-offenders was raised to $6,000 during Budget 2021, from $5,000 previously, wages paid for such hires between September 2020 and February 2021, will be 50% covered up to the first $5,000. Thereafter, wages paid from March 2021 onwards will be 50% covered up to the first $6,000.

The JGI scheme was extended during the Ministerial Statement – Oct 2020 by Deputy Prime Minister and Finance Minister Heng Swee Keat to include 50% funding for employers hiring persons with disabilities (PwDs) regardless of their age. On 4 December 2020, Minister for Manpower Josephine Teo announced in a Facebook statement that it would be further extended to ex-offenders regardless of age. During Budget 2021 on 16 February, DPM Heng extended the scheme to end-September and enhanced the scheme to provide salary support up to 18 months and a salary cap of $6,000 for workers over 40, persons with disabilities and ex-offenders.

Read Also: Complete Guide To Employer’s CPF Contributions In Singapore

For example, if a company hires a 40-year-old local worker and pays the employee $4,000 a month, they will receive $2,000 (50%) from the JGI. Do note the company also has to contribute the mandatory employer’s CPF contribution of $680 (17% of $4,000). Companies will not receive any JGI support for the mandatory employer’s CPF contribution. The total monthly cost of the employee to the company will be $2,680, instead of $4,680, representing a total saving of close to 43%. This will last for 18 months.

If a company hires a 35-year-old local worker and pays the employee $4,000 a month, they will receive $1,000 (25%) from the JGI. Similarly, the company will also need to contribute to the mandatory employer’s CPF contribution of $680 (17% of $4,000). The total monthly cost of the employee to the company will be $3,680, instead of $4,680, representing a total saving of over 21%. This will last 12 months.

New EmployeeGross SalaryJGITotal Cost To Employer After JGI (including 17% CPF)
Age 40 and above$4,000$2,000 (50%)$2,680
Below age 40$4,000$1,000 (25%)$3,680

How Will Employers Be Eligible For The Jobs Growth Incentive (JGI)? 

To prevent employers from being able to game the system, there are certain eligibility criteria in place in order for employers to be eligible for the Jobs Growth Incentive (JGI). 

Condition 1: There must be an increase in an employer’s local workforce; AND

Condition 2: There must be an increase in their local employees earning gross wages of at least $1,400 per month.

The increase is as compared to August 2020 (i.e. the baseline headcount). 

For example, a company with ten local employees (all earning more than $1,400 per month) in August 2020 (baseline headcount), hires a new local employee in September but loses one existing employee in September as well will not receive any JGI for September. This is because it did not fulfil Condition 1, as its local workforce was 10 employees in August 2020 and remains at 10 employees in September 2020.

However, if a company has five local employees (all earning more than $1,400 per month) in August 2020 (baseline headcount) and seven local employees earning more than $1,400 in September 2020, it will be eligible to receive the JGI payout for both employees in September. 

To receive the JGI for the full 12 months or 18 months from the month of hire for each new local hire, the employer must have qualified for the JGI during the eligibility period, (i.e. September 2020 to February 2021) and continually meet the eligibility criteria for the entire payout period (i.e. September 2020 to January 2022).

In other words, even if you meet the eligibility criteria for the JGI payout as of February 2021 (i.e. you increase your local headcount from Aug 2020 to Feb 2021), but start reducing your local headcount thereafter, your JGI will be reduced. 

The payout schedule for the JGI is as follows.

Source: IRAS

Note that Phase 1 refers to hires made between September 2020 to February 2021, and Phase 2 refers to hires made between March 2021 and September 2021.

Jobs Growth Incentive (JGI) Adjustments

To encourage employers to retain local employees, the JGI payouts will be adjusted downwards if any existing local employees (in the employer’s employ as of August 2020) leave the employer after August 2020.

The adjustment factor is calculated based on the ratio of existing local employees who have left the employer to the total number of existing local employees as of August 2020, or 5%, whichever is higher. The adjustment factor is, therefore, higher if more existing local employees leave the employer. If the new local hires (employed from September 2020 onwards) leave the employer, this does not affect the adjustment factor. However, any JGI attached to such local hires will cease.

For example, an employer with five local employees (as of August 2020) will see its JGI payout reduced by 20% if one of their existing employees leave. If two local employees (of the existing headcount as of Aug 2020) leave, their JGI payout will be reduced by 40%.

In other words, retaining your local employees (as of August 2020) is critical to receiving the full JGI payout. If any of your existing local employees leave, you will receive a lower JGI. 

This adjustment may affect smaller companies more as each existing local employee contributes a larger proportion of their existing baseline headcount.

Read Also: Are Grants And Payouts You Receive From The Government Taxable In Singapore?

How To Apply For The Jobs Growth Incentive (JGI)?

Eligible firms need do not need to apply for the Jobs Growth Incentive (JGI) payouts, as this will be automatically computed each month from employers’ CPF contributions to their employees.

Employers can expect to receive Jobs Growth Incentive payouts from March 2021 onwards.

Abuse Of Jobs Growth Incentive (JGI) 

Similar to the Job Support Scheme, the government is taking a serious view of any abuse of the Jobs Growth Incentive (JGI). Offenders may have their JGI payouts denied and can be charged and may face up to 10 years of imprisonment and a fine. 

To detect possible abuses, the Government has instituted a robust anti-gaming framework leveraging data from multiple sources to identify risks. When ascertaining whether an arrangement is abusive, the Government will consider all relevant facts and circumstances and conduct in-depth verifications where necessary.

For the avoidance of any doubt, do note that the JGI is paid out to employers only. Local employees themselves should not be affected as they will receive their salary and CPF contributions from employers as if the JGI never existed. Such employees should not expect to receive any JGI revenue that their employers may have received for hiring them. 

Read Also: Abusing The Jobs Support Scheme: 6 Things IRAS Is Warning Companies NOT To Do

(Additional reporting by Dinesh Dayani)

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