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

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.

First 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. The JGI was then extended for a third phase from October 2021 to March 2022.

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 15% to 50% salary support for new employees hired between September 2020 to March 2021. The amount of salary support given depends on when you hired the employee and their age. In the third phase of the JGI, salary support for new local hires will last up to 6 months for workers below 40 (down from 12 months) and up to 18 months for workers over 40, persons with disabilities (PwDs) and ex-offenders (down from 18 months). There is also a cap of $5,000 salary for non-mature hires and $6,000 for new employees who are mature, PwDs 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 Jobs Growth Incentive has been enhanced on at least three occasions. The latest enhancement will extend the JGI, which was set to end in September 2021, in a Phase 3 from October 2021 to March 2022.

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

  • 50% salary support for local workers aged 40 and above (on the first $6,000 of their salary) for up to 12 months,
  • 50% for local workers who is 1) a person with disabilities (PwD) or 2) an ex-offender (on the first $6,000 of their salary) for up to 12 months, and
  • 15% for local workers who are below the age of 40 (on the first $5,000 of their salary) for up to 6 months

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 40 and above, 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.

Here’s a summer of the different salary support levels across different phases:

Jobs Growth Incentive (JGI)Phase 1Phase 2Phase 3
Qualifying WindowNew hires from Sep 2020 – Feb 2021New hires from Mar 2021 – Sep 2021New hires from Sep 2021 – Mar 2021
Non-Mature Employees (below 40 years old)Up to 25% of first $5,000 for 12 monthsUp to 25% of first $5,000 for 12 monthsUp to 15% of first $5,000 for 6 months
Mature Employees (40 and above), Persons with Disabilities and ex-offendersFor wages paid in Sep 2020 – Feb 2021, up to 50% of first $5,000 For wages paid from Mar 2021 onwards, up to 50% of first $6,000 Support provided for 18 monthsUp to 50% of first $6,000 for 18 monthsUp to 50% of first $6,000 for 12 months
Source: IRAS

The JGI scheme was first introduced by then Deputy Prime Minister and Finance Minister Heng Swee Keat during a Ministerial Statement on 17 August 2020. He then extended the scheme during the Ministerial Statement – Oct 2020 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 2021 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. In the latest enhancement for Phase 3 of the JGI, the scheme has been extended from October 2021 to March 2022, but the duration of the support level has been reduced to 6 months (from 12 months) for non-mature employees and to 12 months (from 18 months) for mature employees, PwDs and ex-offenders.

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

Here’s an example of how the JGI will work in Phase 3. If a company hires a 40-year-old local worker in October 2021 and pays the employee $6,000 a month, they will receive $3,000 (50% of $6,000) from the JGI until March 2022. The JGI support does not include Employer CPF contributions. This means you have to contribute the mandatory employer’s CPF contribution of $1,020 (17% of $6,000). The total monthly cost of the employee to the company will be $4,020, instead of $7,020, representing a total saving of close to 43%. This will last for 12 months.

If a company hires a 35-year-old local worker in October 2021 and pays the employee $6,000 a month, they will receive $750 (25% of $5,000) from the JGI until March 2022. Similarly, the company will also need to contribute to the mandatory employer’s CPF contribution of $1,020 (17% of $6,000). The total monthly cost of the employee to the company will be $6,270, instead of $7,020, representing a total saving of about 11%. This will last 6 months.

New EmployeeGross SalaryJGITotal Cost To Employer After JGI (including 17% CPF)
Age 40 and above$6,000$3,000 (50%)$4,020
Below age 40$6,000 (note that JGI only provides salary support on first $5,000)$750 (25%)$6,270

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.

For Phase 3 of the JGI, these increases is as compared to September 2021 (i.e. the baseline headcount). 

For example, a company has 10 local employees (all earning more than $1,400 per month) in September 2021 (baseline headcount). If they hire a new local employee in October 2021 but lose one existing employee in October 2021 as well, they will not receive any JGI for October 2021. This is because they did not fulfil Condition 1, as its local workforce was 10 employees in September 2021 and remains at 10 employees in October 2021. If they hire another new local employee in November 2021, they will receive JGI on one new hire for November 2021.

However, if a company has five local employees (all earning more than $1,400 per month) in September 2021 (baseline headcount) and seven local employees earning more than $1,400 in October 2021, it will be eligible to receive the JGI payout for both employees in October 2021. 

To receive the JGI for the full 6 months or 12 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. October 2021 to March 2022) and continually meet the eligibility criteria for the entire payout period (i.e. October 2021 to March 2023).

In other words, even if you meet the eligibility criteria for the JGI payout as of October 2021 (i.e. you increase your local headcount from Sep 2021 to Oct 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. Phase 3 – the current phase we are in – refers to hires made between October 2021 to March 2022.

This means the scheme will run until March 2023 at least. The payouts are given on a quarterly basis, and from the current schedule looks to be paid at the end of the next quarter.

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 September 2021) leave the employer after September 2021. While the IRAS website does not explicit say this for Phase 3, it applied to both Phase 1 and Phase 2, hence we assume they will update their information as well.

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 September 2021, 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 October 2021 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 September 2021) will see its JGI payout reduced by 20% if one of their existing five employees leave. If two local employees (of the existing headcount as of September 2021) leave, their JGI payout will be reduced by 40%.

In other words, retaining your local employees (as of September 2021) is critical to receiving the full JGI payout. If any of your existing local employees leave, you will receive a lower JGI. Of course, this also works restrospectively, which means that there are previous baseline figures to account JGI support being paid on new local employees hired in Phase 1 (baseline employee count as of August 2020) and Phase 2 (baseline employee count as of February 2021). 

As you can see, this figure may be quite complicated to calculate on your own. Nothing to fret over, as IRAS will provide the JGI support based on CPF contributions in its records. So, businesses do not have to make any submissions to receive the JGI support.

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.

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

This article was first published on 7 September 2020 and updated to provide latest information.

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