Singapore: Singapore Budget 2019 – Helping the “newly vulnerable”
- There is a need to alleviate the uncertainties faced by skilled professionals
- Preparing for an aging population and managing healthcare costs will be another focus
- The budget will continue to aim at preparing Singaporeans for the future
Focus on PMETs
Amid a subdued employment outlook, one segment of the labour force looks exceptionally vulnerable. For the past nine years, the percentage share of Professional, Managers, Engineers and Technicians (PMETs) amongst all retrenched workers has been rising. The situation is more acute for resident (Singaporeans and PRs) PMETs. The percentage share of resident PMETs amongst total retrenched residents is as high as 70% in 3Q18. This is far more than the share of resident PMETs (56%) in the total resident employment. Additionally, degree holders account for the largest segment (43%) amongst those who were retrenched in that quarter. This may suggest that this segment of the labour force is increasingly facing more difficulties in maintaining their employability. This seems to defy conventional wisdom that being better skilled, the PMETs would be relatively more employable. The data is now suggesting otherwise.
Beyond accounting for a relatively higher percentage of the retrenched workers, resident PMETs also face relatively greater difficulties getting back into the workforce. The re-entry rate for PMETs and degree holders have persistently been much lower than the other segments of the workforce and the national average. This is despite their better qualification and higher skill-sets. Considering the significant amount of resources put into education and emphasis on skills upgrading, this emerging trend is disconcerting.
The need for more policy support and recalibration
Given the rising vulnerability of the PMETs, we expect more forceful policy measures to tackle this emerging concern in the upcoming budget. Expect further enhancement to schemes such as the Professional Conversion Programme (PCP) and the Adapt and Grow initiative. Beside enhancing some of the existing schemes targeted at the PMETs, there could be a review on existing guidelines pertaining to skilled foreign workers. Upward adjustment in the minimum salary requirement for EPs and/or tighter requirement beyond the Job Bank could be considered.
Tackling concerns of an aging population
The population is aging. Singapore’s population will start to shrink from 2025 onwards. With low birth rates, longer life expectancy due to better medical care, Singapore’s old age dependency ratio is set to rise. This implies higher financial burden and healthcare cost for Singaporeans and the government going forward. A slew of policy measures has been put in place in recent years to prepare the nation for the impending challenges of an aging population. Health subsidies, universal insurance programmes (e.g., Medishield Life), enhancement to the CPF system, and many more were systematically introduced. We believe such efforts will continue in the upcoming budget, with more specific focus on managing healthcare costs.
Beside subsidies and insurance coverage, there could even be a need to introduce health-related tax (e.g., Sugar Tax) to encourage public health consciousness. Singapore has one of the highest incidences of diabetes among developed countries, second only to the United States .
Preparing Singaporeans for the future
Beyond helping the PMETs and mitigating against challenges such as rising healthcare costs, policymakers will continue to focus on preparing Singaporeans for the future. For example, disruptive technologies could potentially make many jobs redundant. Hence, there is a need to continue to invest in education and skills upgrading. Periodic reviews and updates are also crucial to ensure relevance of the existing education and training schemes. Efforts directed at strengthening the social safety net and public support measures will also be featured in the budget given an increasingly difficult economic climate. With the surpluses accrued in the past budgets, the government is in a good position to roll out strong counter-cyclical fiscal stimulus should economic conditions warrant that.
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