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Singapore Budget 2023: Highlights for employers and HR leaders

Singapore Budget 2023: Highlights for employers and HR leaders

Among measures announced by DPM Wong, the Government-paid paternity leave will be doubled from 1 January 2024, and CPF monthly salary ceiling will be raised from S$6,000 to S$8,000 by 2026.

Deputy Prime Minister and Minister for Finance Lawrence Wong delivered his #SGBudget2023 speech in Parliament on Tuesday (14 February 2023), which he noted is "about building our capabilities and seizing new opportunities in a new era of global development."

The focus, he said, will be on how to:

  • Continue to uplift the wages of those at the lower end of the income distribution, and sustain real income growth for workers in the broad middle;
  • Support workers, especially those who are displaced, with a better system of reskilling and upskilling, so they can be re-trained and placed into new jobs, and bounce back from setbacks in life;
  • Give everyone opportunities throughout their lives to uplift themselves, so that the circumstances of birth will not determine how far they go, and this can keep social mobility alive and well in Singapore, and
  • Better look after Singapore's growing number of seniors – not just their medical and retirement needs, but also their care and living arrangements, so that they can age in place with grace, dignity, and security.

Thus, the Minister added, Budget 2023 is centered on three key thrusts to "secure our future in a new era":

  • Grow Singapore's economy, equip workers, and provide a fuller range of opportunities for everyone to advance in life.
  • Strengthen Singapore's social compact and provide better support for families, seniors, and vulnerable groups.
  • Build up collective resilience in order to bounce back strengthened from external shocks and setbacks.

With that, here are the key announcements for employers and HR leaders:

S$4bn top-up to the Government National Productivity Fund, new Enterprise Innovation Scheme

As part of efforts to ensure Singapore's workforce remains competitive, the Government will top up the National Productivity Fund with S$4bn, and expand the scope of the Fund to include investment promotion as a supportable activity. "We will use the fund to anchor more quality investments here. This includes supporting companies to build new capabilities, add greater value to our domestic ecosystems, and upskill our workers.

"Ultimately, these efforts will lead to better-paying jobs for Singaporeans," Minister Wong stated.

Next, to help businesses press on with innovation, the Government will be introducing a new Enterprise Innovation Scheme. This scheme will significantly enhance the tax deductions for five key activities in the innovation value chain:

  1. R&D conducted in Singapore.
  2. Registration of intellectual property, including patents, trademarks, and designs.
  3. Acquisition and licensing of intellectual property rights.
  4. Innovation carried out with Polytechnics and ITE.
  5. Training via courses approved by SkillsFuture Singapore and aligned to the Skills Framework.

Currently, businesses can obtain tax deductions of up to 250% of qualifying expenditure on some of these above-mentioned activities. Moving forward, these tax deductions will be raised to 400% of the qualifying expenditure on each of these five activities. The qualifying expenditure will be capped at S$400,000 for each activity, except for innovation carried out with Polytechnics and ITE, for which the expenditure will be capped at S$50,000. With these enhancements, businesses that make full use of the scheme could see tax savings of nearly 70% of their investment, Minister Wong shared.

Apart from the above, he noted that some firms have yet to turn profitable, or do not have sufficient profits to maximise the benefits from the tax deductions. "To cover these firms, I will allow businesses the option to convert 20% of their total qualifying expenditure per Year of Assessment into a cash payout of up to S$20,000. This will help smaller firms defray the costs of their innovation activities, even if they pay little or no taxes."

Minister Wong further shared that an additional S$150mn will be set aside via the SME Co-Investment Fund, to invest in promising SMEs following the "positive outcomes" observed in current efforts. The Government will also aim to catalyse an additional S$300mn of private investments to support SMEs.

Finally, the Government will set aside S$1bn to provide a further boost to the Singapore Global Enterprises initiative, which was introduced in Budget 2022 to provide promising companies with more dedicated and customised support.

  • Such companies will be offered specialised capability-building programmes tailored to their needs. This could involve working with experts to strengthen the core leadership team, accelerate their internationalisation plans, and build a strong talent pipeline.
  • Enterprise Singapore will also support them to secure resources to execute their growth plans, and to build sustained research and innovation capabilities so they can strengthen their value proposition and stay competitive.

Appointing Jobs-Skills Integrators, extending schemes for employment and re-employment

"We all know that it is good to have more skills training. But training programmes can vary in quality. Some lead to recognised certifications, or help workers gain specialised skills that are sought after by the industry.

"But others may not be so relevant to industry needs. Workers themselves may not know what training programmes to go for, or what competencies and skills they need to secure better jobs. Employers, especially amongst the SMEs, may also be unfamiliar with the training landscape, and often struggle to fill vacancies despite available jobseeker pools.

"There is therefore a need to develop labour market intermediaries who can work with industry, training, and employment facilitation partners to optimise training and job placement," Minister Wong shared.

In that vein, he announced that Jobs-Skills Integrators will be appointed and equipped to:

  • Engage enterprises to understand the manpower and skills gaps in the sector,
  • Work with training providers to update existing training programmes, or develop new ones, and
  • Work with employment facilitation agencies, industry partners, and unions to ensure that training translates into better employment and earnings prospects.

The Jobs-Skills Integrators will be piloted in the precision engineering, retail, and wholesale trade sectors, which see higher concentrations of mature workers and SMEs.

More on this will be shared at the Ministry of Education's Committee of Supply (COS).

Next, the Government will extend the Senior Employment Credit till 2025, to encourage employers to offer part-time re-employment, other flexible work arrangements, and structured career planning to senior workers. The Minister for Manpower will share more details on this at the COS.

Third, there will be continued support for lower-wage workers. This comes on the back of the expanded Progressive Wage Model to cover more sectors and occupations, and the requirement for companies that employ foreign workers to pay all local employees at least the local qualifying salary. In line with these, to provide transitional support for businesses, the Progressive Wage Credit Scheme (PWCS) was introduced in Budget 2022, with the Government’s co-funding share raised in June last year. "I will maintain the increase for this year, and top up the PWCS fund by S$2.4bn for this purpose," Minister Wong announced.

Following this, Minister Wong further announced:

  • To support employers in hiring persons with disabilities (PwDs), the Government will enhance the Enabling Employment Credit to cover a larger proportion of wages and a longer duration for PwDs who have not been working for at least six months.
  • A new Uplifting Employment Credit will be introduced in the form of a time-limited wage offset, in a move to encourage firms to employ ex-offenders.

More on this will be shared by the Minister for Manpower at the COS.

Doubling of Government-paid paternity leave from 2024, increase in the unpaid infant care leave

Budget 2023 will see the strengthening of leave provisions for parents of infants. First, this will involve the doubling of the Government-paid paternity leave from two weeks to four weeks, for eligible working fathers of Singaporean children born on or after 1 January 2024. For a start, the extra two weeks will be given on a voluntary basis, so that employers who are ready to grant the additional leave will be reimbursed by the Government.

"This is also to give more time for employers to adjust, especially taking into account the existing economic conditions and manpower and operational challenges that many employers face. But we will review this over time and intend to make this mandatory in due course," Minister Wong said. "With the doubling of paternity leave, I hope the message is clear: we want paternal involvement to be the norm in our society, and we will stand behind all our fathers who want to play a bigger role in raising our children."

Second, the unpaid infant care leave for each parent, in the child's first two years, from the current six days per year to 12 days per year. This will also apply from 1 January 2024 for eligible working parents, and if they have worked with their employer for a continuous period of at least three months.

Taken together, these enhancements will increase parental leave for a working couple from 22 weeks to up to 26 weeks in their child’s first year.

In addition to the above, there will also be adjustments to the Working Mother’s Child Relief to provide more support for eligible lower- to middle-income working mothers:

  • First child:
    • From 14 February to 31 December 2023: 15% of the mother's earned income
    • From 1 January 2024: S$8,000
  • Second child:
    • From 14 February to 31 December 2023: 20% of the mother's earned income
    • From 1 January 2024: S$10,000
  • Third child:
    • From 14 February to 31 December 2023: 25% of the mother's earned income
    • From 1 January 2024: S$12,000

Enhanced support for platform workers and older workers, raising the CPF monthly salary ceiling

The Government had earlier convened the Advisory Committee on Platform Workers to look into strengthening protections for platform workers, including improving their housing and retirement adequacy. These recommendations have been accepted, one of which was to align the CPF contribution rates of platform workers and companies with those of employees and employers over a period of five years. Platform workers who are below 30 years old when the changes are implemented will be required to make increased CPF contributions. Platform companies will also be required to pay CPF contributions for these platform workers.

Minister Wong pointed out: "These changes will help platform workers raise their total earnings and strengthen their housing and retirement adequacy. But in the short term, they will affect the take-home pay of these workers.

"I will therefore introduce additional support to help lower-income platform workers cushion this impact. For the first four years after implementation, I will provide a CPF Transition Support to lower-income Platform Workers who see an increase in their CPF contribution rates." The Minister for Manpower share more on this at the COS. 

Next, in helping older workers in line with the recommendations of the Tripartite Workgroup on Older Workers, the Government had implemented the first increase in CPF contribution rates for senior workers in 2022, and the second increase earlier this year. For these two increases, the Government had provided employers with a CPF Transition Offset to alleviate the increase in business costs.

It will continue with the next increase in CPF contribution rates in 2024, and likewise provide employers with a similar offset. Additionally, the minimum CPF monthly payout for seniors on the Retirement Sum Scheme will be raised to S$350 a month.

Coming to middle-income Singaporeans – in efforts to help them save more, the CPF monthly salary ceiling will be raised from S$6,000 to S$8,000 by 2026 to keep pace with rising salaries. The increases will be phased over four years, starting from this year, to allow employers and employees to adjust to the changes. More on this on CPF Board's website.

Other key announcements

GSTV Scheme and Assurance Package updates

There will be further enhancements to the permanent GSTV scheme:

  • For Singaporeans residing in homes with annual values of S$13,000 and below, the GSTV Cash will be increased quantum from S$500 to S$700 in 2023, and to a further S$850 from 2024 onwards.
  • For those residing in homes with annual values of above S$13,000 and up to S$21,000, the GSTV Cash quantum will be increased from S$250 to S$350 in 2023, and then to S$450 from 2024 onwards.

The Assurance Package will also be enhanced, as follows:

  • The Government will increase the AP Cash by between S$300 and S$650 for eligible Singaporeans over the remaining years of the Assurance Package. This will bring the total AP Cash payments received by adult Singaporeans to between S$700 and S$2,250 over five years.
  • The Government will also increase the CDC Vouchers by S$100 in 2024. So all Singaporean households can look forward to another S$300 of CDC vouchers in January next year.

To mitigate cost-of-living concerns, there will also be additional one-off support measures under the Assurance Package:

  • A cost-of-living Special Payment of between S$200 and S$400 for each eligible adult Singaporean.
  • Additional support for seniors and extend a cost-of-living Seniors’ Bonus of between S$200 and S$300 for eligible Singaporeans aged 55 and above.
  • Doubling of the U-Save Rebates provided to households over the next three tranches of disbursement this year. In total, eligible households can expect to receive up to S$760 in U-Save Rebates this year.
  • For households with children, each child aged six and below will receive a top-up of S$400 to their Child Development Account, and each older child a top-up of S$300 to their Edusave account or Post-Secondary Education Account.
  • MediSave top-ups:
    • Singaporeans aged 20 and below: S$150
    • Singaporeans aged 55 and above: S$150-S$600

These enhancements to the Assurance Package will cost S$3bn, with the total amount of the Package increasing from S$6.6bn to S$9.6bn.

Housing support for young Singaporeans

As shared by Minister Wong, specific groups of first-timer applicants who intend to buy a BTO flat or a resale flat will get more support. Families with children and young married couples aged 40 years old and below, who are buying their first home, will be given an additional ballot chance for their BTO flat applications.

Next, the CPF Housing Grant will also be increased by S$30,000 for eligible first-timer families purchasing four-room or smaller resale flats, and by S$10,000 for those purchasing five-room or large flats. Eligible first-timer families purchasing resale flats will benefit from this increased CPF Housing Grant with immediate effect.

This additional grant amount will be credited into their CPF account from April 2023 onwards.

Image / MCI YouTube

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