There’s a System to Prevent Companies from Abusing the Jobs Growth Incentive Whereby Gov Co-Pays New Hires’ Salary

By
Boon Hun
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On 17 Aug 2020, DPM Heng Swee Keat gave stressed-out business owners two very welcome pieces of news.

The first is, of course, the extension of JSS until Mar 2021, although in a reduced form.

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And the second is a new initiative that’ll encourage businesses in Singapore to hire more people.

No wonder he’s also known as the cai shen ye (God of Prosperity) of Singapore.

A Simplified Version Of How They Work:

Here’s how the JSS extension works.

It’s separated into three tiers, with the most vulnerable to the least impacted with different support given:

  • Tier 1: 50% support
  • Tier 2: 30% support
  • Tier 3: 10% support

And here’s how the Jobs Growth Incentive (JGI) works.

For every new local hire that a business makes, the government will co-pay their salary for up to a year.

  • Local hire below 40 years old: 25% support
  • Local hire above 40 years old: Up to 50% support

Yes, it’s like JSS, just for new employees.

A Small Problem

After reading through the above, you’ll start to wonder: What if businesses abuse the system?

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For example, let’s take a tier 3 business which only gets 10% support for every employee.

Then, one day, the boss has a brilliant idea: Why don’t I fire everyone and hire people to replace them?

Then instead of 10% support, I’ll enjoy 35% (or 60%) [JSS + JGI], depending on who I hire, right?!

Now, if you’re thinking, businesses in Singapore not that bad lah, you probably didn’t read about this abuse of the traineeship system:

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Well, the government has thought of this little loophole too and they’ve already taken steps to make sure this doesn’t happen.

There’s a System to Prevent Companies from Abusing the Jobs Growth Incentive Whereby Gov Co-Pays New Hires’ Salary

On 18 Aug 2020, Manpower Minister Josephine Teo announced more details about the Jobs Growth Scheme.

Turns out, there’s more to the scheme than just hiring someone new and getting the full payout.

The company also has to retain its previous local workforce.

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Here’s a simple example.

Imagine the tier 3 business mentioned above has 10 local employees on average from Jan to Aug 2020.

Then the company decided to employ 2 more locals to help grow the company.

In order to receive full co-payment support for the two new hires, the 10 local employees must still be hired within the company.

Every time one of the original staff leave the company and is replaced by a new hire, the support (for the new hire) gets reduced.

This way, the company won’t go on a “replacement spree”, Minister Teo said in a Facebook post.

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More Details Will Be Revealed Later

It seems that the finer workings of the Jobs Growth Scheme haven’t been ironed out yet because Minister Teo said they’ll review the details later in August 2020.

However, there were some important points revealed in her post.

One is, of course, to tell you that the loophole is closed.

It also seems like the level of support is confirmed as well, with new Singaporean hires under 40 years old getting 25% support and those above 40 getting 50% support.

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It was also mentioned that the support will be up to the first $5,000 of the new hire’s salary.

Hopefully, with these two schemes, businesses in Singapore will be encouraged to grow and expand instead of retreating, resulting in job losses.

For those who are interested, here’s what the latest announcement by DPM Heng has for individuals:

These GRCs & SMCs will have the toughest fights in GE2025; here’s why:

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Boon Hun
Email: [email protected]
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