Singapore - How effective is Special Employment Credit?

SINGAPORE: The enhanced Special Employment Credit (SEC) is widely seen as an effective tool to encourage companies to employ older workers.

Under it, employers will receive up to eight per cent of monthly wages.

However, some economists believe the effectiveness of the wage subsidy could be reduced by the rise in CPF contribution rates for these workers.

Workers at Makino Asia used to climb tall racks to collect engineering parts -- an activity that can be dangerous and time consuming. 

But the precision engineering company started using an automated vertical storage system just last month.

This job redesign has helped reduce the number of workers required for the job and increase efficiency by 40 per cent.

Such effort has attracted more locals to work on the factory floor.

Singapore Manufacturers' Federation deputy president and Makino Asia president and CEO Moh Chong Tau said: "Why we have foreign workers is mainly because the locals didn't want to work in this kind of environment. 

"One thing is to encourage (developing) better working environment, better pay and hopefully government also encourages people to put pride in these kind of jobs."

The company believes the SEC wage subsidy will motivate them to hire more older workers.

Dr Moh said: "The SEC will help to reduce eight per cent of the cost on labour. 

"This can be passed on to the employee and if there are fewer foreign workers, the levy savings can also pass on to the local older workers that will enlarge their income level."

Economists said the wage subsidy is similar to the Jobs Credit Scheme introduced during the last recession, but with some differences.

SIM University Business Programme head Randolph Tan said: "One factor that is actually in favour of the Special Employment Credit -- which is not present in the earlier Jobs Credit Scheme -- is the fact that the Special Employment Credit is a long-term scheme, so employers can be much more confident they have much more time to wait, to see how it works out, and perhaps to try to see whether it works for them as well."

However, the increase in CPF contribution rates for older workers may reduce its effectiveness.

Associate Professor Tan said: "This offsetting CPF contribution rise, that's very small of course, but if that is increased over time, that will offset to some extent, the efficacy of the Special Employment Credit."

Legislation was also enacted this year to encourage employers to re-employ older workers.

A programme to raise productivity and enhance the well-being of older workers has already begun. 

It's called the Silver Productivity programme organised by the Singapore Manufacturers' Federation. 

The first intake of this programme is targeted to kick-off next month.

- CNA/wk


Business & Investment Opportunities

YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.