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Budget 2022: Government Sets Aside $100 Million for NTUC to Help Workers and Companies Transform

Part of the sum will go towards a new grant which will go towards supporting companies that have established Company Training Committees.
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A sum of $100 million has been set aside to support NTUC in its efforts to upscale workers’ training and businesses’ transformation through the Company Training Committees (CTCs).

Finance Minister Lawrence Wong made the announcement during his 2022 Budget Statement in Parliament on 18 February 2022.

Of the total sum, a portion will go towards a new grant that will be administered by NTUC to support companies that have already set up CTCs to implement their business transformation plans.

Mr Wong said: “The CTC model brings together the unions and employers to develop concrete firm-level transformation plans, including the relevant training needed for their workers, so that they can enjoy better wages, welfare and prospects.”

Upon hearing the announcement, NTUC Secretary-General Ng Chee Meng took to Facebook to say that move by the Government was an encouraging one.

He wrote: "All of us in NTUC Singapore are encouraged by the support and commit to step up our efforts to transform the workforce and chart the way forward with companies. Helping our workers stay relevant will go a long way in protecting their livelihoods and allow them to better cope with cost of living.

"While NTUC and our tripartite partners work towards transforming our companies and workforce, I urge both employers and workers to actively play their parts in transformation and training."

NTUC Deputy Secretary-General Chee Hong Tat seconded Mr Ng's sentiment. Mr Chee believes that by using CTCs as a collaboration platform with employers, the unions can help more workers upskill and raise productivity.

"I will be sharing more about this and other initiatives at the upcoming Budget Debate from 28 Feb. These include our plans for enhancing NTUC’s Training & Placement ecosystem and how we will continue to work together with tripartite partners to achieve win-win outcomes for workers and companies," Mr Chee wrote on Facebook.

Since the initiative was first launched in April 2019, NTUC has already formed more than 800 CTCs with companies of various sizes.

Beyond CTCs, the Government will continue to extend its outreach, especially to smaller companies, through other platforms. This includes partnering with industry leaders, as well as working closely with Trade Associations and Chambers and the Singapore Business Federation.

Adjusting Foreign Worker Policies

The Government will also be updating the framework for Employment Pass (EP) Holders, S Pass Holders and Work Permit Holders

EP Holders

Come September 2022, the minimum qualifying salary for new EP applicants will be raised from $4,500 to $5,000. This increase will be higher for the financial services sector, which will be raised from $5,000 to $5,500.

Qualifying salaries of older EP applicants, which increases progressively with age, will also be raised in tandem.

The minimum qualifying salary for renewal applications will only be raised in September 2023 to give businesses sufficient time to adjust to the changes.

Beyond the qualifying salary, the Government will be refining how it assesses EP applications to increase certainty and transparency for businesses.

S Pass Holders

The minimum qualifying salary for new S Pass applicants will also be raised in September 2022, from the current $2,500 to $3,000. Likewise for financial services sector, which is known to higher salary norms, the minimum qualifying salary will be raised to $3,500.

The Government will be reviewing and raising the minimum qualifying salary for S Passes in 2023 and again in 2025.

In addition, to better manage the flow of S Pass Holders, the Government will progressively raise the Tier 1 levy from the current $330 to $650 by 2025.

Work Permit Holders

To spur greater productivity improvements and support labour efficient solutions, the Government will be adjusting the work permit policies for the construction and process sectors which are heavily dependent on foreign workers.

The Dependency Ratio Ceiling (DRC) will be reduced from 1:7, down to 1:5. Meanwhile, the current Man-Year Entitlement (MYE) framework will also be replaced with a new levy framework that will encourage firms to support more off-site work and employ more higher-skilled work permit holders.

These changes will take place from 1 January 2024.

On the adjustments to the foreign worker policies, Mr Wong said: “Even as we invest in Singaporeans, we must continue to stay open and bring in manpower skills from around the world. By combining local and foreign professionals, we form the best teams in Singapore to create value together.”

NTUC Assistant Secretary-General Patrick Tay, who has been championing the interests of PMEs for years now, was heartened by the move.

Taking to Facebook, Mr Tay wrote: "I am elated that Finance Minister announced earlier that the Government will refine the Employment Pass (EP) application framework so that there is complementarity and diversity of the foreign workforce; and help mid-career jobseekers, including PMEs, transit into other careers... These would mean a lot for our PMEs as I believe they would address their ground up concerns over job security, employment and training opportunities."

Uplifting Lower-Wage Workers

This year’s Budget will also see more being done to uplift lower-wage workers.

Working on the recommendations of the Tripartite Workgroup on Lower-Wage Workers (TWG-LWW), the Government will be extending the Progressive Wage Model (PWM) to the retail, food services, and waste management sectors over the next two years.

The PWM was first introduced by NTUC in June 2012. It was the congress’s solution to increase workers’ wages sustainably, by means of increased productivity.

“We will also extend it to in-house cleaners, security officers, landscape workers, administrators and drivers across all sectors,” said Mr Wong.

To further support local lower-wage earners, companies employing foreign workers will be required to pay all local employees a local qualifying salary of at least $1,400.

The Government will also be implementing a Progressive Wage Mark to accredit firms that pay progressive wages. The Government will also require all suppliers to be accredited with the Progressive Wage Mark before they can tender for government contracts from March 2023 onwards.

Recognising that firms may need time to adjust for these changes, the Government will introduce a Progressive Wage Credit Scheme (PWCS) to provide businesses with transitional support.

A sum of $2 billion will be set aside for the fund.

Through the PWCS, the Government will co-fund the wage increases of lower-wage workers between 2022 and 2026.

For workers earning up to $2,500, the co-funding rate will be 50 per cent for the first two years, 30 per cent for the subsequent two years, and 15 per cent by 2026.

Support will also be given to workers between $2,500 and $3,000, at a lower co-funding ratio.

Supporting Mid-Career Individuals

The Government will be paying special attention to mid-career workers, especially those in their 40s to 50s.

Mr Wong said: “They are more vulnerable to churn and disruptions in the workplace, but they have valuable experience to contribute. With so help, many are able to learn, adapt and do well in new jobs.”

Riding on the success of attach-and-train initiatives such as the SGUnited Mid-Career Pathways Programme, the Government will make such company attachments a permanent feature of the training and placement ecosystem.

The Government will also continue to enhance their provision of high-quality, industry-oriented training courses through a new SkillFuture Career Transition Programme.

“These courses will be highly subsidised, and after training, we will provide employment facilitation services to maximise jobseekers’ prospects,” he said.

Boosting Retirement Adequacy

The Government will be increasing the CPF contribution rates of workers aged 55 to 70 by 3-4 percentage points.

For example, this will bring the CPF contribution rates of workers aged between 60 to 65 to 20.5 per cent, up 2 percentage points from 18 per cent. Employer contribution will increase to 11 per cent, while employees will increase to 9.5 per cent.

“We enhanced the CPF so that members with lower balances can benefit from extra interest on their retirement savings,” said Mr Wong.

To further support workers in their golden years, the Government will be raising the Basic Retirement Sum (BRS) payouts by 3.5 per cent per year for those turning 55 between 2023 to 2027.

For CPF members who manage to set aside the BRS upon turning 55 in 2027, they will receive payouts close to $1,000 per month by the time they turn 65. Members will not need to top-up their CPF if the BRS is not met.

Supporting Businesses

In the short run, the Government has plans to extend more immediate support for businesses through its $500 million Jobs and Business Support Package.

As part of this package, the Government will be providing SMEs that have been adversely impacted by COVID-19 through the Small Business Recovery Grant.

SMEs in eligible sectors will receive a payout of $1,000 per local employee, capped at $10,000 per company.

Sole proprietors and partnerships in eligible sectors, as well as SFA licensed hawkers, market and coffeeshop stallholders, who do not hire local employees, will also receive a $1,000.

Workers who continue to face income loss brought about by COVID-19 can continue to tap on the COVID-19 Recovery Grant, which has been extended to December 2022.

The Government will continue to extend the Jobs Growth Incentive to September 2022, but with lower support rates. This extension will cover workers who have more difficulty in securing jobs, such as mature workers who have not been employed for six months or more, as well as persons with disabilities and ex-offenders.