Singapore: Tapping the reserves to safeguard employment

Singapore, one of the major hubs for finance and trade worldwide, was severely hit economically by the Covid-19 pandemic. It’s economy contracted by 41.2 % in the second quarter of 2020. But at the same time, Singapore’s 5.7 million inhabitants had the advantage that they could rely on the city-state’s gigantic Official Foreign Reserves, that were worth about SGD 400 billion in spring 2020 (= about EUR 250 billion) – and, despite the global economic crash, grew to SGD 491 billion in January 2021.

Early on, Singapore’s government – with the consent of the president – decided to tap the Official Foreign Reserves and withdrew SGD 52 billion to help fund four Covid-19 specific budgets in 2020, totalling close to SGD 100 billion. These four budgets "were largely focused on maintaining employment, supporting businesses and providing households and individuals with a range of financial and social support", Jun Jie Woo (National University of Singapore) writes in his report for the CRC 1342 Social Policy Response Series.

Roughly, 80 % of the Covid-19 budgets were focused on maintaining employment:
- With the Job Support Scheme, between 25% and 75% of the first SGD 4,600 of employees’ salaries was subsidised from February to August 2020 – the subsidy was then reduced to the range of 10% to 50 % from September 2020 to March 2021.
- Self-employed received three cash payments of SGD 3,000 over the course of six months. People who lost their jobs received a monthly payment of up to SGD 800 for up to three months. And older low-income workers received a single cash payment of SGD 3,000.
- Apart from that, government programmes aimed to create 100,000 jobs and traineeships, and to encourage retraining of the workforce.

In health-care, Singapore subsidised the treatment of Covid-19 patients, introduced a compulsory long-term disability insurance scheme and allowed cash withdrawals from pension funds for long-term care.

In order to mitigate income losses, the government arranged for a number of cash transfers to various groups, among those were families and Singaporeans aged 50 or older.

Singaporeans with low incomes were addressed with additional grocery vouchers, reduced charges for services and maintenance of public housing estates, and vouchers to offset VAT, as well as with grants to grassroots organisations.

Overall, Jun Jie Woo concludes in his report, "these measures have ensured that a large majority of citizens were able to retain their jobs, or find new ones if they were laid off, and hence provide for themselves." Singapore’s unemployment peaked at 3.6 % in October 2020 (up from 2.4 % in March 2020) and has since dropped to 3.2 % in January 2021.

Read Jun Jie Woo ’s full report: Singapore’s Social Policy Response to Covid-19: Focusing on Jobs and Employment

See the other parts of the series: CRC 1342 Covid-19 Social Policy Response Series


Singapore (Photo: TTstudio/Adobe Stock)
Singapore (Photo: TTstudio/Adobe Stock)