How does the Jobs Growth Incentive work? What are its benefits and drawbacks?
The Jobs Growth Incentive (JGI) was announced on 17 August 2020 and aims to encourage companies to employ more locals by providing them with wage assistance.
What is JGI and how does it work?
JGI is an incentive programme that offers employers wage subsidies for new recruits hired from September 2020 onwards. It was introduced as a response to the pandemic, to support the hiring of locals. There have been three phases so far, with the latest phase running from October 2021 to March 2022. The amount of salary incentive offered by the government is determined by the number of employees you have hired and their age at the time of hire.
In the third stage of the JGI which runs from October 2021 to March 2022, employers will be able to receive up to 15% of the first S$5,000 of gross monthly wages for a non-mature (below 40 years old) hire for 6 months. Employers who hire mature people, persons with disabilities (PwDs), or ex-offenders will receive 50% of the first S$6,000 of gross monthly wages, for up to 12 months.
To qualify for the third phase of the programme, employers will need to have increased their overall workforce from the last headcount in September 2021. Apart from that they should also have increased the total number of local employees earning a gross of S$1,400 per month.
The goal is to entice firms thinking of hiring or expanding to do so because they will be eligible for salary assistance via the JGI. The scheme allows Singapore Citizens and Permanent Residents (PRs) to access salary support, with the aim of creating jobs and supporting businesses in Singapore.
The salary subsidy across the three phases is reflected in the table below.
|Phase 1||Phase 2||Phase 3|
|Qualifying window||Local hires from Sep 2020 to Feb 2021||Local hires from Mar 2021 to Sep 2021||Local hires from Oct 2021 to Mar 2022|
|Non-mature||Up to 25% of first S$5,000 for 12 months||Up to 25% of first S$5,000 for 12 months||Up to 15% of first S$5,000 for 6 months|
|Mature workers, PwDs and ex-offenders||Up to 50% of first S$5,000 for Sep 2020 to Feb 2021 |
Up to 50% of first S$6,000 from Mar 2021 onwards
Support for 18 months
|Up to 50% of first S$6,000 for 18 months||Up to 50% of first S$6,000 for 12 months|
JGI eligibility criteria for employers
To prevent employers from manipulating the system, the government has set certain requirements that must be met in order for companies to qualify for the JGI. These requirements are as follows:
Condition 1: There must be an increase in the number of Singapore Citizen or PR employees. This includes part-timers.
Condition 2: There must be an increase in local employees earning minimum monthly gross wages of S$1,400.
To qualify for phase 3, employers must have been established on or before 23 September 2021.
If a company hires one local employee and loses another, the loss of one employee will affect its eligibility. This is because it did not fulfil the first requirement of the incentive scheme.
However, if the company hires two local employees without losing the existing ones, it will receive the JGI for the new employees as long as the gross wage of at least one of the new workers hits S$1,400 and above per month.
In order to receive the JGI for the full payout duration, the employer has to qualify during the respective phase and continue to meet the eligibility criteria for the payout period.
JGI adjustments to promote retention of existing employees
In order to encourage employers to retain existing local employees, the JGI payouts will be reduced if any current local workers (who were employed by the employer just before the qualifying window), leave the firm after the window starts. For phase 3, the adjustment will happen if any locals employed as of September 2021, leave after that month.
The adjustment factor is determined by dividing the number of existing local staff who have departed the company by the total number of the present employees as of September 2021 (for phase 3), or 5%, whichever is higher. As a result, if more current local workers leave the firm, the adjustment factor will be greater.
However, if new local hires leave the firm, this will not affect the adjustment factor. Any JGI associated with the new hires will simply cease.
In other words, If a small business with five local workers (as of September 2021) loses one of its existing employees, the JGI payment will be cut by 20%. If two of the company's current staff depart, the payout will be dinged by 40%.
Thus, it is important for businesses to understand the implications of losing existing employees during this period. This may have a bigger impact on smaller businesses because each existing local employee contributes a larger percentage of their current baseline headcount.
Application for JGI
Eligible firms do not need to apply for the JGI payouts. The employers' CPF contributions to their workers will be used to calculate the payments automatically every month.
How the government is preventing abuse of JGI
Abuse of the scheme is being taken seriously by the government. If companies are found to be abusing the JGI programme, their payouts may be withheld and they might be charged, facing up to 10 years in jail and a fine.
Unacceptable behaviours include:
- Firing or laying off existing staff and subsequently employing new individuals.
- Splitting up employees' pay among a number of affiliated businesses.
- Increasing purported CPF contributions for staff who have not actually received a pay rise.
- Making fraudulent CPF contributions for non-genuine employees.
- Inflating required CPF contributions and deducting these extra funds from workers' earnings in cash.
- Maintaining CPF contributions based on past salaries for workers who have had their wages reduced.
JGI payout schedule
Eligible employers have been receiving payouts since March 2021. If they qualify for the third phase, payouts will persist till June 2023.
|Qualifying window of new local hires||Month where CPF contributions for new local hires is made||Month when JGI payout will be disbursed|
|Phase 1||September 2020||March 2021|
|October 2020||March 2021|
|November 2020||March 2021|
|Phase 1||December 2020||June 2021|
|January 2021||June 2021|
|February 2021||June 2021|
|Phase 1 and 2||March 2021||September 2021|
|April 2021||September 2021|
|May 2021||September 2021|
|Phase 1 and 2||June 2021||December 2021|
|July 2021||December 2021|
|August 2021||December 2021|
|Phase 1, 2 and 3||September 2021||March 2022|
|October 2021||March 2022|
|November 2021||March 2022|
|Phase 1, 2 and 3||December 2021||June 2022|
|January 2022||June 2022|
|February 2022||June 2022|
|Phase 1, 2 and 3||March 2022||September 2022|
|April 2022||September 2022|
|May 2022||September 2022|
|Phase 1, 2 and 3||June 2022||December 2022|
|July 2022||December 2022|
|August 2022||December 2022|
|Phase 2 and 3||September 2022||March 2023|
|October 2022||March 2023|
|November 2022||March 2023|
|Phase 2 and 3||December 2022||June 2023|
|January 2023||June 2023|
|February 2023||June 2023|
In conclusion, the JGI is intended to reward companies for hiring Singapore Citizens and PRs as their first priority, and for retaining existing local employees. The criteria ensure that employers will be rewarded with wage assistance if they truly bring on new staff and do not abuse or exploit loopholes in the scheme.
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