SINGAPORE (Apr 7):  The Singapore government is sparing no expense in protecting jobs, as the city-state heads for its first “circuit-breaker” in history. 

The move, which is considered by many to be a partial lockdown, has resulted in the move to full home-based learning for schools, and the closure of most physical workplace premises, save for those providing essential services and in selected economic sectors which are critical for the Republic’s local and the global supply chains. 

On Monday, Deputy Prime Minister Heng Swee Keat pulled out all the stops in a bid to protect as many employees as possible from retrenchment or no-pay leave woes.  

DPM Heng announced his decision to raise the wage subsidy for all firms to 75% of gross monthly wages, for the first $4,600 of wages paid in April. The maximum subsidy to the firms will be capped at $3,450 for each person. 

Heng also said that this subsidy would benefit more than 1.9 million local employees. 

This was a significant improvement from the Job Support Scheme (JSS) unveiled in the Budget 2020 in February, where firms were slated to get 25% of wage subsidies. Back then, those in the food services sector would get 50%, while the aviation and tourism sectors were already receiving 75%. 

One question remains at large for investors: Which companies are set to benefit the most from these wage subsidies?

In a Tuesday report, DBS Group Research analyst says companies in sectors other than travel and tourism with a relatively high employee count stand to benefit the most. 

These include banks such as UOB and OCBC and telcos such as Singtel and Starhub. Other beneficiaries include ComfortDelgro and SingPost. 

“[There will be] no benefit to travel and tourism sectors as these were already receiving support for 75% of wages,” says Yeo. 

CGS-CIMB Research analyst Lim Siew Khee opines that SingPost, with its estimated workforce of about 1,100 postmen, should receive at least $1.1 million from the extended JSS, as well as $0.5-$0.6 million of cost savings from the foreign worker levy waiver and rebate, against the group’s FY2020F labour and related expenses of $287 million. 

Although large amounts of money are being distributed one after another, Maybank Kim Eng Research analyst Chua Hak Bin estimates that some 1.3 million workers will be placed in “cold storage”, indicating that the help may well be needed by firms to tide over this period. 

“We estimate that shutting down “non-essential” services for a month could cost about $10 billion, or 2%, of GDP,” says Chua. 

“These sectors are more labour-intensive and will cover about 1.3 million jobs or a third of total employment, more than their share of GDP, by our estimates,” he adds. 

Even with the additional fiscal support, Chua is bracing himself for job losses to climb to the range of 150,000-200,000 in 2020, with foreigners accounting for more than half of the retrenchments. 

“Government’s financial support is targeted at saving jobs for locals, while firms with a larger share of foreign workers will receive far less,” says Chua. 

“We forecast the unemployment rate spiking to above 5%, higher than the 4.1% during GFC and 4.5% during SARS,” he adds.