Published February 5, 2009

'Doctor Lim' speaks up for Jobs Credit pill

Not a panacea, but a strong remedy that could save jobs and protect workers' CPF

By LEE U-WEN

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(SINGAPORE) Borrowing medical analogies and colourful descriptions, labour chief Lim Swee Say yesterday gave his take on the ailments afflicting companies and described how the Jobs Credit Scheme was a powerful remedy that could save jobs while protecting workers' CPF.

'It's like a group of people caught in a thunderstorm. Some will come down with a cold, others flu, some with bronchitis, some may end up having pneumonia.' - Lim Swee Say

Answering concerns raised by some Members of Parliament that the $4.5 billion scheme is untested and may not be effective, Mr Lim said it should not be seen as a 'wonder drug' that would result in zero retrenchments.

He stressed that it is not realistic to expect the scheme to save every job amid the global downturn. 'It's like a group of people caught in a thunderstorm,' he said. 'Some will come down with a cold, others flu, some with bronchitis, some may end up having pneumonia.'

The scheme covers 12 per cent of the first $2,500 of monthly salary of local workers who are paid CPF.

Mr Lim, a Minister in the Prime Minister's Office, also explained why the government took a 'no-strings- attached' approach to implementing the scheme, which subsidises employers' wage bills to defray costs to save jobs.

Some MPs have suggested that Jobs Credit be given only to companies that promise not to retrench.

'I don't understand the logic,' Mr Lim said. 'If a company is not doing well, or is doing so badly that it retrenches workers, and we deprive it of Jobs Credit, aren't we pushing it further towards the downturn, speeding up retrenchments and resulting in more workers losing their jobs?'

Other MPs have suggested that only companies that are not profitable should be entitled to the Jobs Credit subsidy. This idea was similarly shot down by Mr Lim.

'Are we better off to see more profitable companies turn unprofitable?' he asked. 'What do we have to gain out of this? Let us recognise this: there is no guarantee that profitable companies will not retrench workers. But more importantly, if we want to truly succeed in saving jobs, we need the support and participation of all companies - big and small, local and multinational, profitable and not profitable.'

Any retrenchments in the weeks ahead should not be seen as a sign that Jobs Credit is a failure, he said.

Harking back to 1998, when the employer's CPF contribution was cut by 10 percentage points, he said that despite this move to cut business costs, 30,000 people were retrenched.

'Do we say that the CPF cut was a failure? I don't think so, because if not for that 10 percentage point cut, the level of retrenchments could have been much higher,' he said.

The big difference between a CPF cut and Jobs Credit is that while both are pro-business, the latter keeps workers' CPF intact, Mr Lim said. 'The aim of Jobs Credit is to create the same effect as cutting CPF but without having to do so. Jobs Credit is pro-worker because it protects their CPF.'

He also said he is heartened to hear from Nominated MP Cham Hui Fong that she has learned of companies that plan to pass on Jobs Credit savings to their workers. Other companies have indicated they plan to defer or reduce retrenchments.

Mr Lim's fellow labour MP Heng Chee How (Jalan Besar GRC) said the unions are acting fast to help displaced workers retrain and find new jobs to forestall structural unemployment.

One scheme in place, SPUR@e2i, has 54 unionised firms committing 7,200 workers to retraining, with 44 more companies in the pipeline, he said.

But MP Ho Geok Choo (West Coast GRC) would like the success of Jobs Credit to be measured in some way. She has suggested that companies be required to let the government know beforehand if they are considering retrenchments.

The government could then help them with specific measures or refer them to other schemes or business consultants to help them manage costs better, she said.