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Budget 2019 Wishlist: Help companies to defray costs of re-training workers

Employees at their workstations at a printed circuit board assembly factory in Singapore. (Photo: REUTERS/Edgar Su/File Photo)
Employees at their workstations at a printed circuit board assembly factory in Singapore. (Photo: REUTERS/Edgar Su/File Photo)

By Francis Kan

You’re never too old to learn new skills.

In today’s fast-changing economy, re-training is a way of life for workers of all ages. While the government has rolled out a host of schemes in recent years to retool workers, the accelerated pace of disruption and a shortfall in talent for growth sectors mean that this continues to be a key priority for Singapore.

Economists and tax consultants believe that more support for worker training will be part of Budget 2019 when it is unveiled on 18 February by Finance Minister Heng Swee Keat.

Senior Minister of State for Trade and Industry, Koh Poh Koon said earlier this week that more initiatives to encourage SMEs to send workers for training will be revealed at the Budget and the Committee of Supply debates.

“SMEs should send their workforce for upskilling, otherwise you can buy the technology, but your workforce may not be able to help you reap the full benefits,” he said during a visit to medical device manufacturer Racer Technology on 11 February.

Here are some measures that businesses hope to see in Budget 2019.

Selective easing of foreign talent quotas

Economists hope to see some targeted relaxation of foreign manpower or immigration policies to help companies cope with the persistent labour crunch and rising costs, especially in high-growth segments of the economy. With the Government’s push to promote technologies such as artificial intelligence, big data and robotics, UOB economist Barnabas Gan speculates that the Budget may feature measures targeted to grow the talent pool in these areas.

Funds for re-skilling

More training grants would be welcomed by businesses hoping to offset the cost of upgrading their employees’ skillsets. A top-up of SkillsFuture credits would also encourage Singaporeans to learn new skills. As of October 2018, around 370,000 Singaporeans out of the 2.6 million eligible for SkillsFuture credits have used them to attend training courses, according to government data.

Existing schemes – such as the Adapt and Grow Initiative to help workers transit into new jobs in growth sectors – could also be enhanced. The scheme helped place around 30,000 jobseekers into new jobs in 2018, up from 25,000 placed in 2017.

Tax breaks for training

Despite a talent shortfall in a number of industries, a recent survey by the Singapore Business Federation found that a woeful 12 per cent of local companies invested in employee training in 2018.

To encourage more companies to send their employees back to the classroom, tax consultants say that the Government could introduce enhanced tax deductions for training in digital, data analytics, artificial intelligence, robotics and cybersecurity.

This could come in the form of a scheme where businesses are entitled to 200 per cent tax deductions on amounts spent on training, says Deloitte. Beyond technical skills, PwC Singapore notes that incentives could also cover training for senior managers in areas such as corporate strategy, legal implications and risk management on adopting digital solutions.

Incentives to attract start-up talent

Apart from re-skilling existing staff, start-ups and SMEs need to hire new talent to help grow their businesses. These cash-strapped enterprises often resort to share options and stock award schemes to attract qualified employees. To help them do this, observers say the government could consider re-introducing incentives for share option and stock award schemes, but limit this to the employees of start-ups or SMEs. To make these schemes even more attractive, taxes could be deferred until after the shares awarded to the employees are sold.