Singapore’s Budget 2023 of S$104.2 billion ($78.1 billion USD) was unveiled on 14 February 2023 and emphasized the need to seize new opportunities amid global uncertainty while building new capabilities for Singaporeans.
Budget 2023 provides a wide range of support to upskill and reskill Singaporean workers and keep the local workforce resilient amid what is anticipated to be another challenging year. Core inflation is expected to average between 3.5% and 4.5% in 2023, compared with 4.1% in 2022.
Further, the International Monetary Fund (IMF) sees growth slowing with a projected GDP of 1.5% for 2023. This is in line with the projected slower growth in most of Singapore’s major trading partners, such as the United States and Europe.
Through the 2023 budget, the Singapore government will help co-fund wages for lower-wage workers, extend credit support for the hiring of senior workers, fund industry-relevant training, and facilitate job matching.
Budget 2023 also issues an array of support for Singapore-based businesses, such as tax deductions for research and development and innovation. Singaporean businesses that are presently engaged in research and development projects received at 100% tax break on qualifying expenditures and a 150% deduction for costs related to staffing and other consumables.
Jobs-Skills Integrators
The government will appoint jobs-skills integrators as “labor market intermediaries” who will collaborate with businesses, industries, and training employment facilitation partners to optimize or develop new training programs for Singaporean workers.
This will enable the jobs-skills integrators to identify the manpower and skills gap in an industry and ensure that any training program translates to better employment and earnings for Singaporean workers. The scheme will be piloted in the retail, wholesale trade, and precision engineering sectors. The first jobs-skills integrator to be appointed is Nanyang Polytechnic School of Engineering.
Top-Up of Progressive Wage Credit Scheme
This scheme—known as the Progressive Wage Credit Scheme (PWCS)—was introduced in Budget 2022 in which the government will co-fund the wages of lower-wage workers with employers that voluntarily raises their wages.
Under Budget 2023, government spending has been enhanced and the PWCS topped up by S$2.4 billion ($1.7 billion USD).
Under the PWCS, the government will co-fund 75% of the gross monthly wage of workers earning S$2,500 ($1,864 USD) for 2023; an increase from the current 50%.
Under the second tier of support, the government will co-fund 45% of the gross monthly wage of workers earning more than S$2,500 ($1,864 USD) and up to S$3,000 ($2,237 USD) for 2023. This is an increase from the current 30% co-funding support.
Extension of Senior Employment Credit Scheme
The Ministry of Manpower is extending the senior employment credit scheme from 2023 to 2025. The scheme enables the government to provide wage offsets for employers that hire Singaporeans aged 60 and above and earn S$4,000 ($2,982 USD) per month.
Extension of Part-Time Re-Employment Grant
This scheme provides businesses funding support of up to S$125,000 ($93,186 USD) to commit to a part-time re-employment policy for senior workers.
The scheme has been extended to 2025 under Budget 2023.
Increase in CPF Monthly Salary Ceiling
The Central Provident Fund (CPF) monthly salary ceiling will be increased in stages from 1 September 2023 to 1 January 2026.
The CPF is the obligatory savings and pension plan for Singaporeans and permanent residents that fund their retirement, healthcare, and housing needs in the country.
The increased ceilings will be implemented in four stages:
- 1 September 2023—The monthly salary ceiling will be increased to S$6,300 ($4,700 USD).
- 1 January 2024—The monthly salary ceiling will be increased to S$6,800 ($5,072 USD).
- 1 January 2025—The monthly salary ceiling will be increased to S$7,400 ($5,519 USD).
- 1 January 2026—The monthly salary ceiling will be increased to S$8,000 ($5,965 USD).
This means that employees earning above the ceiling rate will take home a lower net salary to set aside more for their CPF.
Currently, employees up to age 55 years old contribute 20% of their monthly wages—or up to the monthly ceiling—to their CPF, with employers contributing 17%.
With each monthly contribution, the individual accumulates savings in three CPF accounts— MediSave Account, Special Account, and Ordinary Account. The allocation rates differ as the individual gets older as more is transferred to the Medisave and Special accounts.
When the individual turns 55 years old, the amount saved in the Special Account and the Ordinary Account is transferred to a newly created Retirement Account.
Provide CPF Transition Support to Lower-Income Platform Workers
The government will fund up to 75% of the increase in the CPF contribution rates for lower-income platform workers for four years. The term platform workers refer to taxi drivers, delivery workers, and private car hire drivers.
Starting in the second half of 2024, the CPF contribution rates of platform workers will increase by around 2.5% per year. For CPF companies, this will increase to 3.5%. Only platform workers earning up to S$2,500 ($1,864 USD) per month will be eligible for the support.
For the first year, the government will fund 75% of the increase in the CPF rates. This is reduced to 50% in years two and three before being reduced further to 25% in year four.