Commentary: Budget 2024 — How Singapore workers and businesses can make full use of new measures for skills training

At a time of increased global geopolitical risks and macroeconomic uncertainties, Budget 2024 positions Singapore to tap on growth opportunities through a well-calibrated suite of initiatives designed to enhance the country’s workforce and business ecosystem. 

At its heart is a notable and thoughtful consideration for individuals and businesses, both for the immediate and long term — underscoring a holistic and sustainable approach to pursuing economic growth.

LEVELLING UP THE WORKFORCE

Budget 2024 aims to inject more dynamism and agility into the workforce by making training more affordable and reducing the income loss sustained when employees embark on full-time training. 

The S$4,000 SkillsFuture Credit (Mid-Career) top-up under the SkillsFuture Level-Up Programme represents a significant shift in the government’s strategy to empower individual workers. When taken together with the Mid-Career Enhanced Subsidy and the ITE Progression Award, these initiatives have the potential to be a step-change to uplift the quality of the Singapore workforce.

To reduce income loss during full-time training, the SkillsFuture Mid-Career Training Allowance provides up to S$3,000 in monthly allowance for up to 24 months over an individual’s lifetime. 

This is a timely recognition that while part-time and virtual trainings have a place in our national workforce training strategy, full-time training allows for the deeper reskilling needed by mid-career Singaporeans to meaningfully pivot into new jobs and careers.

For workforce upskilling initiatives to achieve the intended outcomes, enterprises should also be proactive in redesigning jobs and upskilling their employees. 

Singaporeans may be hesitant to undertake skills training if there are limited opportunities to apply their new skills meaningfully at their workplaces for better career growth and wages. Thus, enterprises play a significant role in creating the “demand” for the “supply” of workers keen to upskill. 

Forward-looking enterprises assess emerging industry trends and redesign their businesses and job roles to navigate these trends effectively. They also provide more training opportunities to help employees upskill, while enabling strong career growth opportunities to attract, retain and develop their workers. 

Also announced in Budget 2024 was a one-year extension of the SkillsFuture Enterprises Credit scheme, first launched in Budget 2020 and designed to support business and workforce transformation. This will allow small-and-medium-sized enterprises more time to embark on and complete these efforts with confidence. 

However, the impact may be limited due to the S$10,000 quantum in credits and the short-term nature of the extension. Hence, a top-up of the SkillsFuture Enterprises Credits, together with an expansion of the transformation programmes it can support, can be helpful. 

It would also be beneficial for the authorities to provide more clarity on how the scheme will be further incentivised to redesign jobs, provide better training and develop stronger career health for Singaporean workers.

DIGITAL AND GREEN SKILLS

Emerging technologies like generative artificial intelligence (AI) could be a game-changing solution to enhance productivity and drive technological transformation. 

Unlike prior industrial revolutions that mainly affected blue-collar workers involved in operational and manually intensive work, the jobs and livelihoods of professionals, managers and executives may be most impacted by the green and digital economy. 

Digital skills, such as generative AI and data analytics, as well as green skills, such as carbon footprint management and sustainable manufacturing, are expected to be in demand at scale and at speed. Thus, measures on how workforce upskilling in digital and green skills can be further supported through Budget 2024 will be welcomed.

It is heartening to see the Budget include measures to encourage mid-career Singaporeans to take up a second diploma and Institute of Technical Education graduates to upgrade to a diploma. At the same time, micro-learning and micro-credentials should still have a place in the national upskilling strategy. 

Micro-learning, often virtual and asynchronous in nature, became popular during the pandemic as credible upskilling pathways for individuals juggling work and personal commitments. Employers may also be more inclined for their employees to embark on micro-learning than full-time courses. 

Hence, more efforts to enable Singaporeans to leverage virtual and micro-learning will be welcomed.

SPURRING BUSINESS GROWTH AND INNOVATION

Multinational enterprises and local small and medium enterprises (SMEs) are the bedrock of Singapore’s economy. Growing vibrant and competitive SMEs while continuing to attract foreign direct investments is a symbiotic effort that must go hand in hand. 

Singapore’s well-established infrastructure, talent pool, stability in its regulatory, financial and tax system, as well as geographical hub status, have long been recognised as key draws for investors. The implementation of global minimum tax under the Organisation for Economic Co-operation and Development’s Inclusive Framework on Base Erosion Profit Shifting (BEPS) 2.0 Pillar 2 may result in dampening the use of incentives to anchor investments in Singapore. 

However, the newly announced Refundable Investment Credit (RIC) can be a credible countermeasure. 

The RIC is a tax credit with a refundable cash feature designed to spur investments by businesses in high-value and substantive economic activities, such as new productive capacity in manufacturing plants, expanding or establishing the scope of activities in digital services and establishing headquarter activities in Singapore. 

The RIC will complement existing efforts that promote research and development (R&D) and innovation, and further support Singapore’s ambition as a global R&D hub. 

Additionally, other measures such as comprehensively packaged Enterprise Support Package and the enhanced Partnerships for Capability Transformation Scheme will further support local enterprises in deepening their capabilities to compete globally. 

For SMEs, the potential savings of S$40,000 from the 50 per cent corporate income tax rebate for the year of assessment 2024 could also free up capital to be redirected towards strategic areas for innovation and growth.

IMPLEMENTATION IS KEY

Importantly, the effectiveness of these initiatives depends on its uptake and proper utilisation by businesses and individuals. 

To that end, these initiatives should be easily accessible to the targeted audience and flexible in accommodating reasonable differences across businesses and individuals within the scope parameters. Adequate communication and outreach efforts are needed as misinformation, the lack of awareness or administrative hurdles could potentially limit the effectiveness of these well-intended measures.

If well executed, Budget 2024 — and other measures built upon it — will go a long way in fuelling Singapore’s journey towards a future-ready, resilient and inclusive economy.

ABOUT THE AUTHORS:

Chai Wai Fook is partner, tax services at Ernst & Young Solutions LLP and Goh Jia Yong is partner, people consulting at Ernst & Young Advisory Pte Ltd. The views reflected in this article are the views of the authors and do not necessarily reflect the views of the global EY organisation or its member firms.