Resident Unemployment Could Have Doubled If Not For COVID-19 Support Measures in 2021: MOF

SINGAPORE: COVID-19 support measures knocked off 4 percentage points from the projected resident unemployment rate last year, the Ministry of Finance (MOF) said on Thursday (Feb 17).

The resident unemployment rate could have hit 7.5 per cent last year without support measures from the Government, the ministry said in a report assessing the impact of key COVID-19 Budget measures over two years.

Instead, it fell to 3.5 per cent in 2021, a difference of 4 percentage points, MOF said. For 2020, support measures chipped 2 percentage points off the projected unemployment rate, from 6.1 to 4.1 per cent.

Government support over 2020 and 2021 helped to buttress both the GDP and labour market, reducing the impact of the COVID-19 pandemic on the economy, said the report.

MOF estimated that Budget measures, along with “accommodative” monetary policy, supported Singapore’s real GDP growth by 0.8 percentage points in 2021, raising it from 6.8 per cent to 7.6 per cent.

It estimated that the economy had performed better by 6.6 percentage points in 2020, despite a year of negative growth (-4.1 per cent). That means GDP would have fallen by more than 10 per cent without the support measures.

MOF said the Singapore economy surpassed pre-pandemic output levels by the end of 2021, but the recovery was uneven across sectors.

Outward oriented sectors saw strong growth last year but industries like aviation and tourism are operating “significantly below capacity” and are projected to recover only moderately in 2022.

It warned of uncertainties and risks ahead, mainly virus mutations that could lead to a resurgence of the pandemic and persistent inflation.

The labour market is on a “steady path to recovery”. Although the resident unemployment rate is still slightly above 2019 levels, it is expected to fall to pre-pandemic levels this year.

Schemes such as the Jobs Support Scheme (JSS) for wage support, SGUnited Jobs and Skills package and Jobs Growth Incentive to promote hiring of locals, stemmed job losses and helped residents find jobs and skills opportunities, said MOF.

The ministry estimated that JSS saved 165,000 local jobs from March to December 2020 and helped prop up local wages.

Meanwhile, the Jobs Growth Incentive nudged employers to hire an additional 47,000 more local workers and modestly increased the proportion of mature workers hired, while improving the average wages of new hires.

In assessing the long-term impact of the COVID-19 crisis, MOF said that schemes under the SGUnited Jobs and Skills package helped locals, especially fresh graduates, enter new jobs or pick up skills in a depressed job market.

The employment rate of university graduates was comparable to earlier years before COVID-19. But the slower recovery in aviation and tourism weighed more on polytechnic and ITE graduates as a higher proportion took courses related to these sectors.

DECLINE IN INCOME GAP

MOF said that the impact on inequality was also mitigated, with Singaporean households getting an average of about S$2,200 per member from COVID-19 support schemes in 2020.

Lower income households generally received more benefits, it said.

This contributed to a decline in the Gini coefficient, a measure of income inequality, after taxes and transfers. The coefficient fell to 0.375 in 2020 among resident employed households.

It then increased to 0.386 last year, as one-off COVID-19 reliefs were stopped.

“The pre-taxes and transfers Gini coefficient fell from 0.452 in 2020 to 0.444 in 2021 due to stronger income recovery among lower income groups compared to the higher income groups,” said MOF.

The real median income per household member grew by 2.8 per cent in 2021, after a decline of 1.2 per cent in 2020.

At the 20 percentile, real income per household member grew at a faster pace of 5.5 per cent.

Source: https://www.channelnewsasia.com/singapore/covid-19-support-measures-jobs-economy-resident-unemployment-mof-report-2503701

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