Singapore Spends S$9 Billion on Elderly as Lee Boosts Social Aid

Singapore said it will spend S$9 billion ($7 billion) on health care and other benefits for the elderly, while providing companies with more funds to increase efficiency as the economy adjusts to a tighter labor supply. Foreign labor growth has slowed “significantly” in the past two years, and curbs on the inflow of overseas workers have prompted companies to improve the way they do business, Finance Minister Tharman Shanmugaratnam said in his budget speech in Parliament today. Such changes are needed to sustain wage increases while keeping the economy competitive, he said. “Without good productivity growth, if we try to push wages up, we will end up with either higher consumer prices or squeezed profit margins that hurt both businesses and ultimately jobs,” Shanmugaratnam said. “Firms will either pass on higher wage costs to consumers through higher prices, especially in the domestic service industries, or else they will become less competitive.” Singapore is nearing the midpoint of a 10-year economic transition strategy to move away from dependence on cheap overseas workers while attracting new industries such as research and development. Prime Minister Lee Hsien Loong has in recent years tightened the hiring of foreigners, after an influx led to voter discontent over infrastructure strains and increased competition for jobs, property and education.

Jobless Rate

The island’s unemployment rate held at 1.8 percent in the three months through December, matching a five-year low reached in the last quarter of 2012. Labor productivity climbed in the second and third quarters of 2013, after consecutive declines in the six previous ones. The government said in 2010 it wants to achieve annual productivity growth of 2 percent to 3 percent. Companies will be required to increase contributions to employees’ pension funds from January 2015, the finance minister said. At the same time, it will extend support for businesses to expand overseas, he said. “Two years ago, the predominant mood among businesses was to call for government to slow down or postpone tightening of foreign worker inflows,” Shanmugaratnam said. “Most have now accepted the reality of a tight labor market, and are seeking assistance to upgrade, bring in new techniques and grow internationally. Many more firms are taking advantage of our schemes to invest in productivity and to expand abroad.” Source :  http://www.bloomberg.com/news/2014-02-21/singapore-spends-s-9-billion-on-elderly-as-lee-boosts-social-aid.html