During Budget 2011, the Government introduced a one-off Special Employment Credit (SEC) to raise the employability of older low-wage Singaporeans.
The SEC would be paid to employers of Singaporean employees aged above 55 and earning up to $1,700 per month.
For each Singaporean employee aged above 55 to 60 on the employer's payroll in a given month, the employer will receive an SEC of up to 50% of employer CPF contributions for that month. For Singaporean employees aged above 60 on the employer's payroll in a given month, the employer will receive a higher SEC of up to 80% of employer CPF contributions for that month. The exact amount of SEC to be paid depends on the age and income of the Singaporean employee.
The SEC is intended to run for three years and applicable to employees on an employer's payroll from
January 2011 to December 2013.
The Government has enhanced the SEC in Budget 2012 to provide further assistance to businesses in attracting and retaining older Singaporean employees.
The enhanced SEC would be paid to employers who hire Singaporean employees aged above 50 and earning up to $4,000 per month.
Under the enhanced SEC, for each Singaporean employee aged above 50 who earns up to $3,000 per month on the employer's payroll in a given month, the employer would receive an SEC of 8% of that employee's income. Employers of Singaporean workers aged above 50 and earning between $3,000 to $4,000 would receive a lower amount of SEC.
The enhanced SEC would be in place for five years and applicable to employees on an employer's payroll from January 2012 to December 2016.
In addition, the Government has also extended the SEC to employers who hire graduates from Special Education (SPED) schools, regardless of age. The SEC to be given to employers for employing SPED graduates, who earn up to $1,500 per month, would be 16% of that employee's income. For monthly wages between $1,500 and $3,000, the SEC is $240 per SPED graduate employed. A lower SEC would be provided for SPED graduates with monthly wage of between $3,000 to $4,000.
Employers who make regular CPF contributions for their employees would be automatically assessed for their eligbilibility by the CPF Board and notified by post before the SEC payments are made. SEC would be paid out twice yearly to the employers in March and September.
First payment of the enhanced SEC would be in September 2012.
The proposed enhancements to the SEC is a positive step taken by the Government on two fronts.
Firstly, it complements other measures such as the Workfare Income Supplement scheme in boosting the employability of older employees as well as graduates from SPED schools and allow them to remain active and self-sufficient.
In addition, in line with the Government's proposed tightening of the quota of foreign workers into Singapore, the employers would be able to tap on these groups of older workers and SPED graduates for their manpower needs and reduce their reliance on foreign workers.
However, if the taxation of the SEC payments in the hands of the employers could be removed, it would encourage greater participation from employers.