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Impact of the Jobs Growth Incentive (JGI) Scheme on Firm-Level Local Labour Outcomes
13 February 2023
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In 2020, the onset of the COVID-19 pandemic caused the Singapore economy to plunge into its worst recession since independence. To cushion firms and workers from the impact of the recession, the Government provided broad-based cost relief to firms. However, as the economy began to recover from the recession, government support measures started to tilt from providing cost relief to supporting the labour market recovery. Against this backdrop, the Jobs Growth Incentive (JGI) scheme was introduced to support job creation through the use of wage support to encourage firms to bring forward the hiring of local workers. This study evaluates the effectiveness of JGI Phases 1 to 3 in supporting local employment outcomes.
Our findings suggest that JGI Phases 1 to 3 were successful in encouraging firms to expand their local workforce, which in turn supported the labour market recovery. Between September 2020 and February 2022, the JGI scheme was associated with an increase of about 90,200 local hires cumulatively. At the same time, local hires also benefitted from wages that were 12.1 per cent to 13.6 per cent higher on average. Furthermore, there was evidence that in Phase 1, the scheme supported a modest increase in the hiring of mature workers.
Given that the JGI is an exceptional scheme designed to support labour market recovery during a crisis, its positive effects on supporting local hires were the strongest as the economy was emerging from the pandemic-induced recession and when labour market slack was the most severe. As the economic recovery gained momentum and labour market slack dissipated, the positive effect on local gross hires expectedly waned. The JGI is assessed to have achieved its objectives with the labour market having largely recovered to pre-pandemic (2019) levels by 4Q2022.
The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Manpower (MOM), Ministry of Finance (MOF), Ministry of Trade and Industry (MTI) or the Government of Singapore.