It may only be a cup of coffee, but the rising price of this key consumer item is an example of the cost-of-living crunch that some Singaporeans are experiencing.
Chua Chu Kang GRC MP Zaqy Mohamad tells The Sunday Times that the recent increase in drink prices at coffee shops is causing some unhappiness on the ground. It was reported that over 100 coffee shops in Singapore have increased the prices of coffee and tea, owing to rising rental and labour costs. A cup of kopi at some outlets now costs $1.30, up from $1 previously.
That is a 30 per cent increase – at a time when headline inflation is running at negative 0.6 per cent, in January.
Making ends meet and job losses during a downturn are two of the top worries among constitutents of his mostly middle-income electorate, he says.
“People are worried they will lose their homes if they can’t service the loan if they are retrenched; and many citizens are tied up in mortgage until they are 65, or they are retired,” Mr Zaqy says.
No wonder, then, that many will look back on the big-spending social support Budgets of recent years and expect goodies to at least tide them over these more difficult times, let alone talk about moving ahead with confidence.
Previous Budgets have had a strong social dimension, with the roll-out of blockbuster programmes such as the Pioneer Generation Package (PGP), Silver Support Scheme and MediShield Life – which are focused on supporting the elderly and defraying healthcare costs – as well as the national skills upgrading scheme, SkillsFuture.
While social expenditure is still expected to be sizeable, new multibillion-dollar mega social programmes, however, are unlikely to be tabled by Finance Minister Heng Swee Keat this Thursday.
“There will instead be a recalibration of the social policies now that a more robust social safety net is very much in place,” says Singapore Management University law don Eugene Tan.
DBS Bank economist Irvin Seah notes that the Finance Minister may opt to “keep some powder dry” for off-Budget measures, if needed.
But he agrees: “(The Government) will have to take a more conservative approach, particularly against the backdrop of this difficult environment. Social issues will have to take a back seat for now.”
RE-EMPLOYMENT AND RETRENCHMENT AID
One group of workers, in particular, will need more assistance, notes West Coast GRC MP Patrick Tay.
“I am most concerned about the professionals, managers and executives (PMEs) because I expect retrenchments and layoffs to increasingly affect PMEs more than rank-and-file workers,” says Mr Tay, who is also assistant secretary-general of the National Trades Union Congress (NTUC). These workers are seen as more vulnerable, partly because many work in sectors, such as financial services and oil and gas, that are not performing as well.
“(There could be) some form of unemployment insurance to help Singaporeans affected by retrenchment, should these occur. Safeguards could be built into the payouts to nudge beneficiaries towards seeking employment in the soonest possible time,” says National University of Singapore (NUS) sociologist Tan Ern Ser.
Mr Seah also floats the idea of temporary deferment of income tax payable for those who are laid off, which will give them some “breathing space”.
MIDDLE-INCOME SQUEEZE
The rising cost of living remains a concern, especially for the broad swathe of middle class, or the middle 60 per cent of income earners here.
Juggling daily expenses and servicing a mortgage for his four-room flat, small business owner Kendrick Khoo, 45, hopes for more subsidies for infant care services.
His 36-year-old wife had last Monday returned to the workforce as a trainer, so it is easier on the family’s purse strings. The couple have two daughters, one aged four years and the other nine months, and pays about $1,400 on childcare and infant care services each month.
“I don’t know how long I can survive if I’m the only one working. Looking at the current costs, it’s very tough,” says Mr Khoo.
Landed property owner Ananda Kumar, 54, who runs a logistics business, tells The Sunday Times he hopes for a property tax break to mitigate rising costs.
Dr Tan of NUS also suggests further tax reliefs for Singaporeans supporting dependent seniors.
As Mr Kumar puts it: “I feel wages did not go up in tandem, the cost of living has gone up more, and it adds up at the end of the day.”
Besides ensuring that wages keep pace with increased costs of living, Associate Professor Tan of SMU says an inflation-linked savings scheme can be introduced to help Singaporeans grow wealth and ensure savings are not eroded by inflation.
SAVING JOBS
When it comes to preserving jobs, the Government has never been shy about putting in place the necessary measures.
Take the 2009 Budget for example – it put out a $20.5 billion resilience package, of which one-quarter of the amount was channelled to help Singaporeans stay employed, during a “time of grave economic crisis”, as then Finance Minister Tharman Shanmugaratnam put it.
Among them, a temporary one-year initiative – the Jobs Credit Scheme – where businesses received a cash grant based on the Central Provident Fund (CPF) contributions they had made for their existing employees.
Observers say there is no need to roll out such schemes just yet as the economy is not in dire straits. However, some measures to help firms retain staff are seen as needful, amid a weaker economic outlook.
Ideas include a one-off subsidy on the employer CPF contribution for a year for workers drawing wages below a certain level, or have a special employment credit to subsidise wages of older workers, Mr Seah of DBS says.
Mr Liang Eng Hwa, chairman of the Government Parliamentary Committee for Finance and Trade and Industry, says that job creation and preservation is one pillar of social policy.
The MP for Holland-Bukit Timah GRC adds: “If you can create good jobs for Singaporeans, then that is the best welfare, because you are able to provide for yourself and your family.”
wongsy@sph.com.sg
This article was first published on March 20, 2016.
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