Using a set of high-frequency (monthly) firm-level indicators and scheme disbursement data, this study examines the impact of the foreign worker levy rebates (FWLR) and Wage Credit Scheme (WCS) payouts disbursed during the COVID-19 pandemic on firm-level outcomes.

We found that both the FWLR and WCS payouts helped to lower the likelihood of firm financial distress and also supported the hiring and retention of workers, especially Work Permit and S Pass Holders in the construction sector in the case of the FWLR, and local workers earning less than $5,000 in the case of the WCS. This highlights the importance of providing cash transfers to firms to help them fulfil short-term cash obligations and retain workers (and hence capabilities) during times of heightened economic stress.

The high-frequency nature of this analysis implies that the estimated impact of the schemes should be seen as the short-term impact and is meant to provide a prompt sensing of their effectiveness during the pandemic. A more comprehensive study to analyse the longer-term benefits and costs of the schemes should be conducted once annual data on firm-level outcomes (e.g., financial information, value-added) are available.

The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry (MTI) or other government agencies.

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