These include raising corporate income tax rebate from 30 per cent to 50 per cent of tax payable, capped at $20,000 each year for Year of Assessment 2016 and 2017.

The Special Employment Credit (SEC), which was due to expire this year, will also be modified and extended to the end of 2019, with a top-up of $1.1 billion. This will provide employers with a wage offset for workers aged 55 and above who earn up to $4,000 a month.

In his maiden Budget speech on Thursday (March 24), Finance Minister Heng Swee Keat said the need to restructure is “urgent and critical”, pointing to how technological changes, especially in robotics and automation, are disrupting business models across all sectors.

Heng added that while real wage increases over the past few years have benefited workers and households in Singapore, both businesses and workers will be “worse off” unless productivity improves in tandem.

Several measures were announced to address near-term concerns while encouraging restructuring.

The first source of support for firms comes from existing measures and public spending, including public infrastructure projects, Heng said.

The extended Special Employment Credit will cover about 340,000 workers, or about three in four older Singaporean workers.

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This year, total spending is expected to be $5 billion, higher than in FY2015. The increases are mainly in healthcare, education, security and urban redevelopment.

The Transition Support Package, introduced in FY 2013, will also see its largest payout to date, he said. This month, firms will receive a total of $1.9 billion for qualifying wage increases given under the Wage Credit Scheme.

Heng added that public sector demand for construction projects is expected to increase significantly this year, helping to mitigate a decline in private sector construction demand.

This includes more than $2.5 billion of public sector contracts for smaller projects – construction value estimated to be below $100 million – which will benefit smaller construction firms.

Secondly, the corporate income tax rebate will be raised from 30 per cent to 50 per cent of tax payable, with a cap of $20,000 rebate each year for Year of Assessment (YA) 2016 and 2017. The last time a 50 per cent rebate was given was in YA 2001.

Heng said the higher rebate was targeted at SMEs. It will cost an additional $180 million over two years, bringing the total support given to companies under the corporate income tax rebate to close to $1 billion over two years.

Thirdly, the Special Employment Credit (SEC), which was due to expire this year, will be modified and extended to the end of 2019, with a top-up of $1.1 billion. This will provide employers with a wage offset for workers aged 55 and above who earn up to $4,000 a month.