Singapore rejected calls for unemployment insurance
During this year’s May Day rally, Prime Minister Lee Hsien Loon rejected growing calls for unemployment insurance. Instead, he reiterated that the government of Singapore has something even better for Singaporeans – schemes to enable Singapore workers to find jobs. Amid the massive number of retrenchments announced by foreign banks and oil and gas companies, such a move is inexplicable to me.
Firstly, I must clarify that I do not disagree with the government’s push for SkillsFuture. In promoting lifelong learning among workers, the movement enables Singaporeans to develop skill competencies relevant to succeed in the new economy. However, by telling Singaporeans that unemployment insurance is not needed is akin to a doctor advising his patient not to buy medical insurance and to stay healthy through regular exercises. Is this strategy even feasible in today’s challenging context?
We all know that life is fragile and can be unpredictable. Very often, even if you maintain a healthy lifestyle, it does not guarantee you against critical or even terminal illnesses like cancers. And what about unforeseen circumstances like workplace incidents or road accidents? There are simply too many circumstances that are beyond our control and it is naive not to insure our wealth.
Similarly, due to economy restructuring, companies may be forced to lay off workers deemed to be redundant. Even if you are a highly competent or qualified employee, you may not be spared from being retrenched. There are many factors that employers take into consideration and your salary might be one of them. In most cases, you are at the mercy of your boss.
No, I am not suggesting that unemployment insurance should substitute skill upgrade schemes. That will be an irresponsible suggestion as it could lead to a reliant mentality among Singaporeans. We don’t want to create a safety net that results in Singaporeans becoming complacent and not motivated to find jobs after being retrenched. Instead, what I am suggesting is for unemployment insurance to complement the existing skill upgrade schemes.
In today’s job market, PMETs who are in their forties face a dark prospect if they were retrenched. It is not uncommon to read stories of them unable to find jobs for months or even years. This group of employees is especially vulnerable because their skill-sets or knowledge may be obsolete and they face stiff competition from foreign and younger counterparts drawing lower salaries. Many of them give up finding jobs in their professional trades and struggle in their personal finances.
Indeed, being retrenched can be really devastating to one’s ego and financial wealth. The feeling of losing your income overnight can be distressing and may create deep anxiety to a person and his family. When such an unfortunate event occurs, there is certainly a need to adjust the family’s lifestyle. That is why I always advocate readers to build up at least 6 months of emergency fund, which would provide some buffer time for lifestyle adjustments.
Having an unemployment insurance would provide a peace of mind and ease your anxiety when you face retrenchment. The payouts would ensure that your family is well taken care of while you focus on finding jobs in your professional trade. You may not get similar pay in your next job, but at least the sudden impact on your wealth would be mitigated.
Secondly, I am convinced that there is an untapped demand for unemployment insurance and this is an opportunity for insurance companies to innovate new financial products. This is a win-win situation for the government and the society because in creating such financial products, the risk is transferred to enterprises. The government don’t have to worry about providing heavy subsidies or promoting the wrong values among Singaporeans because policy-holders would be paying their own premiums.
The Monetary Authority of Singapore (MAS) can consider encouraging insurance companies to develop unemployment insurances with payout of limited period like up to two to three years. In this way, Singaporeans who lose their jobs due to economy restructuring would still be motivated to look for jobs without having to worry about their finances.
What is your opinion of my proposal? Have you been retrenched before? Do you have any experiences to share? Join me in my investment journey and read my financial adventures for free! You can opt to subscribe email updates on my articles for free by entering your email address below.
Magically yours,
SG Wealth Builder
in Europe countries have unemployment benefit paid to you if you are unemployed . the amount payable each week in dependent on your circumstances if you are married , have offspring etc. the cost of providing this service is a massive burden on each country’s budget due the the fact it is massively abused and a large portion of the money goes to undeserving people due to the level of fraud .it has been attempted many times to have a proper system but each time failure is the result .
Our pm was never retrenched. I was retrenched and sacked many times. Long story. What can the gahmen do. Sweet nothing. See see the job bank. All the rotten jobs and bad employers want your labour. Cheap cheap wages. I never to see the got officers. I had to rely on my wits. I went for sgx now the market is lousy and I go for the dividend play counters. Trust the gahmen!
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Hi John,
I am aware of the social welfare system that you mentioned in USA and Europe. But my idea is not to provide a welfare system for Singaporeans.
Instead, I am advocating a system to be paid for by consumers and not by taxpayers. Each of us should be responsible for our own wealth and career. Thus if we are unemployed, we should not expect handouts from the government. But if there are financial products that can insure our wealth when we are retrenched, it makes sense to pay from our own pockets.
Regards,
Gerald
https://www.sgwealthbuilder.com
Hi Mr Tan,
Sorry to hear your predicament. While I am unable to relate to your agony, I guess you have taken actions to be in charge of your personal finances through investing. Hopefully in the near future, we see more protection for Singapore workers in the job market.
Regards,
Gerald
https://www.sgwealthbuilder.com
Gerald, the cap on 2-3 years equivalent payout makes sense. It is insurance rather than Govt payout. The Govt should not interfere in this space as it is a commercial matter.
The actual unemployment rate in Singapore will be made known once the unemployment insurance is drawn down and published on paper. This is something the PAP is trying to hide from naive Singaporeans and the World. Never trust the unemployment rate figure from MOM. It is NOT meant to be accurate and reflect the actual real situation.
If unemployment insurance was feasible, why hasn’t the insurance companies offered it yet?
If they have, why isn’t it popular?
If a person is going to pay the insurance company for unemployment insurance, why wouldn’t he go about just saving money for a rainy day instead?
Would the premium actually be cheaper than just saving on your own?
If it was, would the payout be worth anything?
In a recession, would the insurance company be willing to accept the level of payouts required?
Otherwise, why offer such an insurance scheme?
Perhaps only if it was mandated such that all have to subscribe.
Perhaps that’s what is actually wanted by some?
Then we have fallen down the slippery slope, to have the working subsidize the not working.
Then where is the incentive to work?
Welcome to Greece.
Insurance companies are profit seeking organisation. The premium collected will always be more than the payout, partyly due to distrubtion cost, agent’s commision, and company’s profit, etc. To avoid these unnecessary cost, won’t it be better for one to self insured?
If one is willing to pay monthly premium for such insurance, won’t it be better to channel these money to emergency funds which could be used not just for unemployment, but other purposes as well?
obviously the insurance companies will not take on this risk as they are in the business on making money . so before they insure you or unemployment they will assess the risk and if the slightest chance of them losing money exists they will refuse to insure as money is their God and people exist only to provide profit for these companies .