The threat of losing your job is, unfortunately, closer to home than you can imagine. While the unemployment rate in Singapore is less than 2% in 2015, the weakening economic conditions have caused repercussions locally: Ever since the global financial crisis in 2009, the number of people losing their jobs in Singapore has been increasing annually.
According to a full-year official data by the Ministry of Manpower, 15,580 people lost their jobs in 2015, compared to 12,930 in 2014. Yes, 15,000 people. More alarming than the ~2% unemployment rate everyone is touting about, huh?
Even as you read this, we can’t help but think of how automation could displace employees all over the world rapidly: cars are self-driving and some checkout counters in supermarkets require no human intervention. Just by observation and common sense, I could almost feel the pains of people losing their jobs due to the inevitable advancement in technology. The question is: will you be next?
In light of this, would it benefit our society should there be an insurance policy that covers people who lose their jobs?
What is unemployment insurance?
In some other countries, there are unemployment insurance policies that provide monetary support to people who lose their job involuntarily. The payout is based on a percentage of the unemployed person’s last drawn pay and the premiums paid. Of course, this is only based on a limited period.
This allows the unemployed person to maintain his standard of living even after he has lost his job. In addition, with the pay-out, he is able to look for a suitable and relevant job without any compromise due to the lack of money to pay his regular expenses.
In the bigger picture, it could also help the economy to stay healthy since the unemployed people would not be forced to decrease their spending considerably.
Sounds like a good idea, isn’t it? Well, we all know Utopia doesn’t exist, so unfortunately, there’s no such unemployment insurance in Singapore.
In the midst of the weakening economic conditions, several MPs have come forward and initiated debates on having unemployment insurances.
Mr Patrick Tay, an elected MP of Jurong GRC, proposed in Parliament on 26 May 2014 for a more comprehensive suite of employment assistance such as payments to recognise years of service and upskilling to help retrenched workers find a new job as a form of “unemployment insurance”.
Ms Sylvia Lim, an elected MP of Aljunied GRC, suggested in Parliament on 4 April 2016 a six-month pay-out of 40% of the unemployed person’s last drawn salary, which will be subjected to a cap based on median wage.
Consequences of unemployment insurance
While it will all look good on paper, there are several consequences of having an unemployment insurance.
Firstly, it might encourage employers to justify retrenchments. With an insurance policy in place, employers would go for the simplest solution of downsizing since the affected staff would be covered by insurance.
Secondly, it can be abused by employees easily—they could just social engineer their dismissal or retrenchment, and conveniently obtain the pay-outs unethically.
In a Parliament sitting on 8 April 2016, Manpower Ministry Lim Swee Say addressed the issue. The key reason why there is no unemployment insurance is that nine out of ten retrenched workers receive retrenchment benefits from their companies instead.
However, retrenchment benefits are not compulsory due to the different circumstances of the retrenching companies—for example, a company in the red would not have the resources to provide any retrenchment benefits.
The Secretary-General of the National Trades Union Congress (NTUC), Mr Chan Chun Sing, instead mentioned that it would be more feasible to help workers to remain “employable and relevant to the job market.”
Should we have unemployment insurance?
There are always pros and cons to everything, and weighing them well to make an informed decision, and to look for the best solution instead of the easiest or populist one is of utmost importance.
While we as employees might cheer at the prospects of an unemployment insurance, giving us a sense of security, would it also lead us to be more complement and subconsciously turn that into a false sense of security? (Since you can get money without working, will you still work?)
Do you think unemployment insurance would be beneficial to all employees, especially so since retrenchment benefits are not compulsory for all companies in Singapore? Or are there other ways to help unemployed and retrenched workers?
What do you—whether you’re an employee or an employer—think?
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Top Image: TK Kurikawa / Shutterstock.com
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