TAN KENG SOON: SCANDINAVIAN-STYLE WELFARE STATE NOT FOR SINGAPOREANS

LAST Saturday’s commentary (“Circle of trust in welfare system: Is S’pore ready?”) focused on whether Singaporeans are ready for a Scandinavian-style welfare state, but nothing was said about whether it is desirable in the first place.

It is ironic that some Singaporeans think a Scandinavian-style welfare state is desirable at a time when the Scandinavians have cut back on welfare spending following a financial crisis in the 1990s.

Indeed, the present financial crisis has led to welfare spending cuts in other European states.

The Netherlands’ King Willem-Alexander, in a speech last year, said the traditional Dutch welfare state is coming to an end and needs to be replaced by a “participation society”, in which people must take responsibility for their own future and create their own social and financial safety nets, with less government help (“End of Europe’s welfare state?”; Sept 19, 2013). This sounds like the system of meritocracy that Singapore has always practised.

If the Europeans are having a rethink about the welfare state, why are we heading towards it? A European or Scandinavian welfare model involves more than just free health care; unemployment benefits and pensions are also given out.

Having a European-style welfare state here would be a serious mistake.

First, a welfare state is inherently unfair. It means that the healthy will have to subsidise the sick, and those who are more hard-working and able will have to subsidise those who are less so.

Second, a welfare state means high taxes. In Scandinavian countries, the sales tax is typically around 20 per cent to 25 per cent, though food is exempted.

High taxation comes at a price – it is a job killer. Companies would prefer to relocate elsewhere and there would be less incentive for one to take the risk of starting a business.

That is why the unemployment rate in Europe is much higher than that in Singapore.

There would eventually be a permanent class of unemployed people who survive on welfare cheques funded by taxpayers, and economic growth would slow down.

Third, a welfare state would likely lead to increased ethnic tensions in Singapore, as a group with lower educational qualifications, for instance, would tend to have a higher unemployment rate and have to be supported by others, breeding resentment.

Tan Keng Soon

Check Also

PAP Using Our Money to Help Children in PCF Kindergartens Only

The funding comes from Temasek and costs $3.38 million. See how they are using our money to make themselves look good? They will look like kind Samaritans while other schools will look bad.