Dear All Singapore Stuff
Associate Professor Daniel Goh made an articulate presentation of the Workers’ Party’s proposal for a Redundancy Insurance scheme in Parliament today. Minister Josephine Teo responded that redundancy insurance schemes may reduce the incentive of the workers made redundant to find a new job.
But wouldn’t some breathing room on day to day expenses (capped to 6 months) allow the laid-off worker to find a job with a better fit? And does it do the employer any good to hire someone who has accepted a job she does not like out of financial pressure? That employee may not fully commit to that job and focus on finding the job she wants, which does not make for good productivity for the company.
Minister Teo also said that the true cost of redundancy insurance may not be the 0.1% of wages in the WP proposal; it could be 1.5% as in Korea, or more. But she did not explain by what mechanism premiums and pay-outs would inflate by 10 times from the level we suggested. By the same token, we should not have introduced Com-care since the Com-care disbursement level may inflate by 10 or more times to European levels, which represent the “true cost” of such welfare schemes.
The Workers’ Party’s proposal was for a modest level of premiums and pay-outs and hence minimal impact on competitiveness, unlike similar schemes in some other developed countries.
Nevertheless, I am glad we have advanced the conversation about the need to introduce such a scheme. Redundancies may become more frequent in the age of disruption. Risk pooling schemes like Redundancy Insurance should seriously be considered, so as to boost the confidence of Singaporeans to take risks and make career decisions with longer-term pay-offs, which is what we need to do for Singapore’s economy to be competitive in the 21st century.
NCMP Leon Perera