Tag Archives: Redundancy Insurance


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.

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