BUDGET SPEECH 2016 – Institutionalizing Unemployment Insurance

For Immediate Release:

BUDGET SPEECH 2016 – Institutionalizing Unemployment Insurance

The Finance Minister has put up this year’s budget on the footing and premise that Singapore Economy will slow down but not going into a recession. We have a different view on such presumptuous premise which only based on GDP projection figures instead of other more pertaining situation on the ground. Due to the nature of the industrial structure of our economy (i.e. the highly fluctuating Biomedical industry), GDP figures are no longer a good indicator of the well being of Singaporeans.

We would regard the indicators of consumption and the number of retrenchment for the coming year as the more important factors to gauge the well-being of our citizens. Considering the backdrop of the unusual number of retrenchments in the recent months, we would describe the situation as ‘bad’ and we expect the Minister to acknowledge the economic pain prevalent among the populace. The number of retrenchment is expected to hit record high (since 2008) for this year coupled with an expected corresponding drop in consumption. Thus, we believe that the Minister’s assessment of the economic outlook for Singapore is a gross underestimate of the real situation affecting the Middle-lower class Singaporeans.

The ‘trickle-down effect’ has proven to be an ineffective and inefficient policy, in view of the relentlessly globalized environment. One cannot be assured where the resources retained by the corporates would trickle down and where it would simply leave the people tricked into merely expecting the trickle down to happen

What is plainly needed now is the appropriate policies to alleviate the treacherous economic conditions for Singaporeans who have lost their jobs. It is time for the government to endorse that welfare is not a bad word and to come down like a ton of bricks upon anyone who even remotely suggest that.

An institutionalized unemployment insurance system can act as a bumper to cushion off any rapid economic downturn by making sure that local consumption will not drop drastically in such event. This system could be financed by the great amount of foreign workers’ levies which the government has been collecting all these years. It is only logical for the government to utilize levies imposed on foreign workers to help mitigate the potential loss of local citizens’ jobs due to the impact of the dependency on cheap foreign labour.

The current situation is dire and needs appropriately structured unemployment benefits. We should move away from the sporadic adhoc handouts which are more targeted at political patronage rather than a sensible, focused and institutionalized economic system of helping those who are retrenched to tie over the difficult period. In return, mitigate the otherwise dwindling purchasing power and thus consumption which will inevitably further aggravate the economy situation.

To be fair, those in the above 65 category had some of their concerns addressed. However we do not face financial problems only after we reach 65. It should also be noted those in the 55 to 65 category do not receive any form of targeted help despite their CPF withdrawal expectations having had vapourised over the last couple of years. Furthermore, this group of Singaporeans normally faces underemployment due to the influx of cheap foreign workers. We believe that it is the government’s responsibility to take care of this group of not-so-senior citizens as well.

The measures announced were glaringly spartan, with the general reason for the austerity being that it could still be a premature stage of the lean economy yet runs its course. The media would often enthusiastically tout this as a measure to ‘keep the powder dry’ for tougher times ahead and they did not waver this time. We do not believe it is good to wait till the SMEs are half dead before the government step in to stabilize the situation.

In that regard too, the phasing off the PIC would leave smaller firms and SMEs in a lurch while wanting to forge ahead during this challenging times. Although the PAP government has introduced a new scheme “Industrial Transformation Program”, but we see it as old wine in a new bottle. Throughout the decades, PAP government has talked about innovations, creativity, increasing productivity etc with many schemes being introduced and withdrawn; we do not see how this latest good sounding scheme could be any different from the previous ones if the bureaucracy and mindsets of GLCs, Ministries and statutory boards do not change at all. We foresee that this scheme will be no different from its many predecessors which were ineffective but costly.

We would remind the PAP government of its promise (made in2010) of growing Singaporean workers’ REAL wages by increasing productivity of SMEs by 3% per year. So far, it has missed this target for the past 5 years. We believe that the PAP government will have to relook into its methodology of helping SMEs and examine why many past schemes did not produce satisfactory results.



Goh Meng Seng

Secretary General for CEC