Retrenchment insurance – or maybe CPF assurance?

by Bertha Henson

You know it’s May Day even if you aren’t part of the labour movement. The news is all about jobs – how to keep it or get a new one. It’s getting to be an urgent issue, especially for older PMEs who wonder if their jobs are safe in a new economy that needs fewer of them.

The news is a bit of a confused mess to lay people: There’s low unemployment but rising retrenchment. Look at it this way. The first is a percentage and the other is in absolute numbers. Overall, lay-offs rose last year to 15,580 workers, a 20 per cent rise from last year. This isn’t enough to take us into higher unemployment territory which is now at 2.7 per cent. The crazy thing is that jobs are actually available but people don’t seem to want them for whatever reason or can’t fit into them. (By the way, for your info, citizens and PRs formed 58 per cent of layoffs while foreigners made up the rest.)

So besides the G and the NTUC talking about jobs today, you can expect that the two politicians in Bukit Batok would be talking about it too. People’s Action Party’s Murali Pillai spoke about a job placement scheme for those living in the constituency. Singapore Democratic Party’s Chee Soon Juan is reiterating his call for retrenchment insurance.
On the national level, the G is against retrenchment insurance, preferring “employment’’ insurance as NTUC chief Chan Chun Sing out it. Rather than pay outs, the G and the NTUC (although its Mr Patrick Tay seems to be more ambivalent about it) prefer to get workers to train and retrain. So money is being poured into getting them to do so, with more attention paid to PMEs who are finding it harder to get new jobs. Today, a tie-up between NTUC and the Nanyang Technological University was announced, providing 28 courses for mid-career professionals.

Manpower Minister Lim Swee Say gave a slew of reasons, chief of which is that nine in 10 retrenching firms already give retrenchment benefits (you know, the letter telling you how much you get when you’re being let go, usually in terms of a month for every year served subject to a cap). Whether unionized or not, nine in 10 workers retrenched get such pay-outs.

Singapore’s employment situation is “quite different” from that in countries providing unemployment benefits, he said.
“Our unemployment rates are low, our long-term unemployment rates are also low. At the same time, the practice of paying retrenchment benefits is widespread.’’

Finance Minister Heng Swee Keat, responding to calls to help retrenched workers during the Budget debate, said that any measure which involves Government intervention in the labour market must “cohere to be effective over the long term”, and must not undermine the spirit of self-reliance among Singaporeans.

The PAP is the only political party which doesn’t advocate retrenchment insurance. Besides the SDP, the Workers’ Party and other political players have done so.

WP’s Sylvia Lim said in Parliament last month that workers and employers could “contribute a very small percentage of the employee’s monthly salary towards a fund’’ which could provide a six-month payout at 40 per cent of the worker’s last drawn salary, subject to a cap based on median wage.

The SDP scheme has a staggered pay-out system that can continue for 18 months. It suggested that the fund’s budget be set at $2 billion a year with 80 per cent coming from the State and the rest split between employer and worker.

Retrenchment insurance is an issue that always comes up during hard times. While both political parties suggested ways to pay out, they are short on details on the “paying in’’, such as who will fund it, run it and sustain it – and whether all those involved will agree to put in the money. This is especially so given that retrenchment numbers aren’t very large, compared to say, the number of those who have to be hospitalized and need health insurance.

Also, would this not lead to companies dropping retrenchment benefits, since the State and taxpayers are there as a safety net?

Perhaps, the politicians should think about another way to help those who are out of work – either mandate retrenchment benefits as MP Lim Biow Chuan suggested so that the 10 per cent of retrenched workers will get some help or give them some access to their own CPF savings.

Most of those retrenched are older PMEs who should have accumulated a tidy sum during their working life. It’s a little odd to deny them some of their money while they are looking for work. This a topic that had been raised in the past and might well be worth a re-look since we are all expecting more retrenchments to come.

 

Featured image DSC_0410 by Farb Ian. (CC BY-ND 2.0)  

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- Bertha Henson