November 6, 2023

Once staunchly against unemployment benefits, Singapore is currently in the midst of reconsidering its stance. In ‘Commentary: Singapore has long resisted unemployment benefits, so why the change of heart?’ (Channel NewsAsia, October 2023), Dr Kelvin Seah (NUS Economics) explores this development and points to the whirlwind of economic changes and tech disruptions as the driving forces behind this shift.

Dr Seah posits that Singapore traditionally has championed the idea that employment is the best form of welfare. Yet, with the government considering rolling out financial aid for retrenched workers through potentially weaving it into the SkillsFuture programme, Dr Seah suggests that the Singaporean government seems to be signalling a potential pivot from their long-time dismissal of the effectiveness of unemployment benefits.

The reasons for this shift are complex. Dr. Seah highlights that rapid economic transformations and technological advancements such as AI have made certain professions redundant. These evolving dynamics thus raise concerns about the potential increase in involuntary unemployment, rendering it an urgent matter of concern for the Singaporean government.

However, Dr Seah also suggests that unemployment benefits present both advantages and disadvantages. While they may provide immediate financial support, they could also potentially discourage proactive job searches. Dr Seah notes that extended benefits might lead to longer periods of unemployment. Nevertheless, he argues that the primary benefit of such support is the financial buffer it offers to employees that ensures they don’t make hasty employment choices or prematurely liquidate their assets.

Singapore’s strategy in this context is distinctive. The envisaged benefits could be linked to training programs or career guidance, aligning with the country’s ethos of self-reliance. Yet, implementing such a system is not without its challenges. There are concerns about ensuring individuals actively seek employment after training, preventing potential misuse of the benefits, and determining eligibility criteria.

In sum, Dr Seah notes that while the concept of unemployment assistance is commendable, its effectiveness will ultimately depend on its execution. He concludes by noting that Singapore’s endeavours in this area will serve as an indicator of how governments can navigate evolving economic scenarios while upholding their principles.

Read the article here.