Look beyond Budget ‘hongbaos’

We have a tendency to look only for “hongbaos” in the annual Budget, when what really matters is how well the Budget helps us set a direction for our growth as individuals and families in the years ahead.

Most of my friends are now raising young children and transitioning into the middle stages of their careers. We have the same everyday concerns as our parents before: How to provide for our families, build fulfilling careers, support our parents — and ourselves eventually — in retirement.

The main difference, perhaps, is that we are building careers in an era when unprecedented changes in technology are rapidly eliminating many jobs formerly considered secure and changing the nature of the jobs in ways we cannot fully predict.

Labour economists have found that jobs in the advanced Western economies are increasingly polarised. Routine, medium-skilled jobs in factories and offices are becoming increasingly rare. These solid middle-class jobs are now outsourced to lower-cost countries or have been eliminated entirely by technological progress. In the past, many office workers were employed as dedicated typists and secretaries. But today, most of us are expected to prepare and print our own documents on personal computers. If typing is all you can do, you may have to find another job.

Meanwhile, both low- and high-skilled jobs have grown in importance, the difference being that while wages for high-skilled jobs have increased dramatically, especially for an international elite class of professionals, wages have stagnated for low-skilled positions.

Both types of positions are important for Singapore’s economy. Singaporeans employed in lower-skill jobs such as cleaning, security and retail are providing basic services that we all need and that are hard to automate. But economic growth also depends strongly on building a critical mass of Singaporeans who can excel in the high-skilled professional positions of the future.

Singaporeans thus face a future with both risks and opportunities. No matter the types of jobs held, workers need to keep their skills relevant — so they can change careers if jobs are eliminated by technology, or improve productivity to raise wages. There are also job opportunities that barely existed a decade ago — our parents would have never predicted that people can earn a living making cat videos on YouTube.

SIGNIFICANT SCHEMES

What can Budget 2015 do to help Singaporeans overcome these challenges and position themselves for growth? While everyone is responsible for shaping and upgrading their own careers, the Government can help by reducing the financial barriers to training and upgrading.

The SkillsFuture scheme, announced in the Budget statement, will give each Singaporean an individual SkillsFuture Credit account that will pay for training to upgrade our skills for jobs of the future.

Together with additional support for continuing education courses, including part-time degree courses, the SkillsFuture scheme will spend nearly S$1 billion a year over the next five years on skills training.

But skills upgrading should not be confused with chasing after credentials. As jobs become increasingly specialised, basic credentials will be less important, while practical experience, skills and specific coursework will be more important for success. Continuing training, at all levels, will help workers find the best job that suits their talents as individuals. The training that suits them best may not always involve a degree or other formal credential.

The present fascination with credentials, rather than skills, is rooted in history. In the past, only a privileged few could earn a degree and employers used degrees to quickly judge the value of a worker.

But today, a majority of younger Singaporeans will eventually earn a degree from direct study or continuing education — making it increasingly difficult to rate a person according to academic qualifications alone.

Another major concern for peers in my generation is retirement. While our own retirement is still decades away, many of us are already supporting elderly parents or relatives. Some are fortunate to be able to support both our parents and children simultaneously, but many have difficulty meeting two sets of obligations at once.

While previous Budgets largely provided ad hoc assistance to the elderly, the Silver Support Scheme introduced in Budget 2015 provides a basic level of income support to retirees on a permanent basis.

It is hard to understate how important this scheme will be to providing retirement assurance.

The debate may shift to whether the Silver Support Scheme provides enough help. But this is a significant improvement over the past when there was no comprehensive, publicly funded income support for the elderly, except through the restrictive and means-tested public assistance schemes.

While we look to the Budget announcement for hongbaos and give-aways — and hongbaos are good to have — they are not measures that make a permanent difference in our lives. Singaporeans should look to permanent programmes that address future challenges and help families and individuals progress to better lives.

I believe SkillsFuture and the Silver Support Scheme have great promise for making a practical difference to our future and giving Singaporeans retirement assurance.

We should follow these programmes closely, critically evaluate their performance and take advantage of the opportunities they provide to build a better future.

ABOUT THE AUTHOR:

Walter E Theseira is assistant professor of economics at Nanyang Technological University.