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Budget round-up: Unemployment insurance not as sustainable as safeguarding jobs, retraining workers, says DPM Heng

SINGAPORE — An unemployment insurance may appear attractive, but it will not be sustainable without longer-term structures to help workers bounce back, Deputy Prime Minister Heng Swee Keat said on Friday (Feb 26).

  • Finance Minister Heng Swee Keat said getting workers jobs is more sustainable than offering an unemployment insurance
  • He was capping off a three-day debate on the Budget 2021 statement
  • Mr Heng rejected suggestions that the Government had missed out support for the middle class

 

SINGAPORE — An unemployment insurance may appear attractive, but it will not be sustainable without longer-term structures to help workers bounce back, Deputy Prime Minister Heng Swee Keat said on Friday (Feb 26).

“It is more sustainable to ensure that workers maintain a source of income, and to upskill and reskill our workers so that they can bounce back quickly from job disruptions,” he told Parliament.

Mr Heng, who is also Finance Minister, was giving his round-up speech capping off a three-day debate to the Budget 2021 statement, where he spoke about building a cohesive and liveable Singapore.

He was responding to three Members of Parliament (MP) who had suggested that it may be time for Singapore to consider a form of unemployment insurance to help those who lose their jobs.

Labour MP Patrick Tay of Pioneer Single-Member Constituency (SMC), Nominated MP Hoon Hian Teck and Sengkang Group Representation Constituency (GRC) MP Louis Chua had raised this matter in Parliament on Wednesday.

Mr Heng pointed to countries such as Germany, Sweden and South Korea, which have unemployment insurance schemes that are linked to active labour market policy measures that seek to get people employed quickly and avoid having their skills deteriorate.

In Singapore, the Covid-19 Recovery Grant will support workers who need more help while they find new jobs or go for training, he said.

This grant provides temporary financial support for workers in lower- to middle-income households whose earnings have been significantly affected by the pandemic.

“At the same time, I recognise that as the global economy goes through an even faster pace of change, the nature of jobs and skills will be changing faster, too,” he added.

“We will partner our business leaders, labour movement, and academics to study how to support employability and help those who falter, through measures that suit our context.”

'MIDDLE CLASS NOT FORGOTTEN'

In his two-hour speech, Mr Heng rejected a suggestion by Aljunied GRC MP Gerald Giam of the Workers’ Party that Singapore’s middle-income families were receiving little support for their cost of living.

Ms Jessica Tan, MP for East Coast GRC from the ruling People’s Action Party, earlier this week similarly raised concerns that the middle-income group may have been missed in the short-term support measures of this Budget.

To that, Mr Heng said: “ I would like to remind members of this House that the bulk of every Budget goes towards uplifting all members of our society, including the broad swathe of our middle class.”

He noted that the S$42 billion set aside this year for social spending and transfers comes on top of the Government’s investments in the economy to provide good jobs and its spending on security that would allow property prices to rise.

Some support packages, such as the S$100 worth of Community Development Council vouchers that will be provided to each Singaporean household, will also go towards helping the middle class.

Acknowledging the wishes of middle-income earners to be financially better off, Mr Heng spoke extensively about the measures that the Government has rolled out to help fulfil their aspirations.

First, Singapore keeps its housing prices lower than many major international cities and provides subsidies on top of that, so that Singaporeans can always have a home to call their own.

Second, the Government has strengthened support for families who have children to defray the cost of schooling and childcare through a mix of grants, subsidies and tax benefits, allowing children to get quality education and take on good jobs in the future.

The new S$900 million household support package that will be distributed this year will also help families cope with their expenses, he added.

Third, seniors can be assured that the Central Provident Fund (CPF) system will allow them to retire with greater peace of mind, and the new Matched Retirement Savings Scheme will give extra help for Singaporeans to meet the basic retirement sum. Through this scheme, the Government will match every dollar of cash top-ups made to the CPF retirement account of eligible members up to an annual limit of S$600, which can amount to S$3,000 over five years.

Lastly, the Government has been investing heavily into healthcare to meet the needs of Singapore’s ageing population.

“Individual Budget measures are useful enhancements that sit on top of our already significant social spending,” he said.

Over the past decade, the Government has been tilting the tax and transfer system in favour of lower- and middle-income groups, he said.

For 2021, middle-income household members can expect to receive S$3,500 this year while the highest-income households are instead paying S$9,500 in taxes, minus benefits, for each household member.

“It is also natural for us to look out for what is new in every Budget. But it is important for all of us to appreciate what is already there, and to see the Budget in totality, over the years.”

POST-PANDEMIC STRATEGY

Mr Heng in his round-up speech also laid out the country’s economic strategy emerging from the pandemic and the Government’s prudent fiscal strategy for the long term.

These, he said, are plans that were made with Singapore’s position within the larger shifting geopolitical forces in mind.

With the pandemic disrupting a geopolitical environment that has already seen tensions between the United States and China, Singapore can capitalise on its predictable and reliable nature as businesses rebuild their networks and supply chains.

Singapore, too, must ride on the rise of technology adoption and green development to emerge stronger and stay relevant to the world, he added.

“The years ahead will be crucial,” Mr Heng said.

While Singapore has done well socially and economically against the pandemic, ahead is a small window of opportunity to transform the economy and come out of the crisis stronger than before.

“I have laid out our strategy,” Mr Heng said, adding that whether it succeeds will depend on businesses continuing to innovate and workers seizing the change to retrain themselves.

“This is why I have given the name ‘Emerging Stronger Together’ to this year’s Budget statement. It is as much about ‘Stronger Together’ as it is about ‘Emerging Stronger’.”

Related topics

Budget 2021 middle income Heng Swee Keat

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