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Explainer: Is unemployment insurance on the cards in Singapore, and for what worker types? Experts offer differing views

SINGAPORE — Statements from various ministers here in recent years seem to signal the possibility that the Government may be mulling the option of reversing a long-held reluctance to give direct financial support to the unemployed.

Explainer: Is unemployment insurance on the cards in Singapore, and for what worker types? Experts offer differing views
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  • Recent statements by ministers seem to signal that the Government may be weighing the possibility of reversing a long-held aversion towards offering direct financial support to the unemployed
  • Some labour, business and human resource experts believe that recent market conditions might have led to a possible shift in policy
  • On the other hand, other experts are less convinced of an urgent need for such a drastic change, given Singapore's low unemployment rate

SINGAPORE — Statements from various ministers here in recent years seem to signal the possibility that the Government may be mulling the option of reversing a long-held reluctance to give direct financial support to the unemployed.

In some countries where such payments are made, they are known as "unemployment benefits" or "unemployment insurance". In Australia and Britain, for example, they are colloquially dubbed "the dole" in the sense that money is doled out to the jobless.

Sometimes, these payments come with strings attached. A recipient must apply for a certain number of jobs in a set period or perform community service. Debate rages over whether such payments provide a disincentive to seek work.

In Singapore, since at least last year, ministers have said that the Government is carefully considering financial support to people who have been retrenched.

In January this year, for example, Finance Minister and Deputy Prime Minister Lawrence Wong acknowledged how displaced workers “may end up just taking the first job available, even if it is not a good fit for them” simply because they have families to support.

Mr Wong, who will deliver Singapore's next Budget statement next Tuesday (Feb 14), said that the skills and training eco-system ought to be reviewed to provide “re-employment support”, though in a way that does not “erode the incentive to work”.

"It is about re-employment support. Providing some form of financial cushion to workers, while enabling them to upgrade their skills," he said.

TODAY spoke to some experts to ask why this change might be coming, when it might happen, and whether it has anything to do with the recent wave of high-profile layoffs in the technology sector.


In February 2020, then-Manpower Minister Josephine Teo pointed to reducing workers’ motivation to find work as being among the “serious downsides” of rolling out unemployment insurance.

This was in response during the Budget debate then to the Workers' Party suggestion for such a scheme — which the opposition had raised as early as during its General Election 2011 manifesto.

Mrs Teo said that although the Government would “keep an open mind” on such proposals, the existing approach in helping workers retrain or pick up new skills was the “more sustainable” one.

A few months later in July 2020, Senior Minister Tharman Shanmugaratnam said that unemployment benefits may be considered if Singapore ends up with high structural unemployment.

Then, in February 2021, Deputy Prime Minister Heng Swee Keat, who was then Finance Minister, said that it was “more sustainable to ensure that workers maintain a source of income” than to give handouts when they were unemployed.

He said that in reply to calls from three Members of Parliament (MPs) — one each from the opposition and the ruling party, as well as one Nominated MP — to reexamine the possibility of unemployment insurance.

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A task force was formed in 2020 by the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF) to look at how the Government can improve employment and employability support for professionals, managers, executives and technicians (PMET).

Among its list of recommendations released in October 2021 was “introducing a national transitionary support framework to provide supplementary income relief and assistance to those who are involuntary unemployed, supplemented by active labour market policy”.

At a media event in November last year, Manpower Minister Tan See Leng said that his ministry was “looking very carefully at how to provide better support to displaced workers”.

PMETs, which are largely not unionised, now form a significant and growing proportion of the domestic labour pool, accounting for 64 per cent of all employed residents in 2022, up from 62 per cent in 2021.

Although retrenchments used to be typically associated with older workers in sunset industries, more than 1,200 retrenchment notices from July to mid-November last year involved PMETs from tech companies, with seven in 10 of the affected workers aged 35 and below.

Since then, more retrenchment exercises among high-profile companies have been reported.

Because of technological changes, we’re increasingly starting to see people finding themselves unemployed involuntarily. Some financial support would help to cushion this impact and lessen the financial stress and burden facing these individuals.
Dr Kelvin Seah, senior economics lecturer at the National University of Singapore

Some experts who spoke to TODAY said that such recent layoffs, involving young professionals in a promising industry, could be an indication of a more volatile labour market, which would necessitate a re-examination soon on support for retrenched workers.

Dr Kelvin Seah, a senior economics lecturer at the National University of Singapore (NUS), said: “Because of technological changes, we’re increasingly starting to see people finding themselves unemployed involuntarily.

"Some financial support would help to cushion this impact and lessen the financial stress and burden facing these individuals."

Associate Professor Trevor Yu from the Nanyang Business School at the Nanyang Technological University said that Singapore’s workforce is becoming more diverse, with more workers on shorter-term contracts or on a gig basis.

“This necessitates thinking about how we can support transitions between jobs and career paths, which I think will happen more frequently in the future economy.”

Associate Professor Walter Theseira, a labour economist from the Singapore University of Social Sciences, underlined the point that being in a union does not necessarily bring retrenchment benefits.

He said that like PMETs, union workers also have no statutory protection against retrenchment and no statutory entitlement to retrenchment benefits. 

What they do have is the benefit of a union that can negotiate for such protections or benefits, he said, though “such provisions may be unenforceable in any case” if the company they worked for is failing. 

Thus, if any form of unemployment benefit were to be rolled out, it should cut across all worker groups.


Experts were divided on how soon, if at all, unemployment benefits would be rolled out here, with four out of nine opining that it could be possibly announced in the upcoming Budget announcement.

Those who think that it is unlikely to come this soon pointed to the low unemployment rate of 2 per cent as of last December — high-profile layoffs notwithstanding — saying that this is indicative of a strong labour market that does not urgently need such reforms.

Mr Richard Bradshaw, managing director of recruitment firm Ethos BeathChapman Asia, said that supporting workers in reskilling or upgrading efforts and helping them to find new jobs were still the Government’s long-standing preferred “modus operandi”.

Unemployed workers were the “most prime targets for upskilling and reskilling”, he added. And given their small numbers, he “does not expect more direct financial support to be discussed during the Budget”.

Although ambivalent about the timing for such a policy shift, Dr Kumaran Rajaram, a senior lecturer at Nanyang Business School, highlighted that it has to be “holistically, thoroughly and carefully reflected upon” before implementation.

“Hence, will it be better to focus on how to further improve and add on to the existing employment support which is already available?” he suggested, referring to reskilling efforts, career support programmes and ComCare — a scheme to help low-income families.

Economist Song Seng Wun from CIMB Bank said that even during the recent Covid-19 pandemic, though some temporary cash aid was given to the unemployed, the Government’s main focus was still to work to ensure that Singapore workers were not laid off in the first place.

This was done through training and wage subsidies through companies, rather than direct handouts, he noted.

Assoc Prof Theseira said that income support for the unemployed should be looked at carefully because it is “the most important remaining area to tackle”, given that upgrading and reskilling support have long been carried out already.

He, too, acknowledged that the strong labour market meant that such a policy might not be in the cards soon, and that there was more time for further consultations and discussions before implementation.

Veteran human resource practitioner Adrian Tan, along with Dr Seah of NUS, said that the recent comments by the deputy prime minister and manpower minister were signals of such a policy shift likely happening sooner rather than later.

Mr Suhaimi Salleh, president and chief executive officer of consultancy and professional training firm SSA Group, looked to factors outside the labour market as potential indicators for the need of such a policy soon.

“While the labour market is still strong, the retrenched should be given financial support especially with the high inflation rate and the recent increase in the Goods and Services Tax – making it harder for families with retrenched individuals to fend for themselves with the rising cost of living,” Mr Suhaimi said.


Should such a policy be rolled out, the experts largely agreed that it should not only target PMETs even though they form the larger part of the labour market and were the group focused on most recently by the NTUC-SNEF task force in their 2021 recommendation.

Mr Suhaimi said that generally speaking in the company’s experience of conducting training since the 1980s PMETs were in a better position and more willing to spend “thousands of dollars” for courses that they felt would help them in the long run.

On the other hand, blue-collar workers are “more sensitive to price factors” when picking courses and have a preference towards shorter programmes, to minimise time away from gainful employment.

This may point to a need to extend such benefits to non-PMETs as well, he said.

Mr Joshua Yim, chief executive officer of recruitment firm Achieve Group, said that given the typically smaller disposable income of non-PMETs that may limit their ability to save up for rainy days, such unemployment benefits should be handed to them as well.

He noted the existing assistance schemes for unemployed persons from low-income families such as ComCare, but said that these can be further expanded to cover those who are outside of the income ceiling and may fall through the cracks.

A few experts felt that Singaporeans by and large would want to “save face” and not want to remain unemployed for long, even if interim assistance is handed out to them. On that premise, concerns about individuals being less unmotivated to find jobs because of the safety net may be overstated.

Regardless, safeguards such as linking the handouts to the individual’s retraining or job search efforts, and calibrating the amount to a sufficient but not extravagant level, can be looked into to prevent the minority who might want to take advantage of such programmes.

Mr Tan the veteran human resource expert said it is inescapable that for any given policy, there is bound to be a small minority of people who exploit the system to their advantage.

However, this concern alone is not enough to hold back efforts that can benefit workers who sometimes end up involuntarily unemployed out of sheer luck despite their best efforts.

“I think we have to be confident that the majority of our citizens are actually honest, hard working people not out to game the system,” he added.

Related topics

Lawrence Wong unemployment layoff retrenchment

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