Jo Teo Rejects Retrenchment Insurance Safety Net because those Jobless will become Lazy

Second Minister for Manpower Josephine Teo rejected the Workers’ Party’s proposal of an insurance to protect retrenched workers in parliament yesterday.

She said the most pressing reason against implementing such a safety net is it would encourage those who are jobless to put off finding employment.

Ms Teo referred to a study in Denmark, which claimed that while many get a job within the payout period, many more wait till just before payouts expire before getting a job.

This is the second time that the WP has pushed for a “Redundancy Insurance” – a fund which retrenched persons can tap on to sustain themselves when they are put out of job.

Non-Constituency MP Daniel Goh said that the Redundancy Insurance scheme would reduce financial pressure on those who find it harder to get re-employed, especially on older workers above the age of 40.

He said that the scheme would also reduce insecurity for younger workers, who are being increasingly laid off.

The WP’s proposal calls for monthly contributions of 0.1 per cent of monthly salary shared between employers and employees, which works out to an average of S$3.80 per worker.

This would mean up to S$1,200 payout monthly for six months.

Prof Goh said that such systems exist in other countries like Canada, Japan and South Korea, and that the proposed scheme has been adapted to the local culture, situation and existing programmes.

He added that if it is “properly calibrated and launched in a timely manner”, the fund could become self-sustainable in the long run and cost close to nothing to the Government

The scheme would also reduce under-employment, as retrenched workers will not jump into the first job they get out of desperation, and eith the financial independence provided by the payouts, workers can retrain without worrying, or getting distracted.

To this, Ms Teo said that the PAP government’s solution to unemployment is job creation, and this is done through programmes which help the unemployed learn new skills to find jobs.


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