Payout of S$6,000 for the involuntarily unemployed meant to keep ‘handout dependency’ at bay, say experts

SINGAPORE: The amount of financial aid for the involuntarily unemployed is meant to support jobseekers while ensuring that welfare dependency does not kick in, said economists and sociologists. 
Under the new SkillsFuture Jobseeker Support Scheme, lower- and middle-income workers who have lost their jobs would get up to S$6,000 (US$4,600) over a period of up to six months. 
This was announced by Prime Minister Lawrence Wong during his National Day Rally speech on Sunday (Aug 18), in a major shift in Singapore’s approach towards helping the unemployed.
Eligible jobseekers must also do their part by going for training, career coaching and job matching services.
Experts told CNA that the amount of financial assistance cannot be too high or last for too long, as it could lead to undesirable outcomes.
If the amount is too high, behaviours might change and a worker’s motivation to keep up the job search might be lowered, explained Mr Christopher Gee, deputy director at the Institute of Policy Studies (IPS).
“Also, the higher the amount of financial support, the more costly the programme will be,” said Mr Gee, who is also a senior research fellow heading the Governance and Economy department.
Sociologist Tan Ern Ser noted that with the maximum financial support of up to S$1,000 a month, retrenched workers are likely to have to reach into their savings or depend on family members for support. 
“If it is just at most S$1,000 a month, then it is best seen as a token sum, especially with the inflation that is still with us, and therefore unlikely to lead to a mindset of welfare dependency,” he said.
“The measure seems more like a symbolic gesture, and sticking close to the fundamentals of self-help as the first line of defence,” added Dr Tan, who is an adjunct principal research fellow and academic adviser at Social Lab at IPS.  
Manpower Minister Tan See Leng will provide more details about the new scheme.
According to Workforce Singapore’s (WSG) website on Monday morning, the scheme would provide support to retrenched Singaporeans who were previously drawing an average monthly income of below S$5,000, while they look for a new job.
However, as of 3pm on Monday, the S$5,000 figure was removed, and the website stated that the scheme is for “lower- to middle-income retrenched Singapore citizens”. 
Responding to CNA’s queries, a spokesperson from WSG said: “More details of the scheme will be made known at (the Ministry of Manpower’s) upcoming announcement and details of the event will be made known very soon.” 
Dr Tan said that the name of the scheme already provides some clues about the eligibility criteria. 
“It is packaged as a jobseeker support scheme, and thereby a policy measure to facilitate re-employment rather than produce a handout dependency,” he said. 
Associate Professor Walter Theseira from the Singapore University of Social Sciences (SUSS) noted the conditions laid out by Mr Wong in his speech, such as going for training.
“Workers on the scheme would have to set out a clear plan for achieving their targets in terms of training and employability during the six months of the scheme,” he said. 
“They should be doing this with the support of the career services provided by the government or partners during the scheme.”
He added that from the experience of other countries, it is often the case that job matching rates and employment seeking go up significantly only towards the end of such schemes. 
This suggests that “at least some workers are not searching for work sufficiently while there is still a long runway of benefits ahead, or are not taking up work offered in the hopes of finding better jobs”, said Assoc Prof Theseira. 
“It points to how careful case management is important for improving the prospects of workers on the scheme,” he added. 
Experts say financial support for the involuntarily unemployed is typically higher in quantum overseas. It also lasts for a longer duration. 
It is also common for unemployment support schemes globally to be conditional, said Assoc Prof Theseira. 
“That is – paying out only if the covered worker meets some criteria in training or looking for work,” he explained.
Mr Gee said that for example, the unemployment benefit scheme in New Zealand offers payouts to involuntarily unemployed residents and citizens on a weekly basis that vary according to age and personal circumstances such as marital status and household arrangements, ranging from NZ$262 (US$159) to NZ$495.  
This amounts to about NZ$1,980 a month, which is S$1,574 – more than 50 per cent higher than the current maximum quantum on Singapore’s scheme. 
Mr Gee added that participants are obliged – failing which they may lose the benefits – to look for work for at least 30 hours a week, attend job interviews that have been arranged, as well as undertake career counselling.
The unemployment support of other countries such as those in the European Union is higher. 
According to business news site the Visual Capitalist, in Luxembourg, the involuntarily unemployed can receive support of up to 87 per cent of their previous in-work income, for up to one full year out of work. 
Assoc Prof Theseira said that in terms of duration of support, Singapore’s scheme is also on the lower end of the spectrum with up to six months of support, with many schemes in the EU providing extended support, like in Luxembourg’s case. 
In Spain, for instance, unemployment benefits can last for up to two years. 
Judging from the experiences of other countries, there is a good chance that the details of the scheme will change along the way, the experts said.  
“Globally, all such schemes have been tweaked over time based on experience,” said Assoc Prof Theseira. “It is not possible, even with the benefit of international research, to avoid all issues or to design the ideal scheme immediately, as the employment context differs widely from country to country.”
He suggested that with the benefits appearing to be “somewhat less significant” for middle-income workers, there is probably a need to examine that group closely to see whether they “fall into some gap”. 
“If, for example, they aren’t eligible for the SkillsFuture Mid-Career Training Allowance (of up to S$3,000 a month) which is much more generous, then what can be done for them if they find the benefits insufficient compared to their last drawn income?” he said.
Mr Gee noted that the government tends to take a “gradual approach” to such social support schemes, which could explain why the initial support of up to S$1,000 a month could appear on the low end. 
“The government tends to take a gradual approach – start in small steps, see if more is needed, then if there is strong evidence that more is needed then increase subsequently,” he said.  
“If it is too generous and does affect behavioural change amongst those unemployed but not for the better, it is hard – if not impossible politically – to reduce the benefit.” 
As to why such support is being introduced now, economists said it is in recognition that the labour landscape has changed in the last few years. 
“Over last decade or so, we are getting shorter, sharper shocks,” said veteran economist Song Seng Wun, citing black swan events like the COVID-19 pandemic. 
“And on top of that, you now have technology that is rapidly upending business practices … so perhaps in anticipation that there will be more of such unplanned interruptions … It’s good to have another way of looking at labour support,” said Mr Song, who is an economic advisor at CGS-CIMB Securities. 
The new scheme comes amid a spate of high-profile layoffs, with the number of retrenchments in 2023 more than doubling from the year before.
Firms like Lazada, Amazon, Temasek-backed online cashback platform Shopback, Ninja Van and Citi were among the companies that recently announced layoffs.
Assoc Prof Theseira said there is a growing concern that mature workers may be permanently derailed from a stable career upon losing their job, and could be underemployed for many years or the rest of their lives.
He added that the growth of the gig economy and contract work has probably contributed to this, “by creating pathways to employment that are not considered desirable, but are still taken up as an alternative to unemployment”. 
“Thus, resetting this with policy is important to avoid the prospect of a larger fraction of Singaporeans, especially mature workers, being structurally under-employed,” he said.