(Delivered in Parliament on 4 April 2016)
This year’s Budget Statement acknowledges that businesses are facing difficult and uncertain conditions. To this end, we see the continuation of some existing schemes to support businesses, such as the Wage Credit Scheme and an extension of the Special Employment Credit which provide a modest offset for wages paid to Singaporeans.
While these measures benefit employers and employees still on the payroll, the painful reality is that there is a significant proportion of Singaporeans who have lost their jobs or are at risk of losing their jobs. What is the size of this problem?
The Minister said that unemployment remained low at 1.9% (para B.11), but this percentage included foreigners in the computation. What about unemployment among Singaporeans? According to the Labour Market Report issued by the Ministry of Manpower last month (March 2016), unemployment among Singaporeans rose to 3.0% in December (2015), meaning that more than 58,000 Singapore citizens were out of work. As for long-term unemployment among residents, or those who had been searching for work for more than 25 weeks (6 months), for the whole of 2015, there were 12,700 residents in this predicament. The report further noted that among those made redundant and sought to re-enter the work force, only about half of them were able to do so within six months.
Underemployment
These figures paint a worrying picture but in all likelihood under-represent the problem. This is due to the definitions adopted in compiling the data. While the definitions used are in line with international norms, it is useful to elaborate briefly on why unemployment statistics likely under-represent the employment landscape. First, a person is considered “unemployed” only if he is out of work and actively searching for work. If a jobseeker is unable to find work and decides to give up the job search or to go into training, he is not considered “unemployed”. In addition, a person is considered “employed” in Singapore so long as he has worked for just one hour in the period in question.
Thus, a General Manager who loses his job and works just five hours per week at a fast-food chain counter is considered employed and off the unemployment statistics. Clearly, the plight of this General Manager deserves attention. One of my residents recently shared with me his worries about employment insecurity. Some of his friends, in their early 40s, had recently lost their jobs. They had decided to dumb down their expectations and found jobs in other industries, but the reduced pay was insufficient to meet their commitments, leading some of them to become Uber taxi drivers to supplement their income. Such persons are also not captured in our statistics. But are these displaced workers not worthy of attention? What stress befalls a breadwinner who loses his job, at a stage of life when he has to support children or elderly parents, service a mortgage and more? These stresses in turn have ripple effects on the quality of family life and the ability of children to concentrate on their studies.
Measuring Underemployment
Madam, it is time for the government to put in more effort to measure under-employment. Unlike unemployment, which refers to the extreme situation of a total lack of work, measuring under-employment will indicate to what extent a person is suffering from a partial lack of work. According to the International Labour Organisation (ILO), measuring under-employment is increasingly relevant for industrialised countries. The ILO noted that many countries were facing changes in the employment situation, labour market flexibility and the rise of various forms of non-standard employment; thus, new situations have emerged that can be regarded as underemployment. According to the 16th International Conference of Labour Statisticians, underemployment reflects an underutilization of the productive capacity of the employed population.
Measuring underemployment usually starts off with time-related measures, viz. the hours worked versus the hours that the employee would be available and willing to work. I note that the government has been putting out some statistics on time-related underemployment in its Labour Force Reports.
While looking at underemployment based on time is certainly useful, it does not present the full picture. Returning to the General Manager example, the fact that he works say 5 hours a week as compared to a full 50-hour week is one indicator; but it is also relevant to consider whether he is now drawing pay at a rate below what is commensurate with his qualifications and experience. A person’s earning potential is just as relevant as the hours spent at work.
In order for us to better understand the phenomenon of under-employment in Singapore, I call on the government to do the following:
First, the government can use the existing data it already collects and publish headline numbers showing not just unemployment; the headline numbers should include time-based underemployment, and the numbers of “demoralized” workers (those who have given up looking for work and hence drop out of unemployment statistics). Putting these three measures in headline numbers will ensure that public attention will be focused on these.
Second, the government, in time, should go beyond this to look into a substantive measure of under-employment and measure/publish that, eg. employment income versus the median income for that academic qualification and age OR previous employment income. This will give some idea of the extent to which people are downgrading expectations and taking up jobs that are below reasonable labour market expectations, just to make ends meet.
I believe that such additional measures will enable us to understand better the underemployment facing Singaporeans, so that appropriate policies and mitigation measures can be put in place.
Addressing and Mitigating the Impact of Job Loss
Coming back to the Budget measures, what does this Budget do for workers who lose their jobs? There is an Adapt and Grow Initiative, and the TechSkills Accelerator.
Adapt and Grow is stated to be targeted at those who face greater difficulty in finding jobs and for mid-career jobseekers. The emphasis is on inducing employers to hire through wage support to the employers, and on re-training and job-matching assistance. These are certainly laudable. But it may take some time before the jobseeker is able to find meaningful employment, through no fault of his own.
As for TechSkills Accelerator, it is not clear whether it is meant only for those already from the ICT sector or has a broader catchment. However, it is very ambitious. I concede that I am no ICT professional, but TechSkills Accelerator assumes that technical skills learning can be “accelerated”. For simpler level skills, that might be the case, but for specialised knowledge, I can imagine that it would take years of experience to master, just like other professions say engineering or law.
In this economic transition, there are hardworking Singaporeans and their families being pushed into limbo. As a society, we should devise some safety nets to give them some peace of mind.
To this end, the government should look into the feasibility of introducing redundancy insurance. One model could involve requiring workers resident in Singapore and their employers, to each contribute a very small % of the employee’s monthly salaries towards a fund. The fund should be geared towards helping workers who undergo involuntary unemployment, meaning those who were made redundant including those terminated with notice. The fund could gear towards giving a 6-month payout at a fraction of the worker’s last drawn salary (say 40%), subject to a cap, say based on the median wage. Such a modest scheme, of limited payouts which end after six months, will send a clear signal that only a temporary buffer is being provided, incentivising the worker to actively prepare to earn his own income again.
Such redundancy insurance has benefits for both the individual and society. For the individual, he will seamlessly have recourse to this buffer which he contributed to; he may not need to queue up at a social assistance agency and tap on public monies. He also need not grab the first job opportunity that comes along, but be able to take a bit of time to hold out for a suitable job, enabling a better employee to job fit and sustainability.
This Budget emphasises the need for innovation, which in turn requires people to feel secure. As pointed out by the panelists at Economic Society of Singapore post-Budget roundtable, better cushions for the unemployed will also encourage more people to venture out on their own and become entrepreneurs, an essential element of an innovative society (Straits Times, 30 March 2016, page C2).
Madam, economic restructuring and downturns from time to time will result in redundancies. It is also inevitable that if we succeed in our productivity and automation drives, people will be displaced from their jobs. We should devise a feasible scheme to tide our fellow citizens through these difficulties.