Singapore’s only elected opposition party, the Workers’ Party (WP), proposed in parliament yesterday (Dec 12) a national unemployment insurance for only Singapore employees that provide 40% of the last drawn salary up to 6 months.
Contribution for the unemployment insurance will come from a S$1.90 monthly premium payment for a worker with a median wage of S$3,782 in 2014. No additional taxes is required to fund the scheme.
The social security insurance proposal is to help retrenched workers who are actively finding employment and prevent disruptions to mortgage payments, healthcare, utilities and other monthly overhead costs.
The WP proposal also took special care for the low income, with provisions giving low income workers earning between S$500 to S$1,000 a month, a minimum S$200 payout on top of the 40% of their last drawn income.
Economists in the private sector lauded the proposal as prudent and praised the premium contribution as affordable for all.
However, the Singapore ruling party shot down the idea and claimed that the unemployed would get too “comfortable”. Pasir Ris-Punggol GRC MP Zainal Sapari, said that it is a moral hazard to help the unemployed with benefits:
“Similar schemes in other countries ran into problems, including not having enough time to grow the fund such that it could cover the payouts during an economic downturn. Having such a scheme may also create a moral hazard, where workers would intentionally make themselves redundant to get the payout.”
There is however no mention of “moral hazard” when the ruling party recently passed new laws allowing online gambling and the opening of casinos.