18 January 2005
Our economy has been very volatile in the past seven years, since the Asian financial crisis. The swings in fortunes have led to many retrenchments. While the manufacturing sector had constantly restructured over the past 3 decades, this time round the services and public sectors also restructured. Significantly, many executives also were affected. Those who lost their jobs had to make painful adjustments.
Employees therefore feel insecure about jobs and income. This sense of insecurity is only beginning to assuage as the economy recovers. The news that employers are hiring, that unemployment has dropped, and that employers are paying higher bonuses, is slowly restoring confidence. However, the ‘feel good’ factor is missing for those who lost their jobs. Those who have found new jobs suffered big pay cuts. Others have yet to find stable jobs, and are classified as the long-termed unemployed, or structurally unemployed.
Even those who were not affected by retrenchments have been apprehensive. Each retrenchment that is reported – especially in areas that previously seem secure, that seem to offer lifelong employment – renews this sense of insecurity.
The truth is: we must expect greater volatility in the economy. As global competition intensifies, we should expect to change jobs several times in our working career.
Does this mean that we will be constantly on edge, feeling insecure? How can employees regain their self-confidence in a more volatile economy? How can they feel that Singapore is a land of opportunity? If we have a social safety net that helps us through the economic cycles, then each of us would be self-confident.
The key word is employability. If an employee stays employable, he can move from one job to another. It will not be a big problem to lose a job, because he can find another one. To stay employable, he must have relevant skills. Therefore the answer is regular training and retraining. Therefore the first piece of a good social safety net would be the availability of training and the means of paying for training. We have put in place the framework for both. I need not recount what we have. However, we must not continue to think that training is the responsibility of the employer and/or the government. I feel we have to change our mindset – we should consider upgrading our own responsibility. It is as much the responsibility of the individual as it is of the employer or government.
How can we make the individual take responsibility for his training and retraining? Mere exhortation will not go far. One way is to establish individual learning accounts. As the name implies, the funds can only be used for training. This year three co-operatives linked with the National Trades Union Congress will start a pilot project. Each employee will have an individual training account. It will be real money, with co-contributions from employer and employee. If the pilot programme works, then the concept can be adopted by other employers.
The second piece of the social security net would be funds for living expenses when an employee is in between jobs. Today employees rely on retrenchment benefits – but this is not reliable. Some companies retrench when they are so broke they cannot pay retrenchment benefits. A better way is to save for the rainy day. Not everyone saves, when it is voluntary. In most societies, the lower 40 per cent of wage earners are unable to save. As such, employees should be assisted to save. Some employers already have programmes to help employees to save. We urge more to do so. The same three NTUC co-operatives that are setting up individual learning accounts are also setting up individual savings accounts for employees.
The third piece of the social security net would be cover for medical expenses, when one is unemployed. The cost of outpatient treatment would not worry most people. It is the cost of hospital treatment that is the concern. Here we already have a system that is centred on the employee – the Medisave and Medishield plans. Medishield has degenerated, and it now no longer fulfill its original objective of saving people from worrying about large hospital bills. A review is underway. Mdm Halimah mentioned yesterday some of the desired outcomes of the review.
Each employee, armed with these three pieces of a social safety net, should therefore be able to face the volatile economy with greater confidence.
But where are the jobs?
Both Members for Hong Kah GRC, Dr Amy Khor and Dr John Chen, were absolutely right when they said yesterday that the issue is still about jobs. Job creation is a key priority of government. Jobs come from new investments. Hence we do all that we can to secure new investments, be it political stability, good infrastructure, a friendly tax regime or a flexible labour force.
But are these jobs suitable for the long-term unemployed, many of whom have low skills? We have to find them somewhere else, in existing jobs in the domestic services, for example. We have had some successes, in cleansing, in textiles, in patient care. More can be done, and more must be done. I am glad Members agree we should do more. The NTUC targets to do 10,000 such jobs.
Sir, there is growing concern about financial security in retirement. Often our people are described as asset rich but cash poor. Our compulsory savings system, the Central Provident Fund, is considered inadequate. Some have surfaced the possibility of a pension system. The proposal is for a limited pension. But that is how most pensions started. When the pension system developed in Europe, it worked like a dream. Then more demands were put on the system, and today pension systems the world over are in trouble – from Japan to the United States to Europe, all need serious revamp.
On June 1 last year, the Business Times carried an article on it.
“Pension plan funding across the world is much like a dragon that has just begun to emerge from its cave. Spurred by stock market declines, poor investment plans, the beast is beginning to inflame the political process.”
