Proposed insurance for retrenched workers received positively, says MP

Opposition party proposes unemployment insurance, which will give financial assistance for six months

Proposed insurance for retrenched workers received positively, says MP

Insurance News

By Gabriel Olano

During a session of Parliament on Monday, Workers’ Party (WP) of Singapore repeated its proposal to establish an unemployment insurance scheme to help retrenched workers while they search for work, saying that there had been a positive reception to the idea during a public consultation.

WP member Daniel Goh said that the proposed insurance scheme will help alleviate financial pressure on employees that have been cut from their jobs, especially older ones who may find difficulty finding work again while supporting their children or elderly parents. He also added that this could reduce insecurity among younger workers.

According to a report by Channel News Asia, the proposal requires a monthly contribution of 0.1% of a worker’s monthly salary, shared between employer and employee, leading to an average premium of SGD3.80 per employee.

In the event of retrenchment, the insured will receive payouts of SGD1,200 per month for six months. Goh cited several other countries, such as Canada, Japan, and South Korea, which have this type of insurance. He said that if “properly calibrated and launched in a timely manner", the fund can become self-sustainable with minimal cost to the government.

In her response, Second Minister for Manpower Josephine Teo said that the 0.1% premium is “too good to be true”, given South Korea’s system had a premium of 1.35% in 2013 and 2.2% at present. Teo said that for the system to work in Singapore, the premium should be between 1% and 2%.

Teo was also sceptical about the proposal, saying this may reduce the incentive for people to find work. She cited data from Denmark where many of those receiving unemployment insurance wait until the payouts dry up before looking for work again.

Related stories:
Foreign domestic workers to get expanded insurance coverage
Singapore’s Workers’ Party proposes insurance scheme for the unemployed
Japan’s employment insurance premiums to hit record low

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