Wednesday, March 30, 2016

Economists call for unemployment benefits as safety net for innovators

S’poreans also need to be prepared to ‘break the mould’ to push for transformation


MARCH 30, 2016

SINGAPORE — With transformation a key word in Budget 2016, and small and medium companies getting loan assistance and corporate income tax rebates they had long asked for, economists yesterday said unemployment benefits may be needed to give innovation a bigger push and to help workers who may lose their jobs in the process.

Policymakers have said Singapore needs to create value in the next phase of its economic transformation, and economists at a forum on the Budget organised by the Economic Society of Singapore said measures such as the Automation Support Package worth over S$400 million show that the Government wants to support certain forms of investment by firms.

But automation will have negative consequences for professionals, managers, executives and technicians (PMETs) whose jobs involve mainly routine tasks, said Assistant Professor Giovanni Ko of Nanyang Technological University at the forum yesterday.

For this group of lower-end PMETs, there needs to be some kind of safety net, he said.

“You can’t just have a push towards automation without something to help catch these people who will probably lose their jobs.”

Economists have in the recent past come to a more nuanced view of jobs that are more susceptible and resistant to automation, said Asst Prof Ko. Those that involve abstract tasks requiring creativity and problem solving, which are largely occupied by mid- to high-end PMETs, will benefit from automation, he said.

Manual jobs that require flexibility, judgment and common sense, as well as sensory and motor skills that humans have refined over the millennia are “quite difficult to automate, contrary to conventional wisdom”, he said.

The experience of Europe and the United States has shown that jobs in production and office/administration, and that were middle-paying, were among the ones affected by automation.

Other panellists at yesterday’s forum said unemployment benefits could aid in Singapore’s efforts to encourage innovation.

Put simply, one in 10 of these enterprises succeeds, but the people behind the remaining nine still have mortgages to pay, said Mr Jimmy Koh, managing director and head of investor relations and research at UOB Group.

Suggesting unemployment insurance in some form, OCBC Bank’s head of treasury research and strategy Selena Ling said: “I think if you want people to take risks, you want people to give up their bread-and-butter kind of jobs to start up companies, try new things, see the world, fail nine times before they get one right ... definitely you have to have some form of support infrastructure.”

To get more of the wider public to understand this year’s Budget and what the Government is trying to achieve, EY partner Luis Coronado suggested a public relations campaign sharing success stories.

But Singaporeans also need to be prepared to break the mould, he said. “How many of you will be happy if your child quits university because he’s going to start an enterprise and be the next Bill Gates? So we’ve got to start by ourselves believing in this.”

On efforts to get Singaporeans to embrace lifelong learning, Ms Ling noted some inertia, for instance, among people even thinking about how they wish to use their SkillsFuture credits.

This year’s Budget, announced by Finance Minister Heng Swee Keat last week, was fiscally prudent and fairly balanced amid a lukewarm global environment, the economists said.

Aside from the S$4.5 billion Industry Transformation programme aiming to transform industries and enterprises through innovation, its social measures included the Silver Support Scheme with quarterly payouts for lower-income elderly.

[There are two arguments or two points here.

One, as companies automate, PMETs are going to lose their jobs, and there needs to be a safety net for these people. This is strictly a welfare safety net for those affected by innovation, or rather automation/computerisation.

Two, entrepreneurs taking risks and failure is very likely and this will impact on their families and their home. They will likely have mortgages, and a business failure may well risk their home.

The second part of this article also covers how to make Singaporeans take more risk.

The analysis by the economists is one dimensional. Shallow even. Yes, unemployment insurance is one answer. 

But go further. The other strong reason is our culture of home ownership. Can we ease up on that?]

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