Tuesday, April 19, 2016

SDP’s Chee says he will push for retrenchment insurance if elected

Kenneth Cheng

April 17, 2016

SINGAPORE — Retrenchment insurance to help laid-off workers tide over periods of unemployment is a measure Dr Chee Soon Juan will push for in Parliament if he wins the Bukit Batok by-election, the Singapore Democratic Party (SDP) chief said on Sunday (April 17).

Citing retrenchment as the “number one concern” among the area’s residents, Dr Chee said that under the proposed scheme, retrenched workers would receive three-quarters of their last-drawn salary – capped at the prevailing median wage – for the first six months of unemployment.

Workers still unemployed after half a year would receive half of their last-drawn salary for the next six months. This would be further reduced to a quarter of their last-drawn wage if they are subsequently still out of a job.

This, he said, would provide temporary respite to workers, giving them “sanity” and allowing them to find jobs without panicking.

“Whilst your income stops, your bills don’t. They continue to pile up. You still have the kids to feed, the school fees … (and) your electricity bills to take care of. And (for) many of (the residents), there are elderly parents to take care of as well,” Dr Chee told reporters after a morning walk at the Bukit Batok Nature Park, where he was joined by a cadre of party members and his wife, Dr Huang Chih-Mei.

The idea of retrenchment insurance is not new. In the parliamentary debate on the Ministry of Manpower’s budget earlier this month, Member of Parliament (Aljunied GRC) Sylvia Lim had suggested the need for redundancy insurance.

Manpower Minister Lim Swee Say said in reply that the priority was to help workers re-enter the workforce through available schemes. And with more layoffs expected among white-collar workers amid the gloomy economic climate, the Government also announced it would expand existing schemes to help such workers should they lose their jobs.

For example, the Career Support Programme will be expanded from next month to include unemployed professionals, managers, executives and technicians below 40 years old if they have been jobless for at least six months, among other changes.

[The rest of the news article is on the plans for the by-election, which is not directly related to the issue of retrenchment insurance.]

Meanwhile, Dr Chee said his party was gearing up for “phase two” of its campaign on the ground, which will see it being “a little bit more targeted” in its approach.

This includes reinforcing the party’s message to residents the team has already met. The SDP will also “double up” on meeting residents they have not reached out to, including those who return home late at night.

“We might just concentrate more on the weekends, so the chances of catching them (are higher),” said Dr Chee.

On the social programmes the party was drawing up for Bukit Batok residents – which it first mentioned three weeks ago – Dr Chee said the party was in the final stages of ironing out the details and would announce them “probably sometime this week”.

These will focus on the elderly in the area, Dr Chee said, noting that he has seen during his house visits some “very tragic” cases of seniors being left alone. The party has heard such residents voice concerns about having only enough for three meals a day, with nothing else to do, and wants to look into their quality of life.

“It takes a toll on them, and they deteriorate very quickly,” he added.

Asked about Friday’s announcement by the National Solidarity Party that it would not contest the by-election, Dr Chee said the party was glad to have a “one-to-one contest” with the People’s Action Party (PAP).

“We’ve done our part as well in the past to ensure that the Opposition doesn’t split the votes and then let the PAP candidate squeak into Parliament,” he added.

The by-election is set to be a straight fight between Dr Chee and lawyer Murali Pillai from the PAP.

The Bukit Batok seat was vacated following the resignation of PAP MP David Ong last month over an alleged extramarital relationship with a grassroots volunteer.

Prime Minister Lee Hsien Loong said a by-election will be called “in due course”, but no date has been announced yet.

[Online comment:
I am not sure if Chee pushing for retrenchment insurance would be good. 
If anything, because he is pushing for it, he makes the issue political and then it becomes difficult to pass because, his proposal would attract resistance from the government, and counter arguments against it. 
In any case, his proposal is unrealistic, overly generous, and unoriginal. 
Unoriginal: Sylvia Lim had already proposed it recently.
And her proposal was not exactly new or original either. Just recent enough that this proposal by Chee sounds like a cheap attempt to copy and ride on a wave created by others. 
Overly Generous: Sylvia Lim's proposal was for 40% for 6 months after retrenchment. Chee proposes 75%, for 6 mths, then 50% for 6 mths, then 25%, (not stated for how long, but assume for another 6 months.) A more generous package means higher premium. Who's going to pay for it? If the premiums are lower, more will buy into it. If it is too expensive fewer will do so. Does Chee intend to make this mandatory? How... PAP of him. 
Unrealistic. And political-maneouvering. By proposing an overly-generous package, he is almost guaranteeing that the PAP would not agree. And then he can paint the PAP as being unsympathetic to retrenched workers, while SDP and Chee are champions of the worker.

Also he does not seem to be able to follow the dialogue. He is either stupid, not up to date with current events, or being deliberately obtuse. 
The PAP's rebuttal to Sylvia should be the next point in discussion. Not a proposal that ignores what has transpired and simply trumpeting old slogans that have been addressed.

The argument put forth by the PAP is that the govt would rather put effort in getting the retrenched workers re-employed, and that unemployment insurance is not required as retrenched workers get retrenchment benefits, which may be several months of salary which will tide them over as they seek re-employment. 
Does Chee's proposal address this? No.

If he were sincere about helping retrenched workers, he would consider the reality of the Singapore employment scene. If there is unemployment insurance (or retrenchment insurance), would this mean that companies would no longer give retrenchment benefits? Is this better for the worker? 
If companies here generally give retrenchment benefits, then should unemployment insurance kick in immediately? Or some months later?

Which insurance scheme (below) would cost more in premiums for the company and the workers? 
Scheme A (CSJ's proposal): 75% of last drawn salary for the first 6 months, 50%, for the next 6 months, and 25% for another 6 months. If and when the worker is re-employed, the payouts would cease. 
Scheme B: No payout for the first 6 months or the number of months of retrenchment benefits provided by the company. Then 40% of last drawn salary for 6 months. So if a retrenched worker got 8 months of salary as retrenchment benefit, there would be no payout for 8 months. If he is re-employed within 8 months, there would be no payouts either.
Companies that have a retrenchment benefit scheme would pay less retrenchment insurance premiums. Companies with NO retrenchment benefit scheme, would pay higher premiums because in the event of a retrenchment, the insurance would kick in immediately, and that means a greater risk for the insurance company.
Did Chee take into account the reality of the Singapore situation or is he just politicking again? And is his politicking helpful or more likely to drum up resistance to his idea so that the workers would NEVER get unemployment insurance? 
I do believe that unemployment insurance is the way to go for SG in an uncertain future. Sure, 9 out of 10 retrenched worker gets retrenchment benefit. But what about the 10th who did not? Sure we have very low unemployment rates.

Now. Today. 
Will that hold in the future? 
Lim Swee Say said that we do not need unemployment insurance, because unemployment in Singapore is low. Like the link suggests, saying we don't need unemployment insurance because unemployment is low, is like saying we don't need fire insurance because our house is not currently on fire.

Brilliantly short-sighted argument.

There is an interesting question in the online comment. Would an unemployment insurance (UI) mean that companies will drop their retrenchment benefit scheme and rely simply on UI. 

Short answer: It could.

Long answer: it depends on the terms of the insurance. The Insurance company would want to ensure that premiums for companies with no retrenchment benefits must be prohibitively higher. Another factor would be whether the company have re-employment fairs for their retrenched workers. And just like car insurance, the insurer can work in a deductible. That is, when there is a retrenchment, the company is required to pay the insurer $X per retrenched worker. If there are retrenchment benefits, and re-employment efforts, the $X can be low because there is very little risk that the UI would kick in for the majority of the retrenched employees.

If there is no retrenchment benefit, and/or if there are no re-employment efforts, then the $X can be very high, because UI payments would be sure to be paid out immediately (no retrenchment benefit), and for longer (no re-employment efforts). 

Retrenchment Benefit (RB) and UI could be aligned - for example, many RBs exclude very new employees - say less than 2 years of employment - from benefiting from RBs. The UI COULD also exclude such staff. This would keep the UI premiums low for the company. 

However the company may want the UI to provide a cover for new employees (who are usually the first to be retrenched in any downsizing exercise), so that they would not be doubly disadvantaged. If so the monthly UI premium would include a "rider" for new employees, and this would raise the premium for the employer. 

Another question is whether retrenchment benefits would be preferred or would UI payments be better? Would you rather have 3 months of salary as retrenchment benefit, or 6 months of partial salary?

That depends on your plans, and how soon you are re-employed. If you get 3 months severance package, and a job within a week of being retrenched, then the 3 months of retrenchment benefit is a bonus.

If you are close to retirement and do not intend to look for a job, the severance package could provide seed money for personal projects or investments.

Most workers should prefer a lump sum retrenchment benefit, rather than UI. But that may not have a bearing on the employers' decision. In the long run, it may simply make more sense for a company to use UI as default and only retrenchment benefit. 

In which case, the PAP's position may make sense. It may well be that UI will drive out RB which may be better for employees. 

So, the govt may need to step in and moderate. Companies that have an RB may be accorded tax rebates or other incentives, such as being allowed to purchase the basic UI cover. Companies without RB could be compelled to buy more comprehensive UI policy that either provides more UI payments, or longer duration of payments, or payment and duration may be dependent on the years of service by the employee.]

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