Retrenched workers getting zero or smaller payouts last year ticks up

DECEMBER 29, 2016

SINGAPORE — The soft economic conditions last year took its toll, with fewer employers paying retrenchment benefits to workers they laid off, with the size of the payouts also shrinking, a periodic survey by the Ministry of Manpower showed.

Over nine in 10 companies (90.6 per cent) gave payouts, down from 94.3 per cent during the last survey in 2012, but similar to the proportion in 2008. The drop was caused by non-unionised companies, with 89.3 per cent paying retrenchment benefits, versus 100 per cent of unionised companies.

Large businesses, defined as those with at least 200 employees, were more likely to compensate laid off workers (97.5 per cent) than smaller firms (87.0 per cent).



In terms of retrenchment packages, only 52.3 per cent of companies compensated retrenched workers with one month of salary for each year of service, plunging from 62.8 per cent in 2012. More bosses chose to give lump sum payouts of one to two months’ salary regardless of how long the employee has been with them (17 per cent, up from 7 per cent).

Again, more unionised companies offered compensation pegged to years of service (70.4 per cent versus 49.5 per cent).

Last year, 15,580 workers were laid off compared to 12,930 in 2014.

Based on preliminary estimates, the number of layoffs has reached more than 13,600 in the first nine months of the year, the highest since the global financial crisis some seven years ago. The number of workers laid off for the entire year is projected to surpass last year’s figure.

[Related stories:
"No need for unemployment benefits"

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.

Another comment response:

More importantly, 9 out of 10 retrenching firms provide retrenchment benefits. Nine out of 10 retrenched worker receive retrenchment benefits. That's GREAT! If you are one of the 9.
But that also means that 1 in 10 do not get any retrenchment benefit. So what does Mr Lim Swee Say say to him? "Too bad"? "Eat shit and die"?

From a comment on this article:
"Chee proposes Retrenchment Insurance"

My previous comment from the above story:

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.

As fewer companies (comparatively. Still about 90% give) pay out retrenchment benefits, the argument that RB are better than Unemployment Insurance or Retrenchment Insurance, loses credibility. For now at 90%, it is still defensible. But since RB are not a legal requirement, it does not afford the employees legal protection. That said, 100% of unionised workers receive RB. And more bosses are going with fixed RB of one or two months salary regardless of years of service. At what point will the govt turn to Unemployment Insurance?]