I remember a former boss telling me that I was probably too
intelligent to be of any use to anyone. I remember this backhanded compliment because
it’s a phrase that is often easily applied to our government officials.
Singapore is Confucius’s wet dream. We are a society that is
obsessed with the rule of the scholar. Our government runs like a well-oiled machine
staffed by the best and brightest. Singapore’s government pays wages comparable
to any private sector company and our argument is simple – you need to pay well
to attract top talent. The official view is this – our Prime Minister is not
the world’s best paid head of government. He’s a “value-for-money CEO,” meaning
that while he’s well paid, his salary is nowhere near that of the CEOs of General
Motors or JP Morgan.” Singapore famously stresses achievement. Our scholars are
sent to the world’s best universities and inevitably end up doing very well. The
system makes it such that the people at the top inevitably have the right
credentials.
Having said that, the question remains – have we hired people
who are so brilliant that they’re actually useless and don’t have a clue as to
what is actually happening? The latest example came to life when our Minister
for Manpower, Ms. Josephine Teo started arguing that, while the government will
keep an open mind, there was no need for Singapore to have any form of “unemployment
insurance,” which was something that Ms. Sylvia Lim of the Workers’ Party had
raised. Ms. Teo’s arguments can be found at:
As I’ve often said, I don’t disagree with the ideas behind
the Singapore government’s approach to the issue of tackling structural
unemployment. It is right to get people to focus on retraining and getting
people to move into second careers as old jobs disappear either through cheaper
sources of labor or automation (“the Jobs aren’t coming back”) rather than
giving them money for doing nothing. As a former “workfare” recipient, I also
agree that it is better to incentivize work rather than let people live off the
state. Workfare was never really enough to survive on but it gave you an
incentive to stay in a job.
The government is right in its philosophical approach. Better
to lend a helping hand to get businesses to create and save jobs and for people
to stay in jobs than to order businesses to hire people who are useless or paying
people to be useless.
Having said all of that, Singapore’s Economic Planners need
to realise that the mechanics of jobs has changed. People no longer join a
single organization until the end of their functional working lives. Work
stints have become significantly shorter. Our social system was designed for an
age where people joined an organization and stayed there for decades. These
days, you’re considered an museum artifact if you’re in an organization for
about five-years. My arguments can be seen at:
Ms. Josephine Teo has never been out of work and short of
her doing something monumentally criminal and getting caught, she’s going to
stay in her job until the day she chooses not to. As such, she has the luxury
of looking at the concept of “unemployment insurance,” as an indulgence.
Let’s look at the two key arguments that Ms. Teo made. The worst (that’s being politically correct) made was that a system of “unemployment insurance” would take away the hunger that people have to look for a new job.
Ms. Teo clearly does not understand the basic concept of
insurance and even if the Minister does not understand the basics of what
insurance is, she’s clearly not looked at statistics. If you take Ms. Teo’s argument,
you’d expect more people to die because life insurance gives their loved ones
money and health insurance would take away the incentive for people to look
after their health (hey, hospitals are hotels – let’s have a holiday there care
off the insurance company.) This is clearly not the case – life insurance has
not led to an increase in death and our hospitals have not been overcrowded by
people who don’t have an incentive to look after themselves.
The other point that Ms. Teo has failed to realise is that funding
for such a scheme can be done in a way that does not break the piggybank. The
CPF scheme for example is funded entirely by the individual and his or her
employer. Unlike the system in the Western world, our pensions are not funded
by the tax payer and our “pension concerns” are not so much not having enough
tax payers but whether individuals are saving and investing enough.
Furthermore, Ms. Teo forgets that she’s part of the organization
that sets the rules and is in a position to ensure that the system is designed
to suite her “key performance indicators” (“KPI”). Insurance has proven itself
to be a useful tool in pricing risk. Rather than “disincentivizing” good behavior,
insurance makes bad behavior expensive. Life insurance encourages people to
stay safe – my sister’s former boyfriend liked climbing glaciers – the insurance
companies avoided him like the plague because he had a high-risk hobby. Health
insurance has helped make unhealthy habits expensive. You pay a basic premium.
Then you get sick. The health insurance company pays your bill but then, your
premiums go up because you become a bigger risk. So, if you see how these other
insurances have helped people behave, whose to say that “unemployment”
insurance cannot be used to get people to behave in a way that encourages
people to stay employed.
The second argument that Ms. Teo made was the fact that an unemployment
insurance would discourage people from paying retrenchment benefits. Once again,
Ms. Teo fails to understand retrenchment benefits and unemployment benefits are
separate issues.
Ms. Teo is an intelligent woman or so her credentials say.
However, her dismissal of a concept of “unemployment” insurance showed that she
has not been placed in a situation where she needs to understand the people she
is supposed to serve. Isn’t it time for Singapore’s Minister’s to get back in
touch with the ground they are supposed to serve?
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