Friday, February 28, 2020

We’re Not Asking for the Lottery,


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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Maira Gall