The idea of implementing an unemployment insurance scheme in Singapore has been mooted several times over the years, and it was again discussed at a recent Parliament session.
The pushback on its introduction has always been that such a scheme may lead to the unemployed not wanting to seek employment.
However, implementing this scheme and encouraging the unemployed to actively seek employment need not be mutually exclusive if the insurance scheme is carefully thought out and calibrated to avoid unintended pitfalls.
A potential unemployment insurance scheme could base its premium on policyholders' declared monthly income. In the event of verified unemployment, the monthly payout could be pegged at a certain percentage of the insured's last drawn monthly salary, subject to a maximum of 24 months' payout.
The payout could be calibrated in such a way that it would not see the insured falling into immediate financial hardship, but yet not be lucrative enough to discourage the insured from actively seeking employment, since the payout would be only a fraction of his last drawn monthly salary, and will last for only a period of time.
As the economy transforms and the employment landscape goes through structural changes, I believe more people will go through periods of unemployment during their career.
Such a scheme will go a long way in helping individuals and families to weather periods of uncertainty in their lives.
Luo Siao Ping