SINGAPORE - With Singapore expected to face greater economic uncertainty and turbulence after the Covid-19 crisis, coupled with longer-term trends of an ageing population and rising healthcare costs, Singapore will need to strengthen social support for the people.
"The Government is not ideologically opposed to any proposed solution," said Prime Minister Lee Hsien Loong on Wednesday (Sept 2), though he warned that the impact of such solutions has to be assessed carefully.
"We know greater challenges lie ahead. We need to do more, and we are ready to do more. The question is: What more will we need to do? And what's the best way to do it?" he said, speaking on the third day of the debate on the President's Address in Parliament.
Singapore's approach to solutions has not been based on ideology, but rather has been pragmatic and empirical, with the Government making the best use of resources to meet the needs of different groups in society in a targeted manner, said the Prime Minister.
"Because if we help everyone equally, then we are not giving more help to those who need it most."
For instance, older workers, who tend to draw higher salaries than younger workers, but who may have skills that are less current, will find it harder to find another similar job at the same pay if they lose their jobs. This puts them at greater risk of long-term unemployment.
Solutions like unemployment insurance can offer older workers "transient relief" at best, said PM Lee.
A better approach, he said, is the retraining and upskilling of older workers, as this will enable employers to continue finding value in them, and to be less likely to make them redundant.
"And if the older worker does get retrenched, with these skills, he or she can find a new job more easily."
He added: "The best unemployment insurance is, in fact, the assurance of another job."
Schemes like the Workfare Income Supplement and the Progressive Wage Model, which will be extended to more sectors over time, have also made a material difference to low-wage workers, with real wages of the bottom 20 per cent growing consistently faster than wages in the mid-range, he said.
Singapore should take some time to assess the landscape after Covid-19 to see how things unfold and what specific problems develop, said PM Lee. "We must keep an open mind as we build and improve on the systems we have, and consider solutions that can work in our context."
This work involves going beyond merely floating ideas such as minimum wage or unemployment insurance, but assessing their impact carefully, like looking at who wins and who loses in the workforce, and how small and medium-sized enterprises (SMEs) and the public will be affected by the measures.
"We must identify pragmatic solutions which will make a real and sustainable difference, and give people justified assurance that when they need help, they will get the help that is relevant to them. And it must not create new problems in the process, for example, by eroding our spirit of self-reliance."
KEEPING PROGRAMMES FISCALLY SUSTAINABLE
One permanent imperative in coming up with new schemes is to keep programmes fiscally sustainable, PM Lee stressed, adding that Singapore's social safety nets should be paid for out of current revenues as a matter of principle.
"We should not draw down on what we have inherited, nor should we mortgage the future of our children," he said.
After several generations of frugal prudence, Singapore has managed to build up significant reserves, he added. "Now the opposition says: Show me how much we have in our reserves, before I decide whether to support your Budget and tax plans... Basically, they are asking: I have something in the bank already. How much of it can I touch?"
Such an attitude held by the opposition is "fundamentally the wrong approach", said the Prime Minister. Singapore's founders, who were building for the future, had not held such an attitude, he added.
"They never asked themselves whether they had too much savings... Things were so uncertain, and no one knew what the next day would bring... it was never a question of how much reserves would be enough, but whether we could steadily squirrel away a bit more in our reserves, year after year, decade after decade, as protection for a rainy day."
There can be no good answer to the question of how much reserves is enough, or too much, he said. "The future is unknowable. We have no way to tell what may hit us from out of the blue," he added, pointing to how the past nine months have played out.
In January, before the Covid-19 crisis hit Singapore, the Ministry of Finance had been preparing the Budget for 2020.
He recalled that the Government then had been quite confident that it could meet its current commitments, set aside funds for the long term, and still expect to have something left over at the end of the term of government to add to past reserves.
"But just a few months after that, we are down more than $70 billion, and we have had to draw heavily on past reserves to fund four, five Budget packages," he said.
"Therefore, we should not think of ourselves as inheritors spending what we have been lucky enough to be endowed with. Rather we should take the attitude of founders... Whatever reserves we have, big or small, let us not think of touching them in normal times. They are our rainy day fund."
By living within its means, and adding a bit more to the rainy day fund whenever this is possible, Singapore can become a bit more secure when it really rains, said PM Lee.
"That is the way to build Singapore for the long term, and secure the future for our children and grandchildren."