Singapore has long resisted introducing unemployment benefits, opting to use employment incentives and wage support instead. That changed last week, when Deputy Prime Minister Lawrence Wong announced at Budget 2024 that the government will announce a “temporary financial support scheme” later this year for retrenched staff.
According to Wong, displaced workers “may not have the time to train or search for new jobs, especially when they are already straining to make ends meet”. Hence, the scheme will support this group of workers “while they undergo training or look for better-fitting jobs”.
Experts think the package will include subsidies or even replace a portion of a worker’s last-drawn salary. Jamus Lim, Associate Professor of Economics at ESSEC Business School, APAC, thinks the government will take reference from the existing SkillsFuture training allowance, which offers 50% of one’s average income over the latest available 12-month period, capped at $3,000 a month and for up to 24 months over one’s lifetime.
But in reality, a nationwide scheme would more likely introduce a shorter period and a lower cap for unemployment payouts, adds Lim.
The government may also gradually reduce the sum of payouts or only offer payouts if the recipient proves that they are looking for a job, says Lim. “[The government may] even institute a tax on wages after re-employment that is greater the longer the unemployment duration.”
That said, these are “relatively more sophisticated tools”, adds Lim. “I suspect the government will wish to keep things simple. However, some conditionality requirements will almost certainly be imposed. I think it will be double-barrelled; recipients of payouts will need to either furnish evidence of an ongoing job search or be enrolled in a SkillsFuture retraining program.”
Indeed, the package will likely make financial aid conditional on participation in relevant training programmes, says Justin Lim, partner, head of outsourcing (Singapore) and head of corporate secretarial (APAC), Mazars in Singapore.
“This approach not only aims to provide immediate relief but also to invest in the long-term employability of the workforce… The package is likely to emphasise the importance of acquiring industry-relevant skills, thus supporting sustainable employment rather than offering unconditional or indefinite financial aid,” adds Lim.
The package is expected to strike a balance between providing temporary financial and upskilling support to displaced workers, while motivating them to return to meaningful employment as soon as possible, says Goh Jia Yong, partner, people consulting at Ernst & Young Advisory.
See also: Lessons from Lazada for Singapore's employers and employees
“Hence, the structure of the package may likely include some temporary allowance to help individuals mitigate a loss of income as well as enhanced training subsidies to embark on their upskilling and reskilling needed to pivot into new employment opportunities, together with career advisory and career search services,” adds Goh.
Employers, too, may be offered incentives to encourage the hiring of displaced workers, says Goh, similar to Workforce Singapore’s Career Conversion Programmes (CCPs). The CCPs offer up to 90% salary and course fee support to companies in Singapore that reskill mid-career new hires or workers.
Mazars’ Lim also expects the package to “closely align” with programmes like the SGUnited Skills (SGUS) and Career Transition Programme (CTP), which offered courses at local universities and polytechnics. “[They] were instrumental during the pandemic in aiding individuals to pivot into new roles through upskilling and retraining.”
Layoffs on the rise
The scheme comes as analysts warn of more layoffs in 2024. Since January, Alibaba's Lazada, Unilever and Electrolux have either downsized or announced that they will trim operations in Singapore.
In 2023, Singapore saw 14,320 retrenchments, more than twice the 6,440 layoffs recorded in 2022.
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More layoffs could come, says EY’s Goh. “Given the economic outlook for 2024, where enterprises in some industries are expected to undergo further structural changes, we can expect more Singaporeans to be impacted by such restructuring and retrenchment exercises.”
Trini Tan, research analyst at Bloomberg Intelligence, says “lingering uncertainties” in global demand and structural disruptions to operations — especially from new technologies — could prompt more firms to cut jobs in Singapore as part of their worldwide reorganisations this year.
In particular, “persistent” layoffs throughout the global tech industry may keep the proportion of information and communications-related job cuts in Singapore above pre-pandemic levels, adds Tan.
Tan says this sector’s share of layoffs rose to 19% in 9M2023 from 9% in 9M2019. “The tech industry made more job cuts in Singapore than financial and insurance service firms like Citigroup, Standard Chartered and UBS, based on available 2023 data.”
Technological changes will bring about “more churn in the economy”, says Wong in his Budget speech on Feb 16. “Even when the economy as a whole is doing well, some businesses or even some industries may be suffering… We have to accept this reality. But it doesn’t mean we should be indifferent to the suffering caused when firms lay off their workers.”
Looking at our neighbours
The support structures for retrenched workers across Asean countries are diverse and tailored to the unique economic fabrics of each nation, says Mazars’ Lim. “Financial aid [schemes] range from unemployment benefits to job placement services, training subsidies, tax relief, essential needs subsidies and one-time financial assistance. These serve to cushion the impact of job loss and facilitate the transition back into the workforce through upskilling and reskilling initiatives.”
While regional unemployment schemes may provide a reference point, the design of Singapore's package is likely to be informed by a comprehensive review of local labour market needs, the economic climate and policy objectives of promoting lifelong learning, adds Lim.
“The aim is to provide a safety net that empowers rather than disincentives the job-seeking process, with a focus on the long-term goal of workforce readiness and economic adaptability.”
Singapore also differs from the region in terms of protections for retrenched workers. Workers in Malaysia, Indonesia, Thailand, the Philippines and Hong Kong are entitled to statutory severance payments. Here, neither the Ministry of Manpower (MOM) nor the Employment Claims Tribunals (ECT) can force an employer to pay retrenchment benefits that are not stipulated in an employment contract.
“As unemployment insurance has been debated in recent years, it’s expected that Singapore will craft a package that aligns with its established policies and economic strategies,” says Lim. “The emphasis is likely to be on programmes that foster workforce resiliency and employability, rather than on long-term financial dependency.”
With more job-seekers chasing fewer job openings in Singapore, it is “more important than ever“ for candidates to hone specialist skills or knowledge, says Karen Ng, regional head of expansion and market lead, Singapore, Hong Kong, Asean and India at payroll services firm Deel.
These candidates will be in a much better position to negotiate salary increases and pursue better jobs, she adds.
According to Deel’s Global Hiring Report, the number of Singaporeans hired by overseas companies grew by 35% in 2023.
The market is cyclical, the start of the year is the time when more layoffs are made, says Ng. “We saw this in 2023 too. Jobseekers should take advantage of global hiring models and employers’ increasing appetite to hire distributed teams from all over the world; this will give them a far wider pool of positions from which to secure the next role.“
