Singapore introduces financial aid scheme for unemployed workers engaging in skills training and career coaching

SINGAPORE: Prime Minister Lawrence Wong has introduced the SkillsFuture Jobseeker Support Scheme, nearly a year after first suggesting the need to assist those who face involuntary unemployment.

In his inaugural National Day Rally Speech on Sunday (18 Aug), Mr Wong detailed the initiative, which aims to support lower- and middle-income workers who have lost their jobs by offering financial aid, contingent on their participation in training, career coaching, and job-matching services.

The scheme, developed in partnership with the National Trades Union Congress (NTUC) and the labour movement, will offer eligible workers financial assistance of up to S$6,000 over a six-month period. However, Mr Wong emphasized that recipients must actively participate in training, career coaching, and job-matching services to qualify for the support.

“These are essential investments that you need to make in yourself to find better jobs,” Mr Wong said. “This is the essence of our renewed social compact. We will have your back, we will stand by you; but you too must take responsibility for your actions, and make an effort to pull yourself up.”

Manpower Minister Tan See Leng is expected to provide further details about the new scheme in the coming weeks.

Mr Wong first raised the idea of unemployment support in September last year, and expanded on his considerations during his Budget speech in February. On Sunday, he elaborated on the government’s cautious approach to such schemes, noting that while some countries offer unemployment insurance, the experience has not always been positive.

“After getting a generous benefit, the person might find it more attractive to stay unemployed than go back to work,” he explained. “That’s why the government has always been wary about such schemes.”

Nevertheless, Mr Wong acknowledged the significant impact of job loss on workers and their families, stating, “We have to do something – to lessen the strain on those who are affected.”

The new scheme comes in the wake of a series of high-profile layoffs in Singapore, with the number of retrenchments in 2023 more than doubling from the previous year. Companies such as Lazada, Amazon, Shopback, Ninja Van, and Citi have all announced layoffs recently, heightening concerns about job security.

In addition to the SkillsFuture Jobseeker Support Scheme, Mr Wong also discussed the SkillsFuture Level-Up programme, which was first announced during his Budget speech in February. The programme provides all Singaporeans aged 40 and above with a S$4,000 SkillsFuture credit top-up and includes a training allowance of up to S$3,000 per month for those who take time off work to study full-time.

Recognizing the challenges faced by those pursuing part-time courses, Mr Wong announced that some of the training allowance would be extended to individuals attending part-time courses as well. The Ministry of Education is currently working on the details and will provide more information when ready.

While the scheme appears to offer much-needed support to those affected by job loss, there are concerns about its broader implications. Critics might argue that the scheme, while providing temporary relief, does little to address the underlying economic issues that contribute to unemployment. Moreover, the requirement for recipients to undergo training, which excludes them from unemployment figures, may create a more favorable image of the labour market than the reality suggests.

By not counting those in training as unemployed, the government could potentially mask the true extent of joblessness, leading to skepticism about the transparency and effectiveness of the statistics being reported. As such, the scheme’s impact on both individuals and the broader economy remains to be seen.

Unemployment insurance will reduce workers’ motivation to find new jobs

In a related note, former Minister for Manpower Josephine Teo had previously expressed serious concerns about the concept of unemployment insurance during a Parliament session in 2020. Mrs Teo argued that such a plan could reduce workers’ motivation to find new employment and decrease employers’ willingness to offer retrenchment benefits.

The idea of unemployment insurance has been advocated by the Workers’ Party since 2016, with MP Sylvia Lim suggesting that a fund financed by small contributions from both workers and employers could better protect workers. However, Mrs Teo contended that Singapore’s existing approach, which focuses on employment support through programmes like SkillsFuture and Adapt and Grow, has proven to be more sustainable and effective.

“Our current approach of focusing on employment support has shown encouraging results and is more sustainable,” Mrs Teo said at the time. “As long as jobs are still being created, a focus on employment support helps both the individuals and businesses.”

Mrs Teo also highlighted the government’s efforts to assist mid-career workers who lose their jobs, including helping businesses sustain job creation, maintaining workers’ motivation to upskill, and promoting fair employment practices among employers.