This is why the SDP advocates retrenchment benefits

Singapore Democrats

The Ministry of Manpower reported that as of June 2010 nearly 70,000 people in Singapore are unemployed. The numbers also reveal that those who are still looking for jobs after six months is on the rise. Add to this is the fact that most of those retrenched are older workers ā€“ aged 40 and above.

Behind the numbers are real people who suddenly find themselves out of a job. They have families to feed and bills to pay. They are also the ones who have children in their teens, a time when expenses are the highest.


These are hardworking folks who through no fault of theirs are rudely greeted with a pink slip on day when they show up for work. And while the income stops, the bills continue to pile up. The electricity bill still needs to be paid, the HDB loan still needs to be serviced, and children still need to go to school.

How do these people cope in the six months or more that they are struck down without an income? This is the reason why the Singapore Democrats call for temporary help for these people in the form of retrenchment benefits. This is the Singapore Democrats’ plan:



The Government pays retrenched workers who do not have unemployment insurance 75 percent of their salary for the first six months. This amount would be reduced to 50 percent during the following six months, and further reduced to 25 percent in the third six months.

The payments will stop once the individual finds employment. They will also cease 18 months after one’s retrenchment if the individual is still not employed by then. This will prevent a culture of welfare dependence from taking root. A cap will also be placed on the amount that any retrenched worker is paid.

Under the SDP’s plan each worker will be allowed to reject only up to three job offers in the one-and-a-half years of the entitlement programme following which, as stated, the retrenchment benefit ceases.



Such a scheme will provide workers a cushion when they are retrenched while at the same time encourage them to seek re-employment.

The estimated cost for running such a programme based on the median income of $2,400 a month and on a scenario of 50,000 workers retrenched in a given year is less than $1 billion.

Let’s put this amount into perspective. In 2008 Temasek Holdings and GIC lost $140 billion in disastrous investments. What the Singapore Democrats propose will be 0.007 percent of the amount Temasek and GIC lost. And this will help 50,000 Singaporeans and their families in Singapore instead of millionaire bankers in Merrill Lynch, UBS and Barclays.

Already we are seeing an increase of hardship cases in Singapore leading to more suicides. The Samaritans of Singapore reported 410 suicides in Singapore 2009, up 10 percent from 2008. That averages out to more than one person taking his/her own life in this small country everyday.

There is another upside to such a programme. People who are unemployed are in dire straits and they will urgently spend the money on basic necessities as opposed taking it out of the country for, say, a holiday. The retrenchment benefits paid out to them will make their way back into the economy. This will help businesses.

The idea of a retrenchment benefits programme will be increasingly urgent as jobs will be harder and harder to come by because many of the multinational companies, especially the ones in the US and Europe, are not expanding their investments here because of the politico-economic situations back home.

A retrenchment-benefits programme is needed now. It makes good economic sense. The PAP ministers cannot continue to twiddle their thumbs while Singaporeans suffer.

For a more detailed account of this proposal, click here.