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If the 2002 second quarter labour market report by the Ministry of Manpower (MOM) is any indication, workers will have to get used to the idea of being not only unemployed but also being unemployed for a long term.
Workers who are likely to fall into the “long term unemployed” category are those who lack the necessary skills to ride the new economic waves that currently besiege the economy of the island state. And of those who were unemployed in June 2002, about a third of them were “long term unemployed” or unemployed for at least 25 weeks.
As at June 2002, the long-term unemployment rate stood at 1.9%. In June 1999, with the Asian economic crisis casting a pall over much of South East Asia, Singapore’s long-term unemployment rate surged to 1.6% from a level of around 0.3% to 0.4% for much of the 90s. And in 2000, even with the economy picking up, the long-term unemployment rate was still hovering above pre-crisis level.
This upward trend of the long-term unemployment rate suggests that over time, as the economy restructures, there would be a residual pool of workers who will not be absorbed by the labour market due to their lack of relevant skills.
With the long-term unemployment rate hitting a high of 1.9% as at June 2002 and more economic restructuring and unemployment on the horizon, the unabsorbed residual pool of workers will only get bigger. And there will come a time where a large and growing number of such unemployed workers’ savings will be near exhaustion and their livelihood threatened. To help such unemployed workers to meet their daily basic needs while hunting for employment, the possibility of freeing up the workers’ savings in the Central Provident Fund (CPF) should be explored. This can be in the form of periodic withdrawals whereby unemployed workers are allowed to withdraw a certain amount of their savings from the CPF say once every 25 weeks of unemployment to sustain their livelihood.
By allowing workers to withdraw their CPF savings partially and periodically during prolonged period of unemployment, a kind of “unemployment insurance” will also be put in place for the long-term unemployed. Such an “unemployment insurance” will also be better than conventional unemployment benefits in that the unemployed will not be overly reliant on the “pay out” to the point that they give up looking for a job completely. This is because the “pay out” is from their own CPF savings and hence there is a limit imposed on how long they can rely on it to sustain their livelihood.
Another advantage in the use of CPF savings as a form of “unemployment insurance” is the cultivating of an independent mentality among the unemployed. As the jobless are being empowered to rely on their CPF savings for their own livelihood instead of turning to the Community Development Councils (CDC) for financial assistance once their savings are depleted, they will develop a more self reliant approach to managing employment crisis. And given that now life-long employment is going the way of the dinosaurs, most workers will be afflicted by employment crisis at least once in their working life. Thus being self reliant will stand the workers in good stead to face the uncertain and ever changing future and it will also prevent unnecessary pressures from being imposed on public institutions and society.
This article was contributed by Tony Soh Kok Leng