Have anyone ask if the payment for the CPL life is fixed once started?

If it is not and could fall outside of the band then what is the point of having the scheme?

What good could it do to people? compared to the old one… to help the govt to save monies?

Get the point.

It is better to keep the monies with yourself

I am also a supporter of the unemployment system at least for a short period of between 6 to 12 months.

Due to a lack of safety net here, many middle income earners suffer and some even take on very low end work to survive.

I know a friend with a master’s degree who took up a security guard job paying just $1200 a month to survive.

In Australia, there is an unemployment benefit for those who are jobless. One gets around $230 a week and subject to certain conditions. There is a household incoem ceiling but it is far more generous unlike ours.

He has to also go for compulsory retraining and go for job interviews when called upon, failing which his benefit will be abolished.

In Singapore, I believe that there is unemployment benefit but pegged more for the low income. CDCs gave out allowances of between $300 – $500 a month to the breadwinners for a period of around 3-6 months.

He has to go for career counselling and interviews.

Once he skipped one or two interviews without valid reason, his benefit will be cancelled.

He has to also go for retraining if possible.

If you stay in a HDB 5 -room flat or private housing, it is very difficult for one to get the benefit as they believe that thsoe who stay in big houses don’t need welfare.

I advocate that CDCs try to come up with a hybrid kind of welfare system for the PMETs.who suffer the most right now.

If he stays in a private house and is the sole breadwinner for the whole family, he should be entitled to some welfare benefit.

It can be for a limited period until he found a job.

PMETs right now have a hourly allowance of around $5.50 – $6.00 when they attend PCP (professional conversion program) courses.

It is insufficient as if he attends a 9am to 5pm course daily, he gets less than $800 a month.

It is barely sufficient for himself let alone his family.

This is one big reason why PMETs avoid attending PCP courses unless he is financially stable.

I find that the govt may find implementation of the unemployment benefit system chaotic and cumbersome.

They always feel that even if they agree to the system they will find it difficult to implement.

The implementation of the ystem will hinder the govt search for relief for the people which is sad.

.

Hmm of course, of course. I just hope to differentiate groups of the unemployed – making them seem like a homogenous group is simplistic. For example, the spending of an unemployed-cum-very-poor may have a smaller import leakage than an unemployed-cum-not-so-poor. This is significant considering the huge import leakage which renders an expansionary aggregate-demand management fiscal policy ineffective.

Philemon: “And what is wrong with that? We are all political beings as well”

No, I actually mean we should stick to economic arguments. Similarly I can say we are all economic agents (:

But yup, I think I also agree in principle the UI can be implemented, for all our sake.

In fact, most UI schemes compute benefits as a proportion of last-drawn salaries up to a certain cap. For instance, 50% up to a cap of $1000 – under this scheme, A will get $1000, B gets $350, which is somewhat fair since A has always paid a larger premium and both are not disincentivised from actively seeking work.

I appreciate your point about giving the workers choice, which stems from a belief in economic liberty. However, in this case it would be more straightforward to administer a scheme with a uniform rate rather than allow workers to choose. Furthermore, the range of options is not really that great – how much more or less than 1% do you think a worker will be willing to contribute?

In any case, your arguments about choice might be better directed to our CPF policy, which demands a mandatory contribution of 20% of your salary. Compared with that, a contribution of 1% or less is negligible. It’s a good bet that a great number of Singaporeans would prefer to choose how much they prefer to save. The UI isn’t overly-ambitious because a means of collecting premiums and administering benefits already exists through the CPF system, and because such a scheme exists widely and can be copied relatively easily.

The problem with just giving handouts to the unemployed is that such a discretionary policy might not be timely enough. The point of an automatic stabiliser is to kick in when retrenchments happen, rather than to suffer from a lag. Furthermore, such a stabiliser introduces certainty and clear criteria for drawing on benefits, which is preferable to languishing in uncertainty while waiting for the government to decide whether it wants to give handouts. The ultimate purpose of the UI, as the author has pointed out, is to reduce economic insecurity.

While the UI is a social insurance scheme, it’s still redistributive in two ways. First, it’s likely that more lower-wage earners will draw benefits than higher-wage ones. You’re right in saying that there’s an increasing tendency for higher-wage workers to be retrenched, but it’s quite probable that the majority will still be lower-wage folk. Second, premiums are at a flat rate, but in this manner higher-wage folk will contribute a larger absolute amount into the UI pool.

“A uniform rate of contribution is better, since it would be regressive to tax lower-wage earners a higher rate, and furthermore it is easier to implement a flat rate”

I understand and accept your point.

Unemployed worker A has a previous monthly income of $7000, worker B $700. Both pay equal premium rates. When both are unemployed, should both receive equal insurance payouts, considering that both have different financial considerations and ‘retrenchment risk profiles’?

I think Singaporeans should have a choice to choose their retrenchment risk profile, then pay premiums and receive payouts accordingly.

Heyhey your argument is interesting; can I take the liberty of publishing it on my blog, to further comment on it?

“Whether such an additional ‘tax’ would be acceptable to the public – I wouldn’t bet against it, given the current economic upheaval and the fact that jobs are increasingly insecure nowadays. Spending 1% of your income to guarantee yourself some benefits in the event of the unexpected happening seems like a rather good outlay”

“increasingly insecure” is dependent on the person holding onto a certain type of job. For example, a worker in a sunset, low-wage, low-growth industry will feel his job is highly insecure, as compared to a worker in an identified ‘growth’ industry. That worker’s valuation of his retrenchment risk may be so small it does not merit drawing even half a percent of his income into an insurance pool which he believe he may never enjoy at all.

The UI seems overly-ambitious. I think a simple, direct way to give handouts to the retrenched for a period of time will be a better ‘economic stabiliser’.

“Giving handouts makes the people feel ‘beholden’ to the government and does not reinforce the rights of the worker”

Hmm. Getting political here.

“A uniform rate of contribution is better, since it would be regressive to tax lower-wage earners a higher rate, and furthermore it is easier to implement a flat rate”

Fine, I understand and accept your point. A uniform rate is easier to implement than creating rates for different risk profiles.

An unemployed worker A has previous monthly income of $7000, worker B has $700. Both pay equal premium rate. So when they are unemployed, they receive equal insurance payouts? Surely people should have a choice to determine their retrenchment risk profile.

“Therefore, a measure of responsibility falls to society (and the firm, of course) to make up for the individual’s loss to a limited extent – which is largely the principle behind UI schemes in other countries”

Heyhey I accept this argument too. Sounds like a ‘merit good’ argument.

“Whether such an additional ‘tax’ would be acceptable to the public – I wouldn’t bet against it, given the current economic upheaval and the fact that jobs are increasingly insecure nowadays. Spending 1% of your income to guarantee yourself some benefits in the event of the unexpected happening seems like a rather good outlay. In fact, as the author has suggested in the Korean model, it is only half of that 1% – the other half should come from firms”

Essentially the UI is a redistributive scheme, as you mentioned. “jobs are increasingly insecure” – I think NOT all jobs can be described as such. Furthermore ‘insecure’ depends on the person holding onto the job. These ‘insecure jobs’ are likely low-wage jobs (construction, service) which S’poreans shun, or jobs in uncompetitive industries. Only them will benefit from UI payouts, as they have a higher probability to be retrenched. Workers in the identified ‘growth’ industries may not think their jobs are insecure at all.

Telling them to make a half percent premium to an UI which they think they will never enjoy will draw objections. This may be for society’s and their own good, but their valuation of retrenchment risk may be so small it does not merit drawing a compulsory percentage of their income into an insurance pool.

It seems the UI seems to be too ambitious. I think a much more easier way is to simply give direct handouts to the retrenched, for a period of time.

“Giving handouts makes the people feel ‘beholden’ to the government and does not reinforce the rights of the worker”

Err…really? Getting political here.

If I were filthy rich and I choose to scatter money liberally on the unemployed, would I have committed any offence in the eyes of the govt?

This is a fallacy as even workers who are educated and qualified in technical fields are subject to early dismissal due to factors like a global slump in demand. Please check out some of the well qualified and well spoken taxi drivers we have here in Singapore.

And UI, as a social insurance program are not designed as a scheme with a income redistribution effect like a welfare program (See Martin Feldstein, “Rethinking Social Insurance”, pg 3).

gst credits : 1 week ago, i called cpf , who sent me a letter about my gst credits. I realised from my neighbor they received much more for same house size. i enquired the check if the amount was correct.

I was told:
1. yes, $200 is correct.
2. how was that derived? based on your 2007 income. Yes, back then i was employed. So, that is how i got $200. they base on 2007 income. 1 of the reasons given was that self-employed people have yet to return the iras for 2008.

question :
1. compare 2007 and 2008, which year has normal low unemployment rate and which year has higher unemployment rate?

2. given there is difference between self-employed and employees, why the criteria was based on income for 2007 for BOTH groups of people? More are employees in my opinion and lesser are self-employed. why not based on 2008? The issuing of the credits was done on end feb 2009.

3. Here is the how the amount is determined, briefly :
a. for people earning less than 24K in the year, the credits can range from 400 to 1000 depending on age AND HDB size

b. those who earned between 24001 upto 100K gets between 400-800 depending on age and

c. those who earned more than 100K gets $100 regardless of age.

I feel that the unemployment problem started in 2008 and those unemployed then are not taken into account as the income checked is based on 2007 income.

Is it not that there are more employees than self-employeds? would the scheme be more useful if it considered those unemployed in 2008 instead of 2007?

just a few questions in my mind. any comments welcome.

Eternalhap @ #29: “I think” is not good enough. Have only the “low-skilled, aged, low-wage”, become unemployed in this economic crisis?”

If premiums are percentaged to wages earned, then of course those that earn more will pay a higher permium (although the percentage is the same). For example if the employee contribution is capped at 0.45%, then he who earns $400 per month will pay $1.80 per month, while he who earns $4000, will pay $18 per month. But the percentage and the burden remains the same.

Giving handouts makes the people feel ‘beholden’ to the government and does not reinforce the rights of the worker.

As Panache has pointed out, the premiums have to be compulsory in order to keep the amount low. The UI is essentially a redistributive scheme, since it’s likely to benefit the lower-wage workers more.

In this regard, the UI does not necessarily contradict the principle of fairness. Rich folk, for example, pay a higher rate of income tax than poorer folk. The UI should be seen in this redistributive vein. A uniform rate of contribution is better, since it would be regressive to tax lower-wage earners a higher rate, and furthermore it is easier to implement a flat rate.

In fact, the fairness argument can be deployed in another manner, as the author has tried to show in his article. It is usually through little fault of the individual that he is retrenched – you might argue that it is the process of creative destruction where unproductive jobs or industries are weeded out as new jobs and firms take their place. The benefits accrue to society, yet the loss is the individual’s – not only the cost of losing his job, but the opportunity cost of having trained for the job, put in effort and accumulating experience on it, etc. Therefore, a measure of responsibility falls to society (and the firm, of course) to make up for the individual’s loss to a limited extent – which is largely the principle behind UI schemes in other countries.

Whether such an additional ‘tax’ would be acceptable to the public – I wouldn’t bet against it, given the current economic upheaval and the fact that jobs are increasingly insecure nowadays. Spending 1% of your income to guarantee yourself some benefits in the event of the unexpected happening seems like a rather good outlay. In fact, as the author has suggested in the Korean model, it is only half of that 1% – the other half should come from firms.

i almost can sense more good year liao.

Right you are, Panache. I think this proposal won’t go down well with many workers. It’s very obvious this UI is meant to help workers who are very likely to be retrenched i.e. low-skilled, aged, low-wage etc. Workers who believe they are unlikely to be retrenched, esp. in boom times, may dislike the idea of funding a scheme which they may never enjoy.

The major problem with the UI is fairness. If the govt wishes to implement it nation-wide, then ‘premiums’ must be different for different groups of workers to ensure it’s fair. I suppose those who are likely to be retrenched has to pay a higher premium than those not likely to be.

If the UI were funded from budget surpluses, fair enough. But the govt might as well give handouts directly to the unemployed, which seems easier than a complicated system of UI.