Budget 2024: Govt ironing out 'temporary financial support scheme' for retrenched workers; details to be unveiled

Source: TODAY

SINGAPORE -- Workers who get retrenched may soon receive financial aid to tide them over while they look for better-fitting jobs or undergo training, with details of this scheme being announced later this year.

Deputy Prime Minister Lawrence Wong in delivering his Budget speech on Friday (Feb 16) said that the parameters of this temporary financial support scheme -- which he alluded to multiple times since last year -- are currently being ironed out.

This support scheme for retrenched individuals will be part of the existing SkillsFuture programme, said Mr Wong, soon after announcing a slew of enhancements to the programme, which includes a S$4,000 top-up in training credits.

He added that the details of the upcoming scheme such as the amount of support and conditions that come with the funding must be designed "carefully".

"This is to avoid the pitfalls other countries experienced when they introduced unemployment benefits," said Mr Wong, who is also Finance Minister.

His announcement comes amidst a recent spate of layoffs, including in technology companies like Lazada, and after overall retrenchments more than doubled in 2023 from the year before.

Mr Wong said on Friday that technological changes will bring about "more churn in the economy".

"Even when the economy as a whole is doing well, some businesses or even some industries may be suffering. In fact, it is not possible to have an economy that is dynamic and growing without failure and losses," he said.

In some sectors, he added, firms will have to let go of people, while in other sectors, new and better jobs will be created.

"We have to accept this reality. But it doesn't mean we should be indifferent to the suffering caused when firms lay off workers," he said.

"Losing a job is a major setback for workers and their families. Those who become involuntarily employed naturally feel the pressure to rush into the first available job they find. But the new job may not always be a good fit."

This group of workers, he said, should ideally consider ways to upgrade their skills and find a job that fits their aptitude and talent.

However, some workers may not have the time to do this, especially when they are straining to make ends meet and that is why a temporary financial support scheme is needed.

Mr Wong said that Singapore's economy must be one that provides opportunities for all and one that benefits the many, rather than the few.

Mr Wong's announcement on Friday is in line with what is seen to be the government's gradual softening towards unemployment support in recent times.

For years, the government has upheld a strong aversion towards giving direct financial support to the unemployed, saying it could risk disincentivising individuals from seeking reemployment.

In January last year, Mr Wong acknowledged that retrenched workers may end up taking the first job available due to pressures to put food on the table. He said then that the skills and training eco-system should be reviewed to provide "re-employment support" without eroding incentive to work.

Experts who spoke to TODAY then said that the shift in stance might be due to more volatility in the labour market following widely reported layoffs of young professionals in promising industries, which warrants a relook at how to better support retrenched workers.

Last September, Mr Wong said that the government is mulling an "appropriately sized" support as part of a revamp and expansion of the existing SkillsFuture programme, to help workers "bounce back stronger" after retrenchments.