WP releases details on proposed scheme to give retrenched workers ‘modest’ payouts

WP releases details on proposed scheme to give retrenched workers ‘modest’ payouts

The Opposition party has issued a consultation paper detailing how a redundancy insurance scheme would use risk pooling to provide payouts to workers who have been retrenched.

SINGAPORE: The opposition Workers’ Party (WP) has issued a consultation paper outlining a proposed redundancy insurance scheme that would give “modest” payouts to retrenched workers.

The 17-page paper, released on Monday (Dec 12), details how the scheme would use risk pooling by having employers and employees each contribute 0.05 per cent of monthly salaries. If a worker is retrenched, he will receive a payout of 40 per cent of his last-drawn salary – subject to a cap on the prevailing median wage – for up to six months.

Based on the average wage of S$3,782 in 2014, excluding CPF contributions, this translates to a “low monthly deduction” of S$1.89 for an employee, WP said.

The scheme will also provide top-ups to low-income workers. Those earning below S$500 a month will receive a payout equivalent to their last-drawn salary, while those earning between S$500 and S$1,000 will get a top-up of S$200 to their original payout.

Both workers and employers would benefit from the scheme, WP said. “Workers will not have to take the first job opportunity that comes their way regardless of fit and suitability. Employers will not have to screen applications from workers who are guided by short-term needs, are a poor fit for their organisations and are unlikely to stay for long or be committed to their work.”

To continue receiving payouts after the first month, workers must demonstrate that they are actively seeking employment by signing a declaration that will be periodically audited and carries penalties for false declarations.

Rather than encouraging retrenched workers to remain unemployed, the scheme would provide them with “some breathing space and the peace of mind to retrain, upgrade their skills and look for suitable employment”, WP said.


Based on the average resident redundancies of 7,950 between 2013 and 2015, and the 2014 average wage, the total premiums collected would be about S$100.9 million a year, and the estimated payout would be a maximum of S$63 million, WP said.

The scheme would have a “healthy buffer” and there would be no need for Government top-ups, it added.

The party first called for a redundancy insurance scheme during the Committee of Supply debate in April. WP chairman Sylvia Lim said then that it was a “feasible scheme” that would provide workers with a safety net to tide them through difficult times.

Singapore Democratic Party’s Chee Soon Juan also proposed a similar scheme while campaigning during the Bukit Batok by-election in May.

Prime Minister Lee Hsien Loong addressed the issue during his May Day Rally speech, saying that Singapore has “something even better” than a retrenchment insurance scheme.

Mr Lee said: “Ours is different. The scheme is not paid by the workers or employers. It's paid by the Government. And the scheme is used not to help you stay unemployed, but to help you get employed. Get a job, upgrade yourself, make yourself more valuable. So support this, make the effort, we will be there with you.”

Source: CNA/cy