Budget 2024: New financial support scheme in the works for retrenched workers

SINGAPORE: The government is working out the parameters of a new temporary financial support scheme to help retrenched workers while they undergo training or look for another job, announced Deputy Prime Minister Lawrence Wong on Friday (Feb 16).

In his annual Budget speech, Mr Wong – who is also Finance Minister – added that more details about the scheme will be provided later this year. It will be part of a revamp and expansion of the country’s SkillsFuture programme.

This comes amid a spate of layoffs in the past years. In 2023, the number of retrenchments – 14,320 – more than doubled from the year before.

The last two years saw mass layoffs in the tech industry among big firms like Facebook parent Meta, Twitter and Shopee. Most recently, e-commerce giant Lazada retrenched at least 100 employees at the start of this year, though it has not specified the exact number.

Lazada did so without informing the workers’ union either, with some telling CNA that they were caught off-guard and were not offered a satisfactory retrenchment package.

On Feb 4, it was announced that the affected employees will get an “enhanced support package” following talks between Lazada and the union.

Mr Wong first mooted the idea of unemployment benefits in September last year. At the time, he said the government had been cautious for a long time about introducing such a scheme due to the negative outcomes in other countries, where people find it more attractive to remain unemployed instead of returning to work.

However, the government then “revised and refreshed” its thinking after looking at the faster pace of change in the economy, he added then.

On Friday, Mr Wong reiterated 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 failures and losses,” he said.

Mr Wong added that companies in some sectors will have to let people go, while new and better jobs will be created in other sectors.

“We have to accept this reality, but it doesn’t mean we should be indifferent to the suffering caused when firms lay off their workers,” he said.

Those who have been laid off will naturally feel the pressure to rush into the first available job they can find, but this job may not always be a good fit. Such workers should ideally consider ways to upgrade their skills and find a job that fits their aptitude and talent, Mr Wong added.

However, he acknowledged that displaced workers may not have the time to train or search for new jobs – especially when they are already struggling to make ends meet.

To support such workers, Mr Wong said the government will introduce a temporary financial support scheme for the “involuntarily unemployed” while they undergo training or look for jobs that fit them better.

“We have to design this scheme carefully, including the quantum of support and the conditionalities that come with the support. This is to avoid the pitfalls that other countries experienced when they introduced unemployment benefits,” he said.

Mr Wong noted that Singapore’s economy must always provide opportunities for all and benefit the many rather than the few.

“We believe that every worker matters and every citizen counts … We will equip every Singaporean to benefit from the fruits of our economic growth,” he added.