Open mind needed to improve on social safety nets, says PM Lee, warning that greater challenges lie ahead

SINGAPORE: Greater challenges lie ahead for Singapore in the post COVID-19 world, and there is a need to keep an open mind in order to build and improve on the system of social safety nets already in place, said Prime Minister Lee Hsien Loong in Parliament on Wednesday (Sep 2). 

Speaking on Singapore's response to COVID-19 and life beyond the pandemic, Mr Lee said that such measures "are there to protect the vulnerable in our society, and ensure that everyone has full access to opportunities to improve our lives”.

“They also give people the confidence and assurance that if some bad luck trips them up in life, society will be there to break their fall, and help them pick themselves up again,” he added.

Mr Lee pointed out that in the early decades of Singapore’s nationhood, there was no need for “extensive” social safety nets.

This was because Singapore had high gross domestic product and income growth, there were jobs readily available for a young population, the economy was buoyant and unemployment after the first few years was very low.

“We invested heavily in our social infrastructure – universal education, basic healthcare, public housing. And this improved everyone’s standard of living and allowed all to benefit from the country’s progress,” said Mr Lee. 

“More importantly, it levelled everyone up, giving them the means to improve their lives through their own efforts.” 

With the country moving to a different phase of development, things have changed, noted Mr Lee.

“Our economy is maturing. Incomes are growing less rapidly. There is a higher premium on specialised skills and education,” he said. “As a result, when someone loses his job, especially as a mature worker, it is harder for them to move to another job, especially across different sectors.”

READ: Singapore has done well in fight against COVID-19, but must learn from errors: PM Lee

Hence, over the last 15 years, Singapore “shifted” its approach and progressively strengthened social safety nets, pointed out Mr Lee. This included schemes such as ComCare in 2005, Workfare in 2007 and Silver Support in 2016, he said.

“These schemes and many others are targeted at the lower income, and those who have fallen on hard times,” he added. “They supplement their wages and CPF contributions, so that the recipients gain both current income and also retirement security.”

In addition, coverage of other schemes and subsidies were also extended to include middle income households, said Mr Lee.

But as these are “peacetime measures”, they were not enough when the COVID-19 pandemic hit, he pointed out. Hence there was a need to implement multiple emergency measures such as the Jobs Support Scheme and the COVID-19 Support Grant among others, he noted.

“We had to draw on our past reserves to fund them. These are emergency measures, they are crucial for now, but they cannot continue indefinitely. We have to start thinking about what comes after them, about the level of social support we will return to after COVID-19 is over ,” he said.

Watch: PM Lee addresses Parliament on Singapore's response to COVID-19, post-pandemic challenges, jobs

‘ECONOMIC UNCERTAINTY AND TURBULENCE’

During this new normal, more “economic uncertainty and turbulence” can be expected, said Mr Lee. There will be a need to strengthen social support for Singaporeans, he noted.

“Several ideas have been raised, including in this House, in this debate. The Government is not ideologically opposed to any proposed solution,” he added. 

“Our approach has always been pragmatic and empirical. Make the best use of our resources to meet the needs of different groups in our society, in a targeted manner. Because if we help everyone equally, then we are not giving more help to those who need it most.”

Giving the example of older workers, Mr Lee explained that these workers tend to draw higher salaries than younger workers, but their skills may be less current.

“If they lose their jobs, they find it harder to find another similar job, particularly at the same pay, so they are at greater risk of long-term unemployment.” he said.

Mr Lee noted how solutions like unemployment insurance can offer “transient relief”, but retraining and upskilling them will enable employers to continue finding value in them, and be less likely to make them redundant.

“And if the older worker does get retrenched, with these skills he or she can find a new job more readily. This is a structural solution that helps older workers get their careers back on track and feel that he is making a worthwhile contribution. The best unemployment insurance is in fact the assurance of another job,” said Mr Lee.

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Also touching on low-wage workers, Mr Lee said that the Government’s efforts, supported by unions and employers, have worked.

“Older workers are staying in the workforce longer. And over the last five years, real wages of our bottom quintile have consistently grown faster than median wages,” he said. “And that clearly shows that our approaches are working.”

READ: The Government will always be on the side of Singaporeans, says PM Lee on job concerns

THE NEED TO DO MORE

But with greater challenges ahead, Mr Lee said the Government needs to do more, and is ready to do so. 

“We know greater challenges lie ahead. We need to do more, and we are ready to do more,” said Mr Lee. “We should take some time to assess the landscape after COVID-19, to see how things unfold, and what specific problems develop.”

Mr Lee noted there was a need to keep an “open mind”, as the Government builds and improves on the current system as well as looks at solutions that can work locally.

“We must identify pragmatic solutions which will make a real and sustainable difference, and give people justified assurance that when they need help, they will get the help that is relevant to them,” he added. “And it must not create new problems in the process, for example by eroding our spirit of self-reliance.”

Mr Lee also pointed out that one “permanent imperative” would be to keep programmes fiscally sustainable. 

“As a matter of principle, our social safety nets should be paid for out of current revenues. We should not draw down on what we have inherited, nor should we mortgage the future of our children,” he said. 

Mr Lee noted that after several generations of “frugal prudence”, Singapore now has accumulated “significant reserves”.

“Now the opposition says: Show me how much we have in the reserves, before I decide whether to support your Budget and tax plans ... Basically they are asking: 'I have something in the bank already. How much of that can I touch?'” he said.

“This was not the attitude of our forefathers, the founders who were building for the future. But the attitude of inheritors who think they have come into a fortune, and want to consume the fruits of their predecessors’ labours.”

This is a “fundamentally” wrong approach, said Mr Lee. “Therefore, we should not think of ourselves as inheritors spending what we have been lucky enough to be endowed with,” he said.  

“Whatever reserves we have, big or small, let us not think of touching them in normal times ... Every year, we live within our means; and whenever we are able to, we add a bit more to the rainy day fund, to make ourselves a bit more secure for when it really pours," Mr Lee added.

“And that is the way to build Singapore for the long term, and secure the future for our children and grandchildren.” 

Watch his full speech: