The problem facing Singapore is low wages for the lower-skilled and older workers.
According to Wikipedia, social safety net is defined as "a collection of services provided by the state (such as welfare, unemployment insurance, universal healthcare, homeless shelters, and perhaps various subsidized services such as transit), which prevent any individual from falling into poverty beyond a certain level".
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LHL claims that we have 4 pillars of social safety net:
1. CPF,
2. 3Ms of healthcare (Medicare, MediShield and Medifund),
3. the home ownership scheme, and
4. workfare.
Firstly, schemes like CPF and home ownership scheme are not social safety net for the simple reason that one can't tap on them for income maintanence in the event of interruption of employment.
Secondly, workfare works only if when employability is not an issue. However, as we have witnessed in recent years, Singapore has one of the most volatile economies due to its economic openess. In addition, we have one of the fatest changing economies in terms of structural changes.
Finally, medicare and medishield are funded by the people themselves and not provided by the govt. Thus there lies the problem that such saving or insurance for medical bills are available if the person is employed or could afford the medishield insurance premiums.
The problem facing Singapore is low wages for the lower-skilled and older workers depressed by the influx of more than 420k non-domestic foreign labour on work permits.
Pursuing a low-wage policy with cheap foreign labour only dampens the wage rate of the lower-skilled workers and harms the productivity growth of the economy. It is thus questionable why the PAP government is still subsidising economic activities that rely on cheap foreign labour that do not benefit Singaporeans?
While the reliance on foreign workers to compete on cost could boost the economy in the short term, it is definitely not a long term solution for Singapore. We should let businesses learn to move up the technology ladder and value-added chain, and not subsidise manual labour intensive activities (via workfare etc) that are no longer viable in Singapore. By continuing to depend on cheap foreign labour, we are just delaying the inevitable shake-up.
In addition, what we will see in the globalised economy is that there will continue to be a lot of employment transition. What Singapore needs is to implement a comprehensive safety net that supports workers who fall off the labor-market trapeze -- improving programs ranging from unemployment insurance, state-funded health insurance, right down to public assistance. An effective safety net would ease the pain and, by so doing, speed up the adjustment.
If not, we will continue to see more of the likes of Mr Tan who choose to jump onto MRT track.
Sources and Relevant Links:
Sammyboy.com's CPF is not social safety net
