Monday, December 21, 2009

Coping with unemployment

Many developed countries have unemployment benefits. Even America, which believes in individual responsibilty and the free market, have unemployment benefits. The leaders in these countries know that the unemployment benefits can be abused, but they still provide these benefits as, in their judgement, the good outweighs the abuses.

In the free, competitive market, people compete for jobs. Some win and other lose. The losers gets unemployed. They have families to feed. In a weak economy, it is not easy to find an alternative job that can pay an adequate wage for their needs. Should they have to borrow and pay a high interest charge? Do the family have to grow hungry? Some have to resort to crime to get some money. Is this a good outcome?

What about people who are lazy and will enjoy the unemployment benefit, without working? These countries have found many ways to overcome this problem. Some countries, fix a limit on the duration of the unemployment benefits. In America, this is usually 12 months, although it has been extended due to the extremely weak economy. In other countries, the unemployed worker is required to attend job training and interviews, and to accept reasonable offers. They can only get the unemployment benefits, when jobs are not available.

These measures are not perfect, but they work reasonably well. If this was not the case, they would have been stopped.

What about countries, such as Singapore, that do not provide unemployment benefits? It is important to have personal savings that can be drawn down to meet emergencies, such as unemployment. Most young people are able to get jobs. They should set aside personal savings of 15% to 30% when they are young. These savings should be invested in financial products that can be withdrawn easily, without paying a high penalty. They include stocks and bonds traded on an Exchange.

Tan Kin Lian


Redstar said...

I believe the unemployment in Singapore is much worse than reported, maybe double the official published figure. Partly because our society and employers (including public sector) avoid hiring older people and favor those below 30.
The result is more foreigners working here at the expense of citizens. Chinese from West Malaysia can work for lower pay as the Sing dollar is 2.5 times the Malaysian ringgit. The employer and employee is also exempted from paying CPF contributions, a significant sum which translates to savings for employer and more take home pay for foreign employee.
To be fair to citizens, the levy collected from foreign labor ought to be redistributed to unemployed (especially older) citizens to help them cope with high living costs and inflation. Additional levies should be introduced in order to increase funding for unemployed/underemployed people. Example, employment pass and S-pass should pay levy instead of enjoying the fruits of our economy.

Unless some sort of such aid is extended, government has no rights to subject citizens to the harsh realities of Capitalism. Obviously, capitalism has failed in USA, Dubai and Japan.

Otherwise expect more crime and loansharking activities.

Anonymous said...

REX comments as follows,

I think it is a jolly good idea as above proposed, to use the foreign worker levy to help Singapore Citizens.

I have been wondering for many years, why is it that we have to pay a additional levy of typically, 50% of a domestic maid's salary to the government as a "levy". The govt should long realise that its stupid policies contradict one another. They want couples to marry and give birth. They make HDB prices so high. So couples husband and wife have to work - both of them- then how to make babies.. and who takes care of baby and household --- a maid is no longer a luxury if baby comes along! Yet for donkey years the govt ketuk a 50% levy on maids. and hoards away all this cash collected from the ecomically strapped ah bengs and ah lians.. and use it for god knows what purposes.

I fully support the idea of making use of the levies to recycle some of it back to the economy to make life easier for Singapore citizens.

Another way is to abolish the levy. It serves no purposes. Long ago they say they want to control the number of foreigners. It contradicts totally their policy today, they encourage foreigners!!

So the government is just doing things without thinking. It just continue to hoard and hoard and hoard cash, whilste the citizens bleed and bleed and bleed. No wonder the local population never increases, the govt just sees $$$$$$$ without understanding that their policies backfire against each other.


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