Unemployment insurance: why it's elusive
It's unsustainable as a business proposition with risks from anti- or self-selection behaviour, lack of reliable database of claims experience and discouraging a return to work
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Genevieve Cua
UNEMPLOYMENT insurance appears to be a desirable hedge against economic and job uncertainty. You get a payout should you lose your job, albeit for a limited period, to help tide you over as you seek other employment.
Amid the ravages of Covid-19 on businesses and the economy, such a scheme would be a godsend. Yet private insurers have been reluctant to step up to the plate; even reinsurers are wary of such a product.
As recently as July, Senior Minister Tharman Shanmugaratnam said Singapore may have to consider some form of unemployment benefits should efforts to create jobs through traineeships and job matching efforts fail. Expectations for unemployment in Singapore are bleak while a Covid-19 vaccine is yet to materialise. Some economists expect retrenchments to hit 150,000 to 200,000 this year. The unemployment rate, which stood at 2.3 per cent at end-2019, could exceed 4 or even 5 per cent this year.
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