“Actually we are more ‘welfare’ than some welfare states,” Chan says, referring to the social transfers which each person in Singapore receives.
Citing housing, education and healthcare as major pillars of our social security system, Chan argues that the subsidies that are distributed through these channels far outweigh the social transfers that occur through MCYS alone.
All head, no heart?
Attempting to debunk the myth that policies are made with all head and no heart, Chan says certain programmes are put in place even though they may not make complete economic sense. He gives the example of the Workfare Income Supplement Scheme (WIS) which was introduced in 2007 and which, the Government says, is “a key pillar of Singapore’s social security landscape.”
The scheme supplements the income of workers earning less than $1,700 a month by topping up their wages. “This is a bit like subsidizing underemployment in economic terms,” the minister says. However, he adds that the top-ups would not be “justified” if they were based on productivity but the Government chooses to do it anyway. “It shows that we don’t just work on pure economics,” Chan says.
In total, about 400,000 older low-wage Singaporeans receive more than $400m annually in WIS, according to a Ministry for Manpower report this year.
To explain why the Government introduced the WIS, the minister said society has to chip in to help those who needed assistance. This was why the Government chose to go ahead with WIS even though economists had doubts about it.
“Our greatest concern”
Turning to the challenges facing Singapore, he lists as one of his main concerns the older workers with lower educational qualifications. “They are 50- years old and above, and make up one to five percent of our workforce,” Chan says. “In 10 to 20 years they will gradually be leaving the workforce. But we are never complacent. Because now people are living longer, chances are that you will still see them taking on lower income jobs. So this is our greatest concern.”
Recent changes to certain schemes have been aimed at addressing the needs of this target group. These include extending public assistance to benefit more seniors in need by relaxing the eligibility criteria as well as increasing the quantum of cash assistance.
Also, the introduction of the Retirement and Reemployment Act 2012 seeks to protect older workers and “to enable more people to continue working beyond the current statutory retirement age of 62.”
The other group that Chan thinks will face major challenges is the PMETs (Professionals, Managers, Executives and Technicians). Several Members of Parliament have also raised the predicaments which this group faces.
The problem, Chan says, is that with globalization, this group will have to compete for jobs with hordes of graduates from places like India and China. His fear is that the lower wages and lower cost of doing business in these countries will entice industries to locate overseas instead. It is a concern which Prime Minister Lee Hsien Loong has also highlighted several times.
Chan explains that with competition from countries which used to lag far behind Singapore, PMETs face tough challenges. To give this group an edge, the Government, in its 2011 Budget, announced that it “is investing S$150 million over three years to enhance the capabilities of professionals, managers, executives and technicians (PMETs).” The training programme is to equip PMETs with “a more comprehensive repertoire of skills.”
“We need to pay a lot of attention to the lower middle band of PMETs,” the minister says, “and our challenge is to make sure that they can compete individually. [We need to make sure that] there is some inherent advantage of them being part of the Singapore team.”
Prioritization
As Singapore society changes, more demand will be placed on the Government to step in and help those in need. But with the wide array of groups needing assistance, Chan says there is also a necessity to prioritize the allocation of limited resources. “Without this prioritization, sometimes people opt out of making decisions, putting a bit of everything on each thing, which doesn’t help,” he says.
The key, he says, is to distinguish between the needs of namely two groups of people: those who cannot help themselves, and those who just need some help to stand on their feet. But besides the help schemes being implemented efficiently and effectively, what is also important is their sustainability, the minister says.
Chan gives the example of ComCare which is an endowment fund. By investing the ComCare budget every year, a steady stream of revenue is then disbursed to the sectors in need. It was because of such investments that ComCare grew to S$1.5 billion presently. The aim is long-term sustainability.
“So supposing one day in 2030 when our number of working adults has dipped quite significantly and our number of elderly has gone quite high, I don’t have to fight so hard because whatever is inside that endowment fund is actually a ring-fence for social services,” Chan says.
In short, it is not simply a question of taking from one person to give to the other. “I think from one of the principles of equity - that every generation should try to spend within its means and take care of itself by planning forward, especially when the next generation is shrinking,” the minister says. “We would otherwise pass on the burden to [the next generation], which is very unfair. So whenever people ask me, ‘Why is it that sometimes when you have a budget surplus, you don’t spend it now?’ I answer them, ‘Actually, it’s either we spend it now or we keep it to spend in the future.’ So we must find that balance.”
In finding that balance among the competing needs, “hard decisions” will have to be made, he says. “You always need to prioritize and decide how you prioritize – it’s both an art and science. For the art part you need some value judgment; the science part is how to spend it a bit better.”
Interview by Elaine Ee, Andrew Loh & Biddy Low.
Pictures by Biddy Low.
Additional contribution by Chan Ngai Meng.
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