In the backdrop of increasing retrenchments, the Workers’ Party (WP) has proposed redundancy scheme that would give a “modest” payouts to retrenched worker via a 17-page paper released yesterday (Dec 12).
In the scheme, employers and employees will each contribute 0.05% of their monthly salaries to a common pool. When a worker gets retrenched, he will then receive a payout from this pool.
This will allow the retrenched to have “some breathing space and the peace of mind to retrain, upgrade their skills and look for suitable employment”.
From the pool, a retrenched worker will get a payout of 40% of his last-drawn salary for up to six months, subjected to a cap on the prevailing median wage.
Given the number of redundancies in 2014 and 2015, the Worker’s Party has estimated that the payout would average around $63 million while the premiums collected would be about S$100 a year thus giving a “healthy buffer”.
After the first month, workers must demonstrate that they are actively seeking employment to continue receiving payouts. They would have to sigh a declaration and be subject to periodic audits.
Unsurprisingly, the scheme was met with criticisms from PAP MPs, with Pasir Ris-Punggol GRC MP Zainal Sapari saying that schemes in other countries have failed.
He added that such a scheme “may also create a moral hazard, where workers would intentionally make themselves redundant to get the payout”.
From Zainal’s comments, it is unclear who would make himself redundant to get a payout of 40% of his last drawn salary for 6 months.