What is unemployment or redundancy insurance?
Unemployment insurance (sometimes packaged as redundancy insurance) is a type of unemployment benefit which you can receive if you lose your job involuntarily.
If you’re retrenched or made redundant, payouts from redundancy insurance can help tide you over temporarily till you find a new job.
Payouts from your unemployment or redundancy insurance is drawn from an existing pool of funds.
For example, if you were previously working, a portion of your salary and another portion from your employer will be contributed to a common fund.
The government may top up the fund too.
How prevalent are unemployment benefits globally?
A large majority of workers in the APAC region (which Singapore is a part of) do not qualify for unemployment benefits, and even fewer receive them.
Only about 39% of countries have legislated unemployment benefits.
Singapore doesn’t have unemployment or redundancy insurance now.
With the increasing threat and incidences of retrenchments in Singapore, there have been calls looking into exploring unemployment insurance.
Two political parties (Singapore Democratic Party and Workers’ Party) have suggested mechanisms by which redundancy insurance can be funded and distributed to the unemployed.
Is having unemployment or redundancy insurance feasible for Singapore?
Here are 4 pros supporting unemployment insurance.
Unemployment insurance is a safety net, so you can still buy meat home for your children even though you lost your job.
Unemployment insurance keeps low income households out of poverty. In Singapore, we have ComCare to help the low income families, but every extra cent counts.
Unemployment insurance allows the unemployed more time to find a job suitable for them.
Unemployment insurance stabilises the economy by ensuring expenditure on goods and services. But it depends if you can bear to spend that dollar you received from your payout, or save for a really rainy day.
Featured photo source: Unemployment Help