Legislating retrenchment benefits does not guarantee better outcomes for retrenched employees, said Manpower Minister Josephine Teo in Parliament on Tuesday (6 Oct).
Ms Teo was responding to a question by The Workers’ Party (WP) Member of Parliament (MP) for Sengkang GRC Louis Chua Kheng Wee on whether a baseline retrenchment benefit can be legislated.
The Minister argued that a legislated baseline would likely become the default, adding that employers would unlikely be willing to pay more even when they can afford to do so.
“On the other hand, setting a high baseline retrenchment benefit would strain the financial health of businesses that are already struggling, and potentially jeopardise their viability and the jobs of the remaining employees,” she explained.
Ms Teo went on to say that with legislation retrenchment benefits, employers would also be less likely to offer long-term or permanent contracts to employees, but resort more to hiring employees on short-term contracts.
According to the Minister, helping retrenched workers find another job would be a more practical approach.
“While recognising the usefulness of retrenchment benefit and encouraging employers to pay according to the prevailing norms, we are even more focused on helping retrenched workers return to the workforce,” she added.
Besides heavy subsidies for skills programmes, Ms Teo said that the Government have been providing substantial training and wage support to employers while their new hires undergo conversion programmes.
“During this period when hiring sentiments have weaken, we have significantly enhanced the support to local job seekers,” she remarked, citing the benefits from schemes such as the Jobs Growth Incentive and SGUnited training programmes.
