(Delivered in Parliament on 26 February 2020)
Budget Speech 2020
UNITY AMIDST DISRUPTION
The government has called this year’s Budget a Unity Budget. Following from the theme of unity, the focus of my speech today is Unity Amidst Disruption.
Of all the areas covered by DPM Heng Swee Keat’s Budget speech, I was especially interested in the section on Navigating Long-Term Structural Shifts. He acknowledged the global decline in support for globalisation, with protectionism and nativism on the rise. On my part, I have been studying the phenomenon of globalisation for a while, and I would argue that the main debate today is not between those who support or reject globalisation. Instead, it is a more nuanced and constructive debate, about the kind of globalisation we should strive for, that would improve human welfare in a sustainable way. Those who advocate such human-centred globalisation are sometimes called “alternative globalisers”.
At the outset, I should say that Singapore has been a major beneficiary of globalisation, with the government providing leadership in this endeavour over the years. We have benefitted from open trade, foreign investment and becoming a global financial centre. We are increasingly becoming a global knowledge hub. While these benefits are undeniable, the question is how the “losers” from globalisation are treated.
In 2006 when Singapore hosted the World Bank meetings, we were met head-on by protestors who came from abroad to make their customary presence felt at these meetings. While some may see them as disruptive and a nuisance, it is increasingly acknowledged that their underlying concerns were valid. These were concerns about the excesses of global capitalism, such as market destabilization and exploitation of workers in poorer countries, and the destruction of the environment through pollution. Though some far-right groups in the world today seem to reject globalisation outright, this is not constructive, as it is simply not possible to unwind today’s world of interconnectedness and multi-polar supply chains. The most useful debate today is between the Neoliberalists, who overwhelmingly believe in the global free market, and the Reformists, who argue that global capitalism can be a force for good only when accompanied by policies that promote equitable growth, human security and sustainable development.
Today, three decades after globalisation took off, the protestors’ core concerns are being recognised in the halls of power. Climate Change is on the international agenda and in this Budget. The OECD has sponsored work on subjective well-being and social welfare. Green financing is gaining momentum, with EU law requiring large companies to publish climate-related financial disclosures.
International financial institutions, such as the IMF (International Monetary Fund) and the World Bank, have had a re-think about their policies. This is especially so after the experience of the Asian Financial Crisis and the collapse of Latin American economies that took their advice. It is now acknowledged by these institutions that different countries are at different states of readiness, that there can be no universal set of rules for everyone. Indeed, the relative success of China and India in the era of globalisation has been attributed to their opening up of their markets in an incremental manner, giving local enterprises and workers time to adapt. The lessons from the 1990s show that governments have an important role to play, to actively manage globalisation for their respective countries. The World Bank highlights that governments need to pay attention to the aspect of human security, such as through targeted poverty reduction and social safety nets.
I believe the Singapore government knows this literature all too well. Though the government does not label its initiatives in terms of alternative globalisation, some of its policies including in this Budget seek to mitigate the harsh impacts of economic liberalization on Singaporeans. There are various schemes for targeted poverty reduction, e.g. through rebates and other financial transfers weighted in favour of the poor. There are also important social safety nets, such as retraining and reskilling efforts, which it is now re-doubling on.
Yet, as DPM Heng acknowledges, workers have anxiety, especially those in their 40s and 50s. It is useful to unpack the source of such anxiety. Workers in their 40s and 50s are at a stage of their lives when they can least afford income disruption: they have children to raise, mortgages to pay, and elderly parents who may be ailing and need financial support. Disruption can come anytime, through industries being off-shored elsewhere, or by being displaced through foreign competition within Singapore. To this end, I agree with the government’s effort in this Budget to boost the hiring of locals and mid-career transitioners, by reducing the S-Pass sub-DRC in the construction, marine and process industries.
Despite all these efforts, mid-career workers’ anxiety will be hard to assuage. Why? Transitions into new industries take time. There could be mismatch between openings and applicants. Seeking assistance from government agencies also positions the citizen as someone applying for help, which can be a humbling experience. All this can be a tremendous mental and emotional strain on the whole family. To illustrate, I know of one retrenched man, who has still not told his wife that he lost his job some months ago; every day he leaves home as usual and comes back at the usual time, while trying to find another job.
In dealing with the long-term structural shifts, the government has devoted significant resources to enable workers to skill-up and transit to other industries. This is certainly needed. But is it time now to consider other measures too, that Singaporeans can tap on more seamlessly, and for security and peace of mind? It had always been a tenet of this government to promote self-reliance among Singaporeans. Singaporeans, too, prefer to be self-reliant and not have to seek government assistance at every turn.
With the weak economic outlook and soft job market, it may be the time to re-examine some policy approaches. For instance, I know of some mid-career employees who had been laid off and turned to government agencies for assistance, but were unable to secure work for months, a point Ms Jessica Tan alluded to earlier. Some of them wanted to chart their own re-skilling towards a professional qualification in another field, which would require a significant cash outlay. One measure which should be considered is allowing more liberal use of CPF savings for education and re-skilling. This would be reasonable for CPF members whose savings already exceed the applicable Minimum Sums. I will speak more about this at the Ministry of Manpower’s Committee of Supply debate.
Another measure for consideration is some sort of redundancy insurance. This has been previously debated in this House, with the government calling it “not a crazy idea”, but preferring its current approach of job creation and re-skilling. How confident is the government that its existing schemes will be able to find solutions for everyone who applies? Today’s economic climate illustrates how such insurance could provide a stabiliser to workers, to soften the cliff-edge that they face with job disruption. Suffice to say for now that the government would need to re-assess its approaches periodically, as economic and technological realities change. If the anxiety of citizens is not taken seriously enough, the door to populism and nativism will widen.
Mr Speaker, I have tried in this Speech to sketch out how globalisation has largely been a boon especially to Asia and to Singapore. The forces of globalisation also pressure us to constantly up our game, reskill and be prepared to be uprooted to stay relevant. This transition is not easy, and I appreciate that the government has poured in resources to support Singaporeans in reskilling and career transition. However, the anxiety and insecurity aspects will also need to be addressed adequately, in order to shore up the concept of Unity which is the theme of this Budget.