Mr Speaker,
I rise in support of the original motion.
The full report of the Economic Strategy Review or ESR, released on the 24th of
June, goes to the heart of what kind of economy and what kind of society we want
Singapore to build for our workers.
It is situated within a world increasingly shaped by artificial intelligence, technological
disruption, geopolitical fragmentation, and intensifying economic competition.
In addition, the ESR speaks extensively about jobs and strengthening resilience, with
Section B of the report specifically devoted to it. Thrust 6 makes a specific call to
shorten the current requirement for companies to submit a mandatory retrenchment
notification within five working days after workers are notified.
My speech will expand on this and focus on worker resilience, the reality of how a
retrenchment hits our workers and how we can better support them. Because a
resilient economy cannot be built on the backs of insecure workers.
That is why I believe the time has come for Singapore to legislate minimum
retrenchment benefits, a subject I have pursued previously in this House, most
recently in April this year, and separately in the context of the ongoing review of the
Employment Act. In advocating for the legislation of retrenchment benefits, my
speech will cover four broad sections. First, I will provide a broad overview of the
retrenchment situation in Singapore. Second, I will summarise the legal position on
the retrenchment benefits in Singapore. Thirdly, I will explain why retrenchment
benefits are important for workers. Fourthly, I will address the common reasons
against the legislation of retrenchment benefits and how they should be reviewed, in
light of the ESR’s broader recommendations.
The Growing Importance of Retrenchment Protection
First, the local situation. Last Friday, a Straits Times published an article titled,
‘Singapore adds more jobs in Q2 even as retrenchments rose’. Within the story, it
was reported that the 4500 retrenchments from April to June this year were the
highest since the last quarter of 2020.
Over the last 12 months, Lazada, Gardenia, Shopee, Asia-Pacific Breweries, Agoda,
DHL and Yeo Hiap Seng are just some of the household names that have
announced retrenchments which made the headlines in Singapore, with some
moving operations across the border to Malaysia. In 2024, the major technology
companies in Singapore such as Meta, TikTok, Dyson, Microsoft and Google
collectively cut at least 9000 jobs in Singapore.
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In this regard, two specific datapoints are noteworthy.
Firstly, in 2024 and 2025, total employment in Singapore grew and the
unemployment rate has remained low at around 2 per cent in 2024 and 2025.
However, recorded retrenchments have increased in recent years, from 6,440 in
2022 to 13,020 in 2024 and 14,490 in 2025.
Secondly, from 2020 to 2025, eight out of ten eligible employees were paid
retrenchment benefits at or above the prevailing tripartite guideline of two weeks’
salary for every year of service. This bodes well for a baseline legislated minimum
retrenchment benefit starting point for all firms. This data point provided by the
Ministry of Manpower does not specifically reveal how many workers received the
unionised norm of one month’s salary for every year of service, although I
understand this is not uncommon in many collective agreements.
Critically though, what we can reasonably extrapolate from both these data points is
that, in 2024 for example, potentially close to 3,000 retrenched workers in Singapore
either received no retrenchment benefits at all, or received less than what is
prescribed by the tripartite guidelines. That is not a small number by any stretch.
Today, many economies in Asia provide some form of legislated statutory protection
for retrenched workers. However, workers in Singapore have no statutory entitlement
to retrenchment benefits. Outside contract, retrenchment benefits remain largely
governed by tripartite norms and employer practices.
To receive retrenchment benefits, workers in Singapore are dependent on the
goodwill of employers, the terms of their employment contracts, or the strength of
their bargaining position after they have already lost their jobs.
This legislative omission in our employment laws sits in stark contrast to the realities
our workers face as set out by the ESR report - First, that Singaporeans should not
assume that economic growth will automatically result in the same extent of job
creation as before, and secondly, that despite Singapore’s positive employment
situation, worker anxiety has increased across a wide range of sectors.
What the Courts Have Told Us
I now move to the next section of my speech on the legal position.
Singapore’s courts and tribunals have reaffirmed a legal position that does not sit
easily with many workers.
In JIF v JIG [2026] SGECT 3, the Employment Claims Tribunal held that section 45
of the Employment Act does not create a statutory entitlement to retrenchment
benefits. The Tribunal held that retrenchment benefits are payable only where they
arise from a contract of employment, collective agreement, or some other legal
basis. Tripartite guidelines do not create such a legal basis.
Indeed, this position can be traced back to the Court of Appeal’s decision
in Bethlehem Singapore Pte Ltd v Ler Hock Seng, which made clear that section 45
does not compel employers to pay retrenchment benefits simply because an
employee has completed a qualifying period of service.
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The significance of the tribunal judgment in particular is magnified by its timing and it
forces us to confront an important policy question.
At the very moment the ESR is asking Singaporeans to prepare for an era of more
frequent restructuring, more rapid technological disruption and greater economic
uncertainty, the courts have reminded us that workers facing retrenchment possess
no general statutory entitlement to retrenchment benefits.
The question before Parliament is whether the law remains adequate for workers
and the economy that the ESR hopes to evince. In my view, the law has fallen
behind.
Singapore’s Position in Asia
Let us look around the region.
China legislates economic compensation for workers affected by redundancy and
restructuring.
South Korea imposes significant legal requirements before redundancies may be
carried out.
Taiwan legislates severance entitlements.
Malaysia legislates termination and lay-off benefits.
Thailand legislates severance payments based on years of service.
Indonesia legislates retrenchment compensation.
The Philippines legislates separation pay.
These countries differ enormously in their political systems, labour markets and
stages of economic development.
Yet they have all reached a common conclusion: business flexibility for employers
and worker protection are not mutually exclusive.
Why Retrenchment Benefits Matter
I now move on to my third section on why retrenchment benefits are crucial for our
workers.
Retrenchment benefits matter because they support workers and their families
precisely at the stage of life when financial obligations can often be at their greatest.
They represent an important layer of support provided by employers, complementing
taxpayer-funded assistance such as jobseeker support.
In the Singapore context, this additional financial relief is especially important given
how leveraged many households are.
According to DBS Bank’s 2025 instalment of its Financial Wellness Series which
analysed aggregated and anonymised data from approximately two million
DBS/POSB retail customers, Gen Zs and millennials aged 25 to 44 are increasingly
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shouldering heavier liabilities and are falling behind their older counterparts in
building retirement savings. Among pre-retirement age groups, those aged 35 to 44
are the most financially stretched, with debts slightly outweighing liquid assets,
largely due to housing, vehicle and credit card loans.
Outside these age bands, when a worker in his fifties loses his job, the
consequences extend far beyond immediate income loss. CPF contributions stop.
Retirement balances grow more slowly. Housing obligations continue. Healthcare
expenses continue. Caregiving responsibilities continue.
Retrenchment is not merely a labour market issue. For many, it is also a retirement
adequacy issue, a housing issue, a family issue and a social stability issue.
As Singapore transits towards a high-wage, high-cost economy, the effects of
retrenchment will become even more severe if workers are unable to secure
employment at a comparable income level. The mental health dimension of job loss
and financial insecurity cannot be understated either.
Taxpayers are playing their part financing the Jobseeker Support Scheme and the
government and labour movement are devoting significant resources towards
retraining. Employers must play their part too. Based on the available data on
retrenchment benefits, we know that many employers are already prepared to
shoulder that responsibility and payout retrenchment benefits to workers.
A Familiar Debate About Worker Protection
The fourth section of my speech will deal with the arguments against the legislation
of retrenchment benefits.
Throughout Singapore’s history, many worker protections were initially criticised as
threats to business competitiveness. When Workfare was introduced, concerns were
raised about costs, even as Workfare was taxpayer-funded. When the Progressive
Wage Model was expanded, concerns were raised about costs, especially after
government wage support tapers off.When platform workers were granted stronger
protections, concerns were again raised about costs.
In fact, when the Government announced the review of the Employment Act last
year, the Singapore National Employers Federation cautioned that the review should
not, and I quote, “inadvertently mandate progressive employment practices that may
reduce flexibilities for employers and undermine business competitiveness”.
Yet advancing major pro-worker reforms are always important because economic
growth alone is not enough. Today, we regard things like Workfare as part of a
mature and balanced economic system.
Retrenchment benefits should be viewed in exactly the same way.
Addressing the Government’s Concerns
Over the years, the Ministry of Manpower has advanced several arguments against
legislating retrenchment benefits for our workers.
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However, the risks it has hitherto identified should be carefully examined and
weighed afresh against the increasingly unpredictable economic landscape facing
workers in the years ahead as outlined by the ESR report.
Concern 1: Employers May Avoid Permanent Employment
The first argument is that mandatory retrenchment benefits may make employers
more hesitant to offer long-term or permanent employment contracts.
Yet, the existence of mandatory retrenchment benefits in many economies including
advanced economies has not eliminated permanent employment.
It is clear that such decisions are influenced by a range of factors, including labour
demand, skills and manpower shortages, productivity and broader labour market
regulations. In the Singapore context, a generally tight labour market could have the
opposite effect with employers competing to hire the best, with a permanent contract
an important lure.
Concern 2: The Legal Minimum May Become the Norm
Second, the Government has argued that legislating a minimum retrenchment
benefit may result in employers converging on that minimum. However, the facts do
not fully support this concern.
There is already a tripartite guideline. There are already collective agreements that
prescribe retrenchment benefits and the vast majority of employers converge at
those benchmarks anyway, with a very small number, paying more than the onemonth norm for each year of service.
It is therefore not obvious that legislation would necessarily result in different status
quo with employers prevented from paying a higher amount should they deem it
appropriate.
Concern 3: Financially Distressed Companies May Be Harmed
Finally, it has been argued that mandatory retrenchment benefits may affect the
viability of companies already facing financial difficulties and could place remaining
employees at greater risk.
This concern must be weighed against the reality that financial difficulty does not
automatically extinguish obligations of distressed firms such as unpaid wages, CPF
contributions, taxes, supplier debts or bank loans.
Businesses do also account for employee leave encashment, gratuity obligations,
contractual liabilities and debt repayments. Retrenchment benefits can be similarly
treated as a foreseeable employment cost as they are today by progressive
employers.
More importantly, this argument assumes that retrenchments occur only when
companies are losing money.
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But that is not always the case.
Many retrenchments occur when profitable firms restructure, automate functions,
consolidate operations, relocate activities or seek to improve profitability, as we have
seen in Singapore over the last few years.
In such circumstances, retrenchment is often a strategic business decision rather
than a last resort.Indeed, this helps explain why some unions have successfully
negotiated for enhanced retrenchment benefits in the absence of statutory
protection, precisely because not all firms retrench workers due to financial distress.
Responding to Concerns About Legislation
Like earlier efforts to strengthen worker protection, legislating retrenchment benefits
will inevitably attract concerns from businesses. Those concerns deserve attention
and respect because it is neither simple nor straightforward to start, build and sustain
a business.
However, we should not forget that many responsible employers already provide
retrenchment benefits.
Eight out of ten eligible employees already receive retrenchment benefits upto the
tripartite guideline of two weeks’ salary for every year of service. This can serve as
the starting point of legislated retrenchment benefits.
This would largely formalise an existing practice while ensuring that workers - who
fall through the gap that cannot be bridged non-binding tripartite guidelines - are
protected. Responsible employers would no longer be disadvantaged relative to
those who provide below the bare minimum or nothing at all.
A statutory framework could also be enhanced by subsidiary legislation directing
higher payouts for larger firms, such as the union norm of up to one month’s salary
for every year of service, something which larger global MNCs would not necessarily
balk at, especially since they already are subject to legislative regimes governing
retrenchment benefits in other countries where they operate.
The ability of smaller employers to pay retrenchment benefits often comes up as a
concern against legislating retrenchment benefits completely. The concerns of these
small businesses are not irrelevant or unimportant. A business with a revenue of half
a million is certainly a different enterprise compared to one that records $50m in
revenue. Various countries address this particular issue differently, even as they
legislate for retrenchment benefits. Some create backstops such as national
insurance schemes, while others advance wage-guarantee agreements, while yet
others treat retrenchment benefits as a preferential debt through insolvency laws.
These are not unchartered waters, and a perfect legislative retrenchment benefits
regime does not need to be the enemy of a good regime that protects more workers
than it does today.
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Conclusion
In conclusion, the call for legislating retrenchment benefits is about what kind of
society we want Singapore to become.
The ESR calls on more international enterprises to set up regional headquarters in
Singapore and is fundamentally an economic plan for the future. It sees international
trust in the Singapore brand as a strategic asset that Singapore rightly seeks to
leverage in advancing its economic value proposition.
Yet that trust also hosts an important domestic dimension that builds the Singapore
brand.
Trust and commitment to an employer is strengthened when workers know that, after
years of service, if restructuring occurs through no fault of their own, they will receive
fair and meaningful protection.
Therefore, as part of the Government’s implementation of the Economic Strategy
Review, I urge the Government to convene employers, unions and workers to
develop a statutory retrenchment benefits framework, with the objective of
introducing legislation.
A resilient society requires workers who know they will not be left to bear the
burdens of economic change alone. Because in line with the call of the labour
movement and NTUC no less, while not every job can be protected, every worker
deserves protection.
I support the motion in the names of MP Kenneth Tiong and Jamus Lim’s calling for
an inclusive and equal economy for all Singaporeans.
Thank you Mr Speaker.
