The Digital Revolution

A Case to Strengthen Singapore’s Social Safety Net

24 January 2017

Isaac Chng Yong Lun | Public Policy and Global Affairs Year 2

Singapore’s embracement of the Digital Revolution

Singapore has topped the World Economic Forum (WEF)’s network readiness index 2 years in a row for the past 2 years. The index analyses how prepared countries are to benefit from emerging technologies and opportunities created by digital innovation, which the WEF calls the fourth industrial revolution. With the recent Smart Nation vision laid out in the iN2015 Master Plan, as well as Committee for Future Economy’s preparation for the digital age, it is evident that Singapore is embracing the shift to a Digital Economy.

The Digital Economy refers to the production and consumption of digital products (e.g. sensors, data), services (e.g. Uber, PayLah), and platforms (e.g. Netflix, Carousell), and any business activity that is enabled by such technologies.

A 2016 paper by the World Bank showed that that 57% of jobs in the OECD are at risk of technological displacement. Similarly, the nature of jobs in Singapore will change and workers with obsolete skillsets must upgrade or be displaced. We must anticipate these problems and mitigate them to foster a more socially just outcome or at the very minimum, prevent an increase in social inequality across the digital divide.

Risk of Alienating Vulnerable Marginalized Workers, and Wider Implication of Rising Social Inequality across the Digital Divide

Herein lies the challenge.

Technological cycles are becoming shorter and shorter, and skills are becoming obsolete at an ever faster rate. People who are hardworking, but fails to catch up due to lack of individual talent or social facts such as family circumstances, initial poverty, etc., will fall behind in the socioeconomic spectrum.

In this rapidly changing technological environment, it becomes ever more true that one’s talent and willingness to work hard is no guarantee that one will succeed in our competitive social system. Consider that sociologists’ findings that most of the social mobility that look place in the 20th century can be accounted by increases in good jobs. Conversely, most of tomorrow’s workers falling into poverty could also be caused by changes in occupational and wage structures.

In my grandfather’s generation, one become an apprentice, master a skillset, and hold a job for life. In my father’s generation, if one gets a good degree, one could probably hold a job for life and earn enough for retirement. In our generation, our degree could just become obsolete over the next one or two decade.

According to 2015 government statistics, currently, 21% of adults aged above 50 years have not used a computer over the past year. In contrast, among Singaporeans aged 15 – 50 years, a maximum of 3% have not used a computer over the past year. Considering that 35% of Singaporeans are more than 50 years old (based on 2015 population figures), a minimum of 7.35% of Singaporeans will fall behind in the digital divide as they do not possess basic computer literacy. The actual proportion of Singaporeans falling behind will actually be higher as even basic computer literacy skills may no longer become sufficient if one wants to succeed in the economy.

We have an entire generation of persons aged 50 and above who have worked hard for all their lives. We can agree that most of them, especially those who belong to poorer families do not have computer literacy to the extent the younger people do; nor do older adults enjoy the same level of fluid intelligence and freedom from social responsibilities needed to pick up new skills as fast as youngsters do. These people will fall behind through no fault of their own, by circumstances largely outside of their control.

Social Safety Nets must be strengthened

Given this reality, it is necessary for us to strengthen and widen our social safety nets, to give these vulnerable workers the breathing space needed to upgrade and match against their younger Singaporeans.

SkillsFuture is one step in the right direction as it helps to defray the costs of upgrading. However, $500 may not be sufficient. Take the subject of Data Analytics as example, a typical online modular course by Coursera costs around $79, while a full-fledged post-diploma course on advanced data analytics costs more than $500. In this case, learners would only be able to mostly afford online modular courses. Consider that for a person with only basic computing skills, to match younger professionals would require them to spend far beyond their SkillsFuture credit allowance and pay from their own pocket. The alternative is to remain disadvantaged. And for older workers with little savings, there is no alternative.

Even if the government decides to grant free education programmes to upgrade displaced workers, the time and effort spent undergoing upgrading trainings poses an implicit cost as they remain underemployed or unemployed.

In addition, despite extensive Professional Conversion Programmes and Work-Trial programmes seeking to improve horizontal labor mobility in Singapore, these programmes are dependent on the willingness of private companies to host these convertees; thereby reducing the effectiveness of these support programmes in the event of economic downturn.

Considering this, I suggest for the institution of unemployment insurance as a stop-gap measure. It will cover unemployed workers above the age of 50 and whose 12-months moving average gross income falls below 40th percentile of household expenditure per person; a standard adapted from the upper ceiling of “2nd quintile retiree household expenditure per person” standard CPF uses to calculate the Basic Retirement Sum. This would translate to about a cap of $942 (in 2013 dollars), or $943.75 (in August 2015 Dollars) payout based on the latest 2013 Household Expenditure Survey. The payout will be the difference between the cap payout and their 12-month moving average gross income.

A 12-month average income threshold is used instead of immediate income. This is to ensure that persons who had lower income over the medium term would receive assistance ahead of persons who had higher income. The unemployment insurance payouts should not last for more than 12 months from the date of unemployment, as it should have provided the recipients with sufficient breathing space to upgrade their skills.

We Must Act

While one may argue that most unemployment in Singapore is short-term in nature, and long-term unemployment rates is at a low of 0.6%, these statistics does not account for underemployment experienced by workers, or discouraged workers who have been dropped out of the labor force measurements all together. These hidden-statistics will grow as the risk of structural unemployment increases.

Also considering that productivity in Singapore has stagnated since 2012, with productivity growth hovering at around 1%, it will come to a point where companies will be pressured to retrench workers as we lose cost-competitiveness.

Considering the negative effects of unemployment on one’s personality, intellectual abilities, psychological well-being as well as wider social effects of crime, or burden to family members, we must act.

Hence, a strong social safety net is timely and necessary to ease Singapore through the transition into a digitalized economy. Benefits to our nation-state should not come at the unreasonable expense of any parties. As humans tend to hold self-serving, egocentric bias and fundamental attribution bias, we must be mindful not to be blissfully ignorant or be dismissive of the plight of people who are left behind. As sociologists would agree, our success is not merely a product of our individual efforts but more of a result of social factors.

All in all, I’m heartened that the Singapore government have the right intentions and sufficient political will to capitalize on the digital revolution for the greater good despite the aforementioned challenges. Indeed, we should disrupt ourselves, be prepared for it, before we get disrupted unprepared. Singapore’s economic pie must grow before we talk about inclusive growth: for people on both sides of the digital divide.

With this, one suggestion: Never stop learning, keep moving forward. I hope you readers will always stay ahead of the technological change, and if you do succeed, whether by individual effort, or by favourable social conditions, don’t forget to help those who are left behind.

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