Adopting a firm policy against broad public welfare and unemployment incentives has to date benefitted an economy as open as Singapore. Although the US remains one of the largest economies in the world today, entrepreneurs are increasingly finding it more attractive to form a Singapore company, in part, because of Singapore’s transparent corporate framework, sophisticated infrastructure, pragmatic immigration policies as well as multicultural fabric; and also due to the structural unemployment issue riddling the US economy.
While some people may support the welfare system in the US, it is evident today that the labor market is suffering gravely as a result. Singapore, on the other hand, is seemingly thriving with robust job creation and low unemployment rates. Evaluating the current surveys of the US Department of Labor with that of Singapore’s, we shall establish how unemployment benefits are causing more harm than good to U.S economy.
Being the third richest country in the world, (according to an evaluation conducted by Forbes magazine earlier this year, using the International Monetary Fund Data of 2010) Singapore has a different take on unemployment benefits. Unlike the US, the small city-state’s government is more inclined to re-employ rather than hand out money to the unemployed. Although this tactic may seem harsh as compared to the welfare structure in the U.S, the comparative analysis demonstrates otherwise. Just recently, the U.S. Department of Labor has estimated an 8.2% unemployment rate. This means that more than 10 million people are jobless, simply discouraged or not interested in looking for work anymore.
Unemployment benefits provide a form of social safety net to the retrenched. However it also reduces the incentive to work. Why would anybody want to work when the government is providing for their needs right at home? On the other hand, Singapore has emphasized benefits specifically for special needs groups such as the elderly, families that are in need and the disabled. Even then, the labor movement has for time, pushed for the reemployment of the elderly and hiring of the disabled. This endeavor came to fruition this year, backed by government support.
In Singapore, the less fortunate receive assistance through schemes that work towards increasing the capability of a person; through measures such as training, course fee subsidization, counseling and job matching services. This helps people to empower themselves through economic independence and encourages them to make themselves more eligible for higher skilled jobs.
In Singapore, financial assistance is offered on governmental and non-governmental levels. However, it is simply providing temporary assistance for the less fortunate, such as those who have a disability, have suffered the death of the sole breadwinner or have experienced unexpected emergency that hinders them from working temporarily. This strategy awards the grants to those who are most deserving, but at the same time, also drives capable people to apply and hone their skills at the workplace.
In addition, the singapore tax system also contributes to lowering the tax burden on individuals and encourages investors and businesses to opt for Singapore company formation. US policies need to be adjusted correspondingly if the country wants to meaningfully increase its job creation and employment rate for the longer term.