Cash or coaching?

ONE of the trickiest questions is how to give help to those who need it - in particular, the expected large numbers of jobless Singaporeans.

For years, the official position has been to teach the unemployed and lower- income to fish, rather than to give them the fish outright.

But recently, the rules appear to have been relaxed on this principle. A few years ago, the Workfare scheme was introduced to give an income boost to lower- wage workers.

And in November last year, the Government set up a $600 million retraining scheme with an allowance for jobless Singaporeans who attend training courses - the closest it has come to unemployment benefits.

These measures are expected to be extended to more Singaporeans and formalised for permanency in this year's Budget, observers say.

But more direct help would also be useful, suggested MP Inderjit Singh. 'Companies can't just send their workers for training for a few months to wait out the downturn. Their decision may be to discontinue the business altogether.'

His 'drastic' suggestion: For the Government to supplement workers' income. Cold hard cash will be more effective than training programmes, and should be given not just to the lowest-income households but also to retrenched workers who may not qualify for other help.

While assistance for the unemployed and poor will probably still come with retraining strings attached, 'we are likely to see elements of a more extensive welfare support', said political analyst Eugene Tan of the Singapore Management University.

Mr Bilveer Singh, associate professor in political science at the National University of Singapore, agreed.

'Despite the allergy towards a welfare system, one of the things we have noticed in every crisis in the last 15 years is that inevitably the Government has expanded and deepened the safety net, whether through handouts or social assistance programmes,' he said.

'Having a widened, deepened safety net might be politically and socially costly and may be a slippery slope, but they have no choice because not having it would have an even higher political price.'

Cash handouts are likely to be on the agenda again, but some are plumping for shopping vouchers, which would do double duty by also propping up domestic demand. Taiwan recently took this unusual route, giving each citizen NT$3,600 (S$161) in vouchers to spend.

Clearly, there is no road map for a crisis of this scale. Despite all the clues so far, it's difficult to know what the Government is thinking and planning.

But perhaps it would do well to take a cue from economist Paul Krugman, as suggested by tax firm Ernst & Young recently: 'When depression economics prevails, the usual rules of economic policy no longer apply. Virtue becomes vice, caution is risky and prudence is folly.

'In normal times, modesty and prudence in policy goals are good things. Under current conditions, however, it's much better to err on the side of doing too much than on the side of doing too little.'

This article was first published in The Straits Times on January 17, 2009.