New social compact needed in post-Covid-19 world: Tharman

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He says post-Covid-19 world requires 'a certain activism' from governments

The Covid-19 pandemic has seen governments around the world unleash unprecedented fiscal firepower to save jobs and help workers.

But amid calls for the state to play a larger role, size is not all that matters - there must be a new social compact that directs markets and empowers communities towards public goals, said Senior Minister Tharman Shanmugaratnam.

He was speaking at a virtual discussion organised by the Lee Kuan Yew School of Public Policy (LKYSPP) yesterday, titled After The Pandemic - The Rebirth Of Big Government? State Capacity, Trust And Privacy In The Post-Covid-19 Era.

Mr Tharman, who is also Coordinating Minister for Social Policies, was joined by Bloomberg editor-in-chief John Micklethwait and Financial Times global business columnist Rana Foroohar at the session, which was moderated by LKYSPP associate professor of practice James Crabtree.

Mr Tharman said that navigating the post-Covid-19 world requires "a certain activism" on the part of government.

"We're not going back to large states per se, but we do have to go back to... a sense of moral purpose in government, having the confidence to convince the population that these are the right things to do - and we're all going to have to organise ourselves together to achieve it - and an ability to focus the resources of the state on what matters most, rather than everything," he said.

"So you don't necessarily have to be very large, but you have to be very good at the most important things you should be doing, and go about it with the spirit of an activist."

One of the most important priorities in both advanced as well as emerging economies, he said, is to recentre government and fiscal policy on the provision of key public goods, such as healthcare and education.

Mr Tharman pointed out that while Singapore does not have a large government, it is a highly progressive one in terms of its social security system, healthcare and education.

"And I think it will get a little more that way in the years to come."


In this regard, more contributions will have to come from those who are better off and wealthier, he said.

"Everyone should contribute something more as societies get older, but fairness dictates that things have to stack up in favour of the poor and middle- income."

Responding to a question on the need for unemployment insurance, he said such schemes, which could also be unemployment benefits financed out of taxes, would apply to societies with high structural unemployment.

But Singapore does not need this yet as its unemployment rate is low, and the Government is able to get people back into jobs quickly, he said.

"It's going to get more difficult in the next six to 12 months. And that's why we are working intensively to reskill people, put them back into firms on traineeships or attachments - even if they don't yet have a permanent job - and try to make that a pathway to a new permanent job."