Out of the box Give a soft loan instead
During an economic downturn, it is difficult to decide on who should or should not get financial assistance from the government. 

The government is reluctant to give money to people who can cope, so there have to draw a line somewhere to determine who are poor and need assistance, and who can do without assistance. 

Wherever the line is drawn, there will be people on the margin that are left out. They will be unhappy. 

A better approach is to give a soft loan to cover any loss of income. This loan will carry a low rate of interest and has to be repaid in the future. 

Some of the potential recipient may opt to go without the loan, if they can cope with the loss of income or have sufficient savings.  They do not want to overspend now and face the burden of repayment. 

It would be a different matter, if the financial assistance is given as a handout. Everybody will feel that they are entitled to the handout. If they are denied the payment, most will feel that they are unfairly treated. 

If a soft loan is given to a low income recipient, there is a risk that it will not be repaid. In that case, the debt has to be written off or be forgiven. Only a small proportion, say 20%, of the loan may have to be written off, as most recipients would make the effort to repay the loan. It is a matter of personal pride and honor.

I would argue that a similar approach should be adopted to help people who lost their jobs due to retrenchment. It is better to give them a soft loan to cover the loss of income, rather than an unemployment benefit.  The loan can be given for a period of one or two years, and should not be extended for too long, unless the recipient is in poor health.

Tan Kin Lian

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