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Govts should take practical approach to policies as world is in uneasy fluxI CAUGHT up recently with an Italian friend who was on a visit to Singapore.迷你倉出租Having lived in China for almost a decade, he lamented the state of his home country.In Italy, unemployment has risen and stayed above 10 per cent since the global financial crisis five years ago.Youth unemployment is worse. Four in every 10 people aged between 15 and 24 do not have a job.It has caused his friends to leave the country for greener pastures, as he has, while those at home have "lost their spirit to strive", he said.But Italy is not even the worst of the countries in crisis-ridden Europe. In Spain and Greece six out of 10 young people are without a job.The average youth unemployment rate in Europe is about 25 per cent.Italy's Prime Minister Enrico Letta called it a "plague", while German Chancellor Angela Merkel spoke of a "lost generation".But the problems are not confined to these southern European countries.Even in Germany, often held up as the prescriptive economic model today, while unemployment is low, real wages have been falling, productivity slowing and investments decreasing. These are a result of companies relying on cutting labour costs rather than investing to boost productivity.Further north, the oft-heralded Scandinavian model is also losing its shine. Its social welfare systems have begun to show cracks and strains.While the economies are competitive and growing, generous universal unemployment and health-care benefits have impaired the desire to work and raised questions among citizens over what and how much is fair.A couple of years back, in Denmark, when one Member of Parliament tried to show that the welfare system did not look after enough poor people, it backfired and instead revealed the extent of consumption of welfare payouts.A 36-year-old Copenhagen resident known as Carina was discovered to have been living off welfare since age 16. The single mum of two children claimed psychiatric problems prevented her from working, and was able to save 5,000 kroner (S$1,100) each month from the 15,728 kroner in cash welfare benefits - after rent, utilities, Internet, a TV licence, dog food and vet bills, football expenses, medicine, private debts, and cigarettes.Little wonder that youth unemployment is at 14 per cent in Denmark, and 19 per cent in Finland.In contrast, my Italian friend said he sensed a dynamism in the people of China and Singapore, a spirit to strive for a better life.Yet I told him there is more to it than meets the eye.China is finding its way as it prepares to restructure its economy to lift more people out of poverty and move more into urban cities. But it still provides only a minimal and highly fragmented social safety net for its people, largely seen as inadequate.As universities churn out seven million graduates a year, the government has a monumental task of managing the social imbalances that will surely occur.Singapore has not been spared either, despite low unemployment. The country is feeling the strains of high income inequality, slowing social mobility and stubbornly low wages at the bottom.While globalisation and technology have improved lives, the twin forces have also served to迷你倉increase competition, stretch out income gaps, and hollow out jobs in the middle.The pursuit of capitalism and economic growth has brought rich rewards to the wealthy and skilled, while leaving little to trickle down.All the while, there is a great rebalancing occurring, with demand and consumption shifting from West to East.These dramatic changes have left the world in an uneasy state of flux.Deputy Prime Minister Tharman Shanmugaratnam said recently: "The problem of higher inequality and slowing or stagnating incomes for the majority is testing social systems all over the world."Established approaches to economic and social policy are being questioned, and new solutions being sought."In the past, economists debated the pros and cons of different social welfare models.Danish sociologist Gosta Esping-Andersen broadly categorised the Western models into three: a liberal model practised in Britain and the United States, the German conservative model, and the Scandinavian social democratic system. Economists later added other models, including the Southern European continental model and a fifth East Asian model, defined as where social policies are subordinate to economic priorities and with a focus on self-reliance and family support.What all those classifications and their experiences serve to tell us today, however, is that there was never one model that worked best. And indeed, those on the right are moving to the left, those at the very left are moving more to the right. But it is unclear where the twain shall meet.Even East Asian systems like Hong Kong's and Singapore's, which are traditionally characterised by little provision of social security and an emphasis on self-reliance, are changing.Hong Kong has introduced minimum wage, while Singapore is moving to universal health insurance and greater risk pooling with Medishield Life.So the only certainty, it seems, is that everyone is muddling their way through, struggling to find a new equilibrium between the community, individual and state.But what does this mean for Singapore?Its leaders have espoused some key principles to guide the country, even as they acknowledge that the balance must change.These are: target subsidies to those who need them most; provide support through measures that reinforce rather than dilute individual effort; maintain a progressive system of taxes and benefits; cultivate a sense of solidarity; and maintain fiscal prudence.There is no one-size-fits-all prescription, but I believe the principles above provide pragmatic guide posts for economies struggling to find the right balance for a future social compact.The rise and fall of various social welfare systems have shown us that culture, history and politics do matter, as well as the global forces reshaping the world around us.But as my Italian friend has observed, countries whose social systems do not complement growth, job creation or social mobility, and which are seen as unfair, lead to people perceiving the future as bleak and losing their desire to strive for a better life.The future is uncertain, but what is important is for governments to take a practical approach to policies, to move where it needs to, and not be hidebound by ideology.chanckr@sph.com.sg儲存倉