Singapore’s AI push needs a defensive shield to protect workers: Commentary

Singapore’s embrace of artificial intelligence represents both opportunity and peril. 

The Government’s ambitious AI thrust, enshrined in Budget 2026 and earlier Economic Strategy Review recommendations, promises to boost productivity and transform the economy. Tax incentives, training programmes and coordinated national missions signal a determined “offensive” to capture AI’s benefits.

Yet this aggressive push forward masks a troubling blind spot: While Singapore invests heavily in helping businesses deploy AI, it offers inadequate protection for the workers – particularly middle- to upper-income professionals – who stand most exposed to AI-driven displacement and income losses.

What’s missing is an equally robust “defensive” strategy that acknowledges AI’s darker possibilities and shields workers from its downsides through mechanisms like wage insurance and digital dividends. Without such protections, Singapore risks winning the AI race and even boosting economic growth, while leaving behind many of the people who should benefit from its success.

Singapore’s ambitious AI push

Singapore’s bet on AI is bold. The Budget, unveiled by Prime Minister Lawrence Wong on Feb 12, places AI at the heart of the nation’s economic future.

With a National AI Council chaired by the Prime Minister himself, new “AI missions” targeting key sectors like finance and advanced manufacturing, and generous tax incentives for businesses adopting AI technologies, Singapore is positioning itself as a global AI hub. These measures build on earlier initiatives from the Economic Strategy Review and the updated National AI Strategy 2.0, which committed over $1 billion to AI research and development through 2030.

The incentives for AI adoption are generous. Companies can now claim 400 per cent tax deductions on AI expenditures up to $50,000 annually for 2027 and 2028. The Champions of AI programme promises tailored support for firms transforming their operations through AI. Workers are encouraged to upskill through a redesigned SkillsFuture platform with clearer AI learning pathways, and those who enrol in AI courses will receive six months of free access to premium AI tools.

These initiatives will benefit Singapore’s economy and workforce in meaningful ways. Accelerating AI adoption will help businesses boost productivity and efficiency. The investment in AI infrastructure, from high-performance computing resources to regulatory sandboxes for testing new solutions, will create an environment for innovation to flourish. For workers, training and upskilling will open avenues to higher-value roles. Those who master AI tools may find themselves augmented rather than replaced and will command premium wages.

Moreover, Singapore’s coordinated approach through the National AI Council and sector-specific missions should give businesses confidence to invest boldly. The ecosystem being built – combining research excellence, business incentives and workforce development – positions Singapore not just to adopt AI, but also to create and export AI solutions. This could generate new industries and job categories that don’t exist today, much as the internet revolution spawned careers no one imagined in the pre-digital age.

The workers most at risk

Yet for all its ambition in leveraging AI’s upsides, Singapore’s strategy reveals a troubling gap: insufficient protection for workers who may face the downsides of AI-driven transformation. While the Government speaks optimistically about every Singaporean learning AI skills and workers being “augmented” by technology, concrete support for those who may lose their jobs or suffer income losses during this transition falls short.

The vulnerability here extends well beyond factory floors and call centres. Recent research reveals that generative AI disproportionately affects cognitive workers – precisely the middle- to upper-income professionals who have traditionally enjoyed job security. Various studies show that occupations involving non-routine cognitive tasks are among the most exposed to AI automation. Computer programmers, accountants, legal assistants and financial analysts, who typically have college degrees and command respectable salaries, face significant exposure.

This represents a fundamental shift from previous waves of automation, which primarily affected routine manual and clerical jobs. As the International Monetary Fund notes, nearly 60 per cent of employment in advanced economies is exposed to AI – and it’s the high-skilled workers who face the greatest risk. Singapore, with its large knowledge-intensive workforce, is particularly vulnerable.

Unlike factory workers displaced by robots, these cognitive workers often have specialised skills and years of experience in their fields. They represent a segment of the workforce that Singapore’s economy depends heavily on, yet they may be among the least prepared for sudden displacement.

Consider a 50-year-old senior software engineer with a substantial mortgage and dependents. If he or she is displaced and forced into a lower-paying role, the resulting income shock can be severe and lasting.

Where safety nets fall short

Here’s where Singapore’s current safety nets fall short.

The SkillsFuture Jobseeker Support scheme, launched in 2025, provides up to $6,000 over six months to involuntarily unemployed workers. But eligibility is capped at those earning $5,000 per month or less – effectively excluding the middle- to upper-income cognitive workers most exposed to AI displacement. A copywriter earning $8,000 monthly, or a financial analyst making $7,000, would receive no support under this scheme despite being in AI-exposed occupations.

Even those who qualify face a troubling reality: Workers who are laid off often experience large and persistent income losses when they find new employment. Research on displaced workers shows that those who lose their jobs earn on average 33 per cent less when they are re-employed, with earnings deficits persisting for years. Especially for older cognitive workers who have spent decades building specialised expertise, the erosion of human capital can be particularly severe. Their skills may not transfer readily to other sectors – a compliance officer cannot easily become a data scientist, for example – and younger, cheaper workers familiar with AI tools may hold a decisive advantage.

Wage insurance and beyond

This is where wage insurance could play a crucial role.

Unlike unemployment insurance or even the Jobseeker Support scheme, which provides temporary income support during joblessness, wage insurance reduces the gap between previous and new earnings for workers who accept lower-paying re-employment.

Recent research on the US Trade Adjustment Assistance programme demonstrates wage insurance’s effectiveness. Under that programme, workers who were involuntarily displaced by trade and found re-employment at a lower wage were eligible to receive payments covering 50 per cent of the difference between their old and new wages, subject to a two-year cap.

The evidence is striking. The programme increased employment rates by 8 to 17 percentage points in the two years following displacement, shortened unemployment duration by about three months, and increased cumulative earnings by over US$18,000 (S$22,780) during the four years after job loss. Critically, the programme proved self-financing; reduced unemployment insurance outlays and increased tax revenues from higher earnings more than covered the costs.

For Singapore’s AI-exposed cognitive workers, a thoughtfully designed wage insurance programme could serve multiple purposes. Because it pays out only when workers accept new employment – even at lower pay – it creates a direct incentive to return to work promptly rather than holding out indefinitely for a position that may never materialise.

It cushions the income shock during career transitions, helping to prevent the financial distress that can accompany prolonged unemployment. It recognises that different people may suffer varying levels of wage shocks, so its payouts are commensurately different. And it acknowledges that re-employment often entails lasting wage declines, rather than assuming that retraining alone will fully restore prior earnings.

Beyond wage insurance, Singapore might also consider mechanisms like a “digital dividend” – a share of the prosperity generated by AI deployment distributed to citizens.

This concept, advocated by technologists such as Mr Sam Altman and Mr Andrew Yang, as well as economist David Autor, who argue that AI’s productivity gains are built upon decades of collective human knowledge and publicly funded research, rests on a simple premise: If AI generates enormous profits for companies, there should also be a public return shared with citizens.

Such a dividend could be funded through taxes on automation, corporate AI profit-sharing, or levies on platforms deploying AI at scale. Much as the US state of Alaska’s Permanent Fund distributes a share of oil revenues directly to residents each year, Singapore could pioneer an equivalent “technology dividend”, ensuring AI’s benefits flow to all citizens rather than exclusively to shareholders and executives.

A further complementary measure would be to invest more deliberately in sectors less susceptible to AI automation – healthcare, early education and skilled trades – which could absorb displaced workers and provide stable employment pathways during the transition.

The case for a defensive strategy

An “offensive” strategy to harness AI is necessary and right: Singapore must, of course, move aggressively to capture AI’s economic benefits and workers must upskill and adapt. But without a corresponding “defensive” strategy to protect those who fall through the cracks – particularly the middle- to upper-income cognitive workers most exposed to AI displacement – the social fabric would risk fraying even as gross domestic product statistics shine.

Singapore prides itself on long-term strategic thinking and pragmatic policymaking. The current AI push exemplifies this tradition in its offensive ambition. But a truly comprehensive strategy would pair that ambition with equally robust worker protections: wage insurance uncapped by income, mechanisms to share AI’s prosperity broadly, and investment in sectors that AI cannot easily displace.

The AI revolution is upon us whether workers are ready or not. Singapore must ride this wave with both offensive innovation and defensive protection, or risk discovering too late that leaving workers behind will ultimately undermine the very competitiveness it seeks to preserve.

Vikram Khanna is a former associate editor of The Straits Times who writes on economic affairs.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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