Low-wage workers to get a boost from improved Workfare Income Supplement Scheme

The Progressive Wage Model will also be extended to the lift maintenance sector.

Matthias Ang | March 05, 2019, 05:01 PM

Here's some good news that low-income Singaporean workers can look forward to.

The Workfare Income Supplement (WIS) Scheme is expected to receive multiple improvements so as to extend its coverage for low-wage workers.

This was the announcement made by Minister of State for Manpower Zaqy Mohamad in Parliament on March 5, as part of a joint address by the ministries of MOE, MND, MOM and MSF on inequality and mobility in Singapore.

Here's what these improvements will entail.

Easing of eligibility and increase in payouts

Starting from Jan. 2020, the qualifying income cap of the WIS scheme will be raised from S$2,000 to S$2,300.

This means workers who earn a salary of S$2,300 and below will be eligible to receive cash payouts and CPF top-ups.

Additionally, the maximum annual payouts will be increased by up to S$400, which means workers can potentially see higher maximum annual payouts of up to S$4,000 per year, depending on their age and income.

Zaqy stated that in total, these improvements means that 2020 will see the government disburse close to S$1 billion in annual Workfare payouts, thereby benefitting almost 440,000 Singaporeans, including those who are self-employed.

Government worries about how low-wage workers will retire

Zaqy further pointed out that another of Workfare's aims is to help Singaporeans save for retirement.

In response to a proposal by NTUC assistant secretary-general Zainal Sapari to change the current cash-to-CPF ratio of Workfare payouts from 2:3 to 4:1 (40/60 per cent to 80/20 per cent), Zaqy stated that the cash component of Workfare payouts was currently higher than when it first started.

What's more, cash payments for daily needs would increase once the improved WIS scheme begins in 2020.

On top of that, most recipients of Workfare also receive other forms of government support for their needs such as GST vouchers and U-Save rebates.

Even so, Zaqy added, the needs of low-wage workers in retirement still matter and the government worries about how these workers would cope once they stopped work.

As such, the government also wants lower-income workers to benefit from the higher interest earned in CPF.

Helping low-wage workers in sectors with depressed wages

Improving the WIS scheme was not the only measure that Zaqy announced as part of the help rendered for low-wage workers however.

Zaqy also brought up the implementation of the Progressive Wage Model (PWM) in the cleaning, security and landscaping sectors, as part of the government's attempt to uplift workers, due to the market practice of "cheap sourcing" which has resulted in wages being kept low.

Zaqy cited the model's success of real wage growth for security guards, landscape maintenance workers and cleaners, at 23 per cent, 36 per cent and 44 per cent respectively, from 2012 to 2017.

He added that the PWM would be implemented in the lift maintenance sector next.

Zaqy explained that this was because the life maintenance sector had also seen depressed wages, as a result of outsourcing.

Thus far, about approximately 70,000 workers have benefitted from the model's implementation.

Zaqy further noted that the PWM had also been established on a voluntary basis by employers and unions within the sectors of public transport and healthcare.

He said:

"We will explore facilitating more of such voluntary PWMs."

Figures show that the approach is working

In citing figures, Zaqy stated that they showed the overall approach was working.

  • Lower-wage workers have had higher income growth than the median worker, with the real gross monthly wages of workers at the 20th percentile growing by 24 per cent, in comparison to that of the median worker which grew by 21 per cent, from 2012 to 2017.
  • The same period also saw the real gross monthly household incomes of low-income households grow by 26 per cent, while that of median households grew by 24 per cent.
  • The employment rate for residents aged 25-64 also rose from 76.5 per cent to 80 per cent, from 2007 to 2017.
  • In total, this period of ten years has seen up to 830,000 Singaporeans benefit from S$5.5 billion of Workfare payouts.

Ambassador-at-large Tommy Koh gives his take on the approach

Top image Mothership file photo