Oral Answer by Mr Tan Chuan-Jin, Minister of State for National Development and Manpower, to Parliamentary Question on income growth for low wage workers

Notice Paper No. 169 of 2011 for the Sitting on 16 January 2012
Question No. 200 for Oral Answer.

MP: Mr Zaqy Mohamad

Question:

To ask the Deputy Prime Minister and Minister for Manpower in light of his Ministry's Paper on Singaporeans in the Workforce published in October 2011 which indicates that the real income growth of Singaporeans at the 20th percentile of incomes was flat over the past decade

1. what factors contributed to this;
2. why has the real income of low-income earners not increased despite many initiatives such as skills upgrading, job re-designing and Workfare; and
3. what are the Government's strategies to improve the income-earning capability of the lower income workforce over the next decade.

Answer

1. Mr Zaqy Mohamad’s question relates to the lack of growth of real incomes over the last decade amongst Singaporeans at the 20th percentile of incomes. What happened over the decade was a story of two halves.
2. In the first half decade, Singapore experienced two serious economic downturns.¹ These downturns had the effect of depressing income growth for all Singaporeans, in particular for workers in the lower income group. In the second half decade, the economy grew faster and we saw real incomes grow. For Singaporeans at the 20th percentile, real incomes grew by 3.1% annually from 2006 to 2010. This was in fact higher than the growth in median incomes of 2.6% per annum during the same period.
3. It is therefore not correct to say that real incomes have not increased despite initiatives such as skills upgrading and job redesign. It was during the latter half of the decade that we introduced schemes like SPUR (Skills Programme for Upgrading and Resilience), and NTUC and its partners stepped up efforts to help upgrade jobs at the lower end of the income scale. Further, older low-income workers began receiving Workfare from the Government, which would have given many of them an average 10% increase in their annual income. (This is not factored in the 3.1% per annum growth in their pay.)
4. What this also shows, importantly, is that good, sustainable economic growth is a plus for Singaporeans, and especially for those in the lower income group. When the economy does not do well, the lower-income group is more badly affected.
5. As Mr Zaqy has suggested, increasing workers’ capabilities is critical to raising their incomes on a sustainable basis. Amongst other initiatives, the National Productivity and Continuing Education Council funds the Inclusive Growth Programme (IGP) to raise the productivity of low-wage jobs and bring about sustainable income growth for low-wage workers. The IGP, which is spearheaded by NTUC, requires employers to share productivity gains with their workers through higher wages.
6. The Workfare Training Support Scheme provides low-wage workers with incentives to go for and complete training to improve their skills. It complements the Workfare Income Supplement, which encourages them to stay in a job and gain experience and capability over time.
7. We will continually review these schemes to improve them, and explore new measures, including those targeted at jobs with employing significant number of low-wage workers, such as cleaning and security. Uplifting low-wage workers cannot be achieved overnight, but the Government is committed to doing so. We will work closely with our tripartite partners towards this shared objective.

¹ These were the burst of the global dot-com bubble in 2001 and SARS in 2003-04.