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Workfare and support for low-wage workers

  • The Straits Times (7 December 2018): Time for minimum wage pilot tests
  • The Straits Times (7 December 2018): With economic growth, why aren't low-wage workers earning more?

Workfare and support for low-wage workers
- The Straits Times, 18 December 2018

  1. We refer to Mr Tan Kar Quan and Mr Kelvin Hong’s letters (“Time for minimum wage pilot tests”; “With economic growth, why aren’t low-wage workers earning more?” Dec 7).
  2. A broad spectrum of Singaporean workers has benefitted from wage growth in the last decade. Between 2012 and 2017, wages at the 20th percentile grew at 4.2 per cent per annum, faster than median wage growth of 3.4 per cent in real terms.
  3. The topic of minimum wage is not new. After decades of debate, economists remain divided.
  4. Introduced in 2007, Workfare reflects Singapore’s approach of going beyond this debate to find a solution that works for our society. Workfare took inspiration from the Earned Income Tax Credit, which was implemented in the United States and is regarded by some quarters as one of the more effective programmes to uplift low-wage workers.
  5. Workfare payouts are targeted at those with limited household support, with more going to older workers. For example, a 65-year old worker earning $1,200 monthly would receive $300 more through Workfare each month. Over the past decade, about 830,000 Singaporeans have benefited from the $5.5 billion disbursed through Workfare.
  6. Most Workfare recipients qualify for other forms of social support. The same worker in the example above would receive government transfers comprising Workfare, Silver Support and GST Vouchers amounting to nearly six months’ salary or $7,000 annually.
  7. In sectors where “cheap outsourcing” reduces the incentive to upskill workers and limits their bargaining power, the tripartite partners have implemented the Progressive Wage Model (PWM).
  8. Unlike a minimum wage, PWM is a ladder, not a floor. Every worker can earn more wages through better skills, enlarged responsibilities and higher productivity. PWM also takes into account sectoral differences and offers a pathway for raising pay which both employers and employees can accept.
  9. Mandatory implementation of PWM in four sectors benefits over 70,000 workers. Thousands more benefit from their employers’ voluntary adoption of PWM.
  10. Proponents of a minimum wage share the same strong desire as the Government in wanting to mitigate inequality and better distribute gains in our society.
  11. Workfare and PWM, together with many other support measures have uplifted low-wage workers, while keeping employment levels high and unemployment low. They are by no means inferior to a minimum wage and continue to be enhanced regularly.

Lim Tze Jiat
Workplace Policy and Strategy Division
Ministry of Manpower


 Time for minimum wage pilot tests
- The Straits Times, 7 December 2018

 The conversation on a minimum wage has been going on for too long and it is time to implement pilot tests to see if this model will work for our society ($15 okay for bowl of ramen, but not more than $3 for hawker food?; Dec 2).    

  1. We have started with the progressive wage model in some industries, like cleaning and landscaping.
  2. We can perhaps roll this out to other sectors.
  3. Personally, I am not in favour of a minimum wage model as I believe that productivity needs to be higher than wages, or this might create side effects that may be hard to reverse. There is also the argument that productivity can be difficult to measure. 
  4. Some of the repercussions of the minimum wage or living wage models are based on academic studies and observations in countries that are currently adopting these structures.
  5. However, we do not know if rolling out the minimum wage system will actually lead to such ill-effects here.
  6. Hence, the Government should look into implementing a minimum wage in some sectors, and closely watch the results.
  7. With technology transforming and disrupting our way of life, there are more pressing issues to tackle.
  8. So, perhaps, it is time to put the minimum wage conversation into action.   

With economic growth, why aren't low-wage workers earning more?
- The Straits Times, 7 December 2018

  1. I felt the minimum wage roundtable was disappointing as it appeared to be a rehashing of the same opinions ($15 okay for bowl of ramen, but not more than $3 for hawker food?; Dec 2).
  2. As there seems to be an agreement that low-wage workers are underpaid, perhaps there could be a more robust analysis of why this is so.
  3. After all, with minimal government intervention and a non-adversarial trade union, wages have largely been determined by free market forces. With robust economic growth over the years, why or how have these workers' wages slumped instead?
  4. A more robust analysis of the root causes should guide our policymaking. This is more fruitful than continuing the debate of a universal minimum wage versus the Singapore-style progressive wage model with the Workfare Income Supplement.
  5. In addition, the focus on wage alone is insufficient as it does not take into account the subsidies and other forms of financial assistance that the Government provides.
  6. Finally, we need more engagement with low-wage workers themselves. Let's hear their stories and seek to understand their struggles.