Unpacking the Implications of the Latest Budget Changes
As Speaker of Parliament Tan Chuan-Jin concluded the Committee of Supply debates last Friday, it marked the end of the significant Budget 2022 discussions.
From postponed GST hikes to doubled GST vouchers, increased carbon taxes, and higher taxes for the wealthy, the reception to Budget 2022 has been largely positive—despite some murmurs of discontent. Those familiar with the budget proceedings often find the subsequent debates even more engaging. This time, however, one particularly perplexing issue surrounding the Workfare Income Supplement (WIS) emerged repeatedly.
After extensive discussions with my editor, we both find ourselves puzzled, unable to understand the rationale behind the continuous back-and-forth. One of the new measures in Budget 2022 introduced by Minister Lawrence Wong was a minimum salary criterion for the WIS set at S$500. Additionally, annual payouts for Workfare will increase across all tiers, with the age range expanding to include those aged 30 to 34 and the income cap raised from S$2,300 to S$2,500.
While these changes seem beneficial for easing the financial struggles of low-wage workers, implementing a minimum requirement for receiving government aid raises questions and may signal a more significant shift ahead.
Fixing What Isn’t Broken
The WIS was first introduced in 2007 as a broad-based initiative designed to supplement the incomes of lower-income workers and help them save for retirement. According to its official description, this program supports Singaporean workers earning within the bottom 20%. Low-wage workers receive their Workfare through CPF top-ups and cash payouts that vary by age group, with older workers typically receiving higher amounts.
For example, a 57-year-old earning S$500 per month would receive S$55 in cash each month, along with an S$82 contribution to their CPF.
Alongside the Progressive Wage Model (PWM), these initiatives aim to uplift low-wage workers while maintaining high employment levels. In many ways, Workfare has succeeded in its objectives. As of December 2021, the program had disbursed a total of S$8.6 billion to over 964,000 low-wage workers. Given the success of this system over the past decade, it is perplexing that the government would choose to impose a new minimum criterion that could hinder those who need Workfare the most.
Full-Time Work as a Privilege
Starting January 1, 2023, individuals receiving Workfare must earn a minimum of S$500 per month to qualify for payouts. This measure aims to encourage casual and part-time workers to seek full-time employment. While the intentions behind this criterion may be commendable, they do not account for individuals who cannot transition to full-time roles.
In Singapore, there exists a dichotomy between part-time and full-time work. Achieving full-time employment is often regarded as a rite of passage towards a successful life, while part-time work is frequently viewed as a temporary arrangement or a stepping stone for those in transition—whether in school or between jobs.
We often overlook the fact that having a full-time job is a privilege. As Leader of the Opposition Pritam Singh pointed out, individuals in part-time positions may be caregivers who cannot commit to full-time roles. Others may simply be unable to work long hours in demanding jobs for various reasons, including age.
PAP MP Jessica Tan from East Coast GRC echoed these sentiments, noting that the new S$500 minimum wage could adversely affect older low-wage workers or caregivers who require the flexibility of part-time work. She cited the example of Mdm Lee, a relief program coordinator at an Elder Care Center, who earns between S$200 and S$500 monthly. Mdm Lee is concerned that she might lose her cash payout once the S$500 minimum takes effect.
While many might see flexibility in employment as merely an advantage, for others, it is crucial for their ability to maintain a job. For caregivers, older workers, or those with disabilities, part-time work is often the most viable option, allowing them to earn a living while accommodating their specific needs. Therefore, Workfare serves as a means to supplement their income should circumstances prevent them from working that month.
However, imposing a S$500 monthly minimum creates additional pressure, making these workers feel compelled to take on more shifts than they can handle, resulting in unnecessary stress. As Ms. Tan pointed out, these new criteria may ultimately harm the very individuals they are intended to support.
Only 20,000 Workers Affected
In response to concerns raised by Mr. Singh and Ms. Tan, Minister for Manpower Dr. Tan See Leng stated that only about 20,000 Workfare recipients—primarily casual or part-time workers—would be impacted by the new criterion. He added that if any of these workers were to increase their hours and earnings beyond S$500, they would automatically requalify for Workfare.
Dr. Tan emphasized that S$500 per month is a reasonable and attainable wage for most regular workers under the Progressive Wage Model. He further challenged the figure of 46,600 workers quoted by Mr. Singh, asserting it did not consider wage growth from the PWM expansion and new Local Qualifying Salary (LQS) requirements, which would uplift many employees above the S$500 threshold.
Additionally, Dr. Tan assured that those unable to meet the S$500 threshold due to circumstances—such as individuals with disabilities or ComCare recipients—would continue to receive Workfare payouts. The new LQS mandates that firms employing foreign workers pay all local part-time workers at least S$9 per hour. With this in mind, Dr. Tan asserted that a part-time worker would need to work only about two days a week to meet the S$500 minimum.
While 20,000 is not an insignificant number, it represents a minor fraction of the 3.6 million residents in the workforce. If this new minimum criterion is poised to affect only a small subset of workers, it raises questions about the necessity of altering a well-functioning system in the first place.
Defining “Gainful Employment”
This seemingly minor change to Workfare requirements, while impacting only a small number of workers, may reflect a broader government initiative to redefine what constitutes “gainful employment.” Senior Minister of State for Manpower Mr. Zaqy Mohamad stated that Workfare is not the end goal for those earning less than S$500 a month. Instead, it is designed to supplement low-wage workers while they upgrade their skills to qualify for higher-paying jobs.
“For workers earning less than S$500, the best way to assist them is to help them find suitable employment with appropriate hours to earn at least $500,” Dr. Tan emphasized. This rhetoric has been reiterated frequently in support of upskilling initiatives. While well-intentioned, it establishes an unhealthy precedent suggesting that work is only fulfilling when it meets a specific financial benchmark.
Mr. Zaqy’s comments about nudging workers towards more “gainful employment” are aspirational but vague, obscuring the intentions behind the statement. For many, the definition of “gainful employment” can vary significantly, and these nuances must be acknowledged.
If these workers already view themselves as gainfully employed—regardless of their circumstances—“nudging” them to strive for more could be detrimental and disruptive. Additionally, salary cannot be the sole metric for measuring fulfillment in work, as a sense of achievement often transcends monetary rewards.
The arbitrary figure of S$500 per month necessitates further clarification on why such a minimum is essential.
The Biggest Mystery of Budget 2022
This addition to the Workfare scheme stands out as one of the more perplexing changes outlined in Budget 2022, as the motivation behind this shift remains unclear. In recent years, there has been no significant public outcry or complaints about Workfare that would justify such a substantial change.
Moreover, statistical and anecdotal evidence indicates that Workfare has effectively benefited those under its scheme, regardless of how small that number may be. While the government’s rationale appears sound, closer examination reveals that the new criterion may complicate the lives of low-wage workers more than it aims to alleviate their challenges.
Although a comprehensive suite of employment initiatives, including ComCare, is available, accessing these benefits can be a complicated process. This new criterion may also suggest that it fits into a broader agenda we have yet to fully understand. By setting a minimum of S$500 per month, it appears to establish a baseline for what constitutes a livable wage in Singapore.
Could this be an early indication of the government’s intention to introduce some form of minimum wage, with S$500 as the starting point? Only time will tell.
