Review Qualifying Income and Other Criteria for Workfare Income Supplement Scheme

30 Mr Murali Pillai asked the Minister for Manpower given the increase in income for the 20th and 30th percentiles of income earners since 2016 (a) when was the qualifying income ceiling for the Workfare Income Supplement (WIS) last revised using these percentiles as benchmarks; and (b) whether the Ministry will consider raising the WIS income ceiling as well as increasing the WIS payouts from the next financial year to assist low-income workers deal with rising costs of living.

31 Ms Rahayu Mahzam asked the Minister for Manpower (a) what is the progress of the review on the Workfare Income Supplement (WIS) Scheme; (b) whether there are studies being commissioned to find out what is considered a "living wage"; and (c) whether there are studies to consider extending coverage to those who are not in formal employment.

The Minister of State for Manpower (Mr Zaqy Mohamad) (for the Minister for Manpower): Mr Speaker, may I take Question Nos 30 and 31 together please.

Mr Speaker: Please do.

Mr Zaqy Mohamad: The Workfare Income Supplement (WIS) Scheme was launched in 2007 as a broad-based measure that raises incomes of lower income workers. WIS payouts are targeted at those with limited household support, with more going to older workers. For example, a 65-year-old earning $1,200 monthly would receive $300 more each month through WIS. In 2017, 407,000 workers received WIS payouts amounting to $650 million.

WIS is regularly reviewed to ensure the target groups continue to be helped. Since inception, the qualifying income ceiling has been raised three times, with the most recent revision being effected on 1 January 2017. MOM is conducting its regular review of the WIS Scheme to ensure that it continues to provide meaningful support to lower income workers. We will take into account the increases in income over the past few years and announce the results of the review when ready.

Most WIS recipients also receive other forms of Government support to help meet their living needs. So, WIS is not the only mechanism through which we help our low-wage workers. Nearly all our WIS recipients receive U-Save rebates and over 90% receive GST Vouchers. Nearly four in 10 also receive outpatient medical subsidies under the Community Health Assist Scheme (CHAS). Overall, a 65-year-old worker earning $1,200 a month would receive Government transfers comprising Workfare, Silver Support and GST Vouchers amounting to nearly six months’ salary, or $7,000 annually. Those with children receive other forms of support if eligible, such as subsidies for childcare and student care.

This approach of going beyond wage supplements, to provide further support based on the varied needs of individuals and families, is more responsive than any “living wage”. Beyond transfers, we also support skills upgrading. So, it is not about handouts and transfers. It is also about advancement. It is about advancing workers to be able to be more productive and higher skilled. With better skills, our workers can access better wages and better jobs. Government-funded programmes such as the Workfare Training Support, Adapt and Grow initiative and SkillsFuture provide active support to promote jobs and skills upgrading in all sectors of the economy, so that lower income workers can progress along with the rest of the workforce.

In fact, as a result of these efforts, real wage at the 20^th percentile grew faster than at the median. Between 2012 and 2017, incomes before Government transfers at the 20th percentile of workers grew at 4.2% per annum, or roughly about 20% over the last five years, faster than median income growth of 3.4% or about 16% over the last five years, in real terms. Like other Singaporeans, our lower income also have the opportunity to build up assets. Among WIS recipients, 75% own their homes. That is a significant statistic because very few places in the world; in fact, I do not think you find one where low-wage workers own their own homes, are able to build up assets.

We recognise that there are workers not in formal employment. Although their incidence in Singapore is generally low, we are concerned about the risks informal workers face. For example, they will have little recourse if their employers failed to make timely payments or compensation for work injury, or if their services were unfairly terminated. The lack of stability also does not enable planning on the part of the individual, and impedes his ability to build up his CPF savings for home ownership, healthcare and retirement. We should hence avoid unwittingly blurring the difference of such work arrangements for workers, or creating an avenue for employers to have reduced or no obligations for these workers with weak bargaining power. This is also why our focus is to help individuals access formal work arrangements.

Through Workforce Singapore (WSG), we seek to bring informal workers back into formal employment. Those in need of financial assistance can also approach the Social Service Offices (SSOs). Members would be very familiar with these, as they have helped many of our low-income Singaporeans. SSO officers assess the needs of each family holistically, and work together with WSG and NTUC’s Employment and Employability Institute to facilitate employment assistance where needed. In the meantime, informal workers continue to be eligible for other support such as U-Save rebates, GST Vouchers and CHAS.

Ms Rahayu Mahzam (Jurong): I thank the Minister of State for the comprehensive answer. I just wanted to explore a little bit on the possibility of actually looking into studies. I appreciate the challenges and the concerns in making sure our workers are put into formal employment. But there are concerns for those who are in informal employment. They already have other challenges and usually, a lot of them are in transition as they are trying to get into better jobs. But in the midst of training, they will need income to assist their families. So, the reality of life is that they do require some support, although there is some other assistance. It is still quite hard to meet their daily demands, especially so with the rising costs. I am wondering if we could at least look into it and have some studies in some way, where we could use WIS as a motivator so that they can be recruited into formal employment eventually.

Mr Zaqy Mohamad: I thank the Member for her question. If you look at the informal worker today, the challenge is that because they do not have a formal contract and they are outside of the CPF system, it is very difficult to gauge what their monthly salaries are, for example, or if they are contributing. Our long-term goal is really to help them build up their retirement adequacy. Therefore, I think it is better that we move them into formal employment. But I hear you. It is something that we could look at.

Generally, the long-term goal is to work through the other schemes and the SSO, for example, today where you have multi-layered support, not just in terms of Workfare. But you also have the social support, you have formal employment search services that we could provide through Workforce Singapore and e2i.

That is where we are today. Certainly, for such workers, we know they are vulnerable and therefore, I think the direction is still to move them towards formal employment.