Singaporeans Earning $1,300 or Less a Month on Take-home Basis

10 Mr Liang Eng Hwa asked the Minister for Manpower (a) to date, what is the total number of Singaporeans who have received the Workfare Income Supplement (WIS); (b) what is the range of the wage supplements; (c) what is the demographic breakdown of the recipients; and (d) what has been the impact of WIS on employment.

11 Assoc Prof Jamus Jerome Lim asked the Minister for Manpower what is the current number of Singaporeans who earn $1,300 or less a month on a take-home basis, excluding employer and employee CPF as well as other deductions of income, for (i) full-time employment and (ii) part-time work or self-employment where their income will be $1,300 per month or less on a take-home basis were it to be extrapolated to full-time equivalent work.

The Senior Minister of State for Manpower (Mr Zaqy Mohamad) (for the Minister for Manpower): Mr Speaker, the International Labour Organization or ILO’s definition of earnings includes contributions of employees to social security and pension schemes. Singapore’s approach is broadly aligned with the ILO and considers personal income to include —

Mr Speaker: Mr Zaqy Mohamad, are you taking both questions? Question Nos 10 and 11?

Mr Zaqy Mohamad: Yes, Speaker, I will take both questions together.

Mr Speaker: Yes.

Mr Zaqy Mohamad: I will repeat the answer again. Sir, the International Labour Organization or ILO’s definition of earnings includes contributions of employees to social security and pension schemes. Singapore’s approach is broadly aligned with the ILO and considers personal income to include the Central Provident Fund or CPF contributions and the Workfare Income Supplement or WIS payouts, as these can be used for necessities including healthcare and housing.

In particular, Workfare provides cash supplements and CPF top-ups to encourage eligible lower wage Singaporean workers to work regularly and build up their CPF savings. CPF contributions and top-ups also go towards retirement savings.

Including Workfare and CPF contributions, there are about 30,000 full-time employees among Singaporeans receiving less than $1,300 per month; likewise, for 22,000 self-employed persons. These lower wage workers also receive further support from the Government, such as Silver Support, ComCare, GST vouchers and U-Save rebates.

Workfare remains a key pillar of social security for Singaporean lower wage workers. Studies have consistently shown that Workfare has been effective in motivating less educated Singaporeans, particularly those in the older age groups, to enter and stay in the workforce. This is important as workforce participation is key to supplementing their household incomes and their ability to save for retirement.

Workfare has been regularly reviewed since its launch in 2007. The qualifying income ceiling and payouts for Workfare were raised on four occasions to ensure continued support for deserving workers. From 2007 to 2019, over $6.8 billion has been disbursed to 890,000 unique lower wage workers.

In the past three years, an average of about 400,000 individuals receive Workfare annually. About 11% are aged 35 to 44, 21% are aged 45 to 54, and 18% are aged 55 to 59. Slightly less than half, or 49% of all Workfare recipients are aged 60 and above.

During the same period, the average Workfare payout received annually was about $1,560, while the maximum was $3,600.

The Government will continue to provide holistic support to low-wage workers. Besides Workfare and the schemes already mentioned, there are also efforts to raise standards of living for low-wage workers in other meaningful ways, such as providing access to quality healthcare, enhanced housing grants and subsidies to help them own their own homes, education for their children and adequate support in their retirement.

Mr Speaker: Mr Liang Eng Hwa.

Mr Liang Eng Hwa (Bukit Panjang): Sir, the Workfare Income Supplement scheme is indeed a commendable scheme. It uplifted the low-wage workers' income and yet not compromising on the employability. A big credit to the Government for this scheme. I just want to focus on the 32,000 or now, the Minister of State mentioned, it is 30,000 low-wage workers that earn $1,300 and below per month. Can I find out from the Minister of State, what is the profile of the 32,000 or 30,000 low-wage workers and more importantly, what is the Government doing to support this group of workers here?

Mr Zaqy Mohamad: I thank the Member for his clarification. The first question was 32,000 and now, I have reported 30,000. I suspect Mr Liang was referring to Member Dr Koh Poh Koon's speech last month when he cited 32,000. The difference is because, when we run reports, our labour statistics is based on resident statistics. Here, the Member, Assoc Prof Jamus Lim asked about Singaporeans, so that is the difference between resident profile and the Singaporean statistics.

On the Member's question about the profile of the 30,000 workers, among the 30,000 employees are office clerks, F&B workers, cleaners, shop salespersons as well as several other smaller groups of occupations. Many of them have lower education profiles, of which four in five have post-Secondary qualifications and below, while half of them have Secondary education and below.

More than third of them are aged 50 and above, which reflects an older profile who have less access to higher education as compared to the current generation. They are also potentially at a higher risk of disemployment and are likely to face greater difficulties in finding jobs, if they are displaced. So, they are less skilled and therefore more at risk at finding jobs in the current climate.

Notably a third of them are youths aged between 15 and 24. Some of us have been there before; they are in vacation jobs. It is also useful to consider another group in terms of the existing household support. Out of this group of 30,000 full-time Singaporean employees, half of them live in households with household income per capita above $1,300. Basically, per capita income implies that if you have two persons living in the home, you probably have a household income of more than $2,600. If you have four persons at home, you have household income of more than $5,200 per month.

Therefore, half of this group have alternative means of support and which also suggests that they are not the primary breadwinners of the household and have other means of support too.

In short, of these 30,000 Singaporean employees who still earn less than $1,300 a month today, half of them are staying in households where they are not the primary breadwinners and have others in the household providing income support. The majority of these 30,000 employees have low education and work as clerks, F&B workers, cleaners and shop salespersons. And more than one third are older Singaporeans at higher risks of disemployment, while the other one third of them are youths on vacation jobs.

Besides the monthly Workfare Income Supplement wage top-up they would already receive, this group of 30,000 Singaporeans will continue to be supported by the Workfare Skills Support scheme that will enable them to upskill and earn higher wages, and by other schemes such as the Silver Support, ComCare, GST voucher and U-Save rebates for their daily and medical needs as well as retirement needs in the future.

Additionally, the Government will continue to raise the standards of living for low-wage workers in other meaningful ways such as providing access to quality healthcare, enhance housing grants and subsidies to help them own their own homes, education for their children and adequate support in retirement.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim (Sengkang): I thank Senior Minister of State Zaqy Mohamad for his clarifications. With all due respect, I wonder if I could get a clarification, specifically with respect to the question, which is that we are wondering how many receive a take-home income of $1,300 and below, excluding all these supplementary schemes. An alternative way to look at this question is, if we could look at the breakdown of wage earnings only, so what is the share or the number of Singaporeans that receive less than $1,300 based on wage earnings only versus those who receive $1,300 and below, after you take into account all these supplementary schemes.

Mr Zaqy Mohamad: Sir, I thank the Member for his clarification. On this, I just want to reiterate that the holistic understanding of Singapore's system, of how we use personal income including CPF and Workfare income payouts. CPF is part of income too, as these can be used for necessities. Workfare Income Scheme or WIS gives you cash. As for CPF, I think many of us use it for housing and healthcare. I think it is worth it to note that 75% of our Workfare recipients, lower income workers, also own their own homes and therefore there is a direct impact from CPF into your home ownership. That is still income which, in other countries, you would have had to use your cash to pay for your own homes or mortgages.

In line with the International Labour Organization (ILO) – so this is not a pure Singapore definition – if you think about the alignment, the concept and definition of gross earnings, the data collected is before tax deductions and inclusive of CPF contributions. If you use the ILO statistics of earnings for example, they define to include social security, pension schemes, insurance premiums, union dues and other obligations of the employees. So, this is how it is done internationally. Therefore, we keep the same conventions because it provides a meaningful comparisons and benchmarks.

Calculations to exclude CPF contributions, as asked by the Member, how do you do that? Or deduction of other incomes will require various other assumptions. For instance, income tax deductions will differ based on individual profiles, and some do get different sorts of reliefs for example.

Moreover, almost all the Minimum Wage systems internationally including in the US, UK, Netherlands, Germany, South Korea, Spain also stipulate that Minimum Wages are subject to taxes and social security contributions. That also implies tax as well as social security, your pensions, your CPF. This means that that Minimum Wage levels are also before deductions.

Given this these considerations, it would not be meaningful nor accurate to consider income according to the parameters of the Member's query.

In fact, I would like to turn the question around to the Member and ask for clarification of the Workers' Party's position on the Minimum Wage level that it is advocating for.

According to the Workers' Party manifesto 2020, it calls for all working Singaporeans to receive a minimum take-home wage of $1,300 per month for full-time work and pro-rated for part-time work. Yet, in the September 2020 Debate on the President's Address, Member Assoc Prof Jamus Lim suggest that the appropriate Minimum Wage levels should be – well, he was suggesting that we should have a national commission to determine this. Thereafter, in October 2020, in the Ministerial Statement just last month, Member Assoc Prof Jamus Lim said that the Workers' Party is proposing a Minimum Wage of $1,300. Member Mr Pritam Singh also asked Member Mr Edward Chia, if he would be agreeable to pay the 32,000 workers $1,300 as a business employer.

Both these statements suggest a gross Minimum Wage of $1,300 per month. But Member Assoc Prof Jamus Lim's current query seem to suggest that the Workers' Party is now proposing for a minimum take-home pay of $1,300. That is a shift in where the line is.

If this is the case, then the gross wage inclusive of CPF contributions should be higher – between $1,600 and $1,700, thereabouts.

Given the statements put out recently and in line with ILO's definition of earnings to include contributions to social security and international conventions of Minimum Wage to be before tax deductions and social security contributions, could I ask the Member to clarify what is the Minimum Wage level that the Workers' Party is proposing. Because I think it is useful for us to all have this same level of benchmark now, so we can have meaningful debates in the future.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim: I thank the Senior Minister of State for the opportunity to clarify. If I may just quickly expand on the question. I appreciate that the ILO has a particular definition, but I am that he would also appreciate that for a worker who works full-time in Singapore, they will have a notion of how much their labour effort is worth every month.

Importantly, to the average Singaporean, what they care about is not necessarily limited to just how much they receive in terms of CPF payments. Because, of course, many Singaporeans justifiably think that the CPF payments are what ultimately is what is owed them after all they have saved for that for that amount.

If I may just step quickly into this Minimum Wage clarification. I should note that the premise of my question had nothing to do with the Minimum Wage per se, the question did not specify anything about Minimum Wage, it was about the idea of $1,300. In part, the reason why we raised $1,300 was because that was the notion of how much a reasonable basket of goods and services for adequate living in Singapore would entail. So, that was in very much, in fact the reason why I had raised this question about $1,300.

Mr Zaqy Mohamad: Mr Speaker, I think the Member is evading the question because I have shown that in the manifesto, it was $1,300 mentioned. In the last few debates too, the same figure was mentioned but in different definitions. So, I think the root of the issue now is the Workers' Party changed its definition for its Minimum Wage line.

Assoc Prof Jamus Jerome Lim: Let me be clear. I do not think I was evading the question because I think the Senior Minister of State Zaqy Mohamad imputed an inference of the $1,300 take-home pay was what the question was asking. I think that the Workers' Party's position has been consistent and that it was about $1,300 in terms of full-time work.

But this particular question was about take-home pay, in part, because it is about what it means for survival in the case of Singapore. That is why I do not think that I am actually evading the question because I think that an inference of what I was asking in the question was actually attributed to be, whereas I did not make them.

Mr Zaqy Mohamad: Mr Speaker, I was just checking with the Member again because I just referred to his quote before. There was a $1,300 gross wage and now he is saying $1,300 take-home. I appreciate his questions for this Parliamentary Question and I have given the answer as to why you do not separate your CPF, for example, from your salary. Because your CPF clearly provides for amounts of money that you pay for your mortgage and pay for your homes. Many of our Workfare recipients, many of our low-income workers own their own homes as a result of the CPF.

To some extent, you have got Government subsidies but you also have CPF flow-through that enables many of our low-income workers to own homes. So, that is income too and that is also a recognition by the employer for the ability for workers to earn and that is why we talk about gross wages typically.

Generally, figures are what we pick up from statistics and this is how we do it. It is the benchmark, not just by ILO, but Minimum Wage benchmarks around the world too use a similar definition of using tax and social pensions and social security systems as part of the wage. If we keep to the convention, it is easier to make for good meaningful benchmarks and discussions and debates, in the future.

Could I just confirm once again that the Workers' Party's $1,300 Minimum Wage benchmark is gross income, so that we could settle this and come to an understanding.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim: Yes, that is a fair characterisation. [Please refer to Official Report, 3 November 2020, Vol 95, Issue No 12, "Clarification by Member".]

Mr Zaqy Mohamad: Okay, thank you very much.

Mr Speaker: Ms Carrie Tan.

Ms Carrie Tan (Nee Soon): Thank you, Speaker. I have a question for Senior Minister of State Zaqy. The question pertains to the age criterion of 35 years old for eligibility for Workfare Income Supplement or WIS. I understand that this policy's aim is mostly to supplement the income of ageing workers who have a lower chance of increasing their salaries due to their age. Also, the Senior Minister of State Zaqy mentioned about the focus on helping breadwinners of families. I would like to ask if it is possible that we can revise or remove the 35-year-old age criterion if the individual is a sole breadwinner in the family, as I have seen many single parents in the community who struggle to bring up their children and they are below 35 years old, and would greatly benefit from this income supplement.

The second question is, Senior Minister of State Zaqy mentioned that the amount WIS that an individual gets within a year, ranges from $1,000-plus to a maximum of about $3,600. Even at the maximum, it translates to about $300 increment on a monthly basis. I would like to ask if it would be possible to consider increasing the quantum of WIS payouts so that instead of a family having to go to multiple and various agencies to receive different kinds of social security benefits, they can get this increased ability in terms of financial resources very directly from WIS, so that they do not have to go through the hassle and the quite undignifying experience of going to multiple aid agencies, which also would translate to more efficiencies from a whole-of-Government perspective.

Mr Zaqy Mohamad: Mr Speaker, I thank the Member for her questions. Since WIS was first introduced, we have made significant adjustments to the payout quantums across all age bands. With the WIS Enhancement recently done – just made in January this year – the maximum WIS payout would be, for a 45-year-old, for example, about $2,500. This is more than double the payout of such workers in 2007 when we first introduced WIS. From the example here, it does show that we revise and take into account inflation and consider how we can better make Workfare more meaningful for our workers.

I can understand the Member's question, in terms of whether we can lower the age criterion and make payouts to those below 35 years old. But really, the target of WIS and if you look at the profile of those receiving WIS as I had mentioned earlier, more than half are on the older side. This is because the younger workers have got the potential; they are more educated; they have more skills upgrading opportunities. Therefore, there is that potential which we want to help through. But of course, I do understand some are single parents, for example, and some have to take care of family and other issues and have other concerns and challenges in the home. This is where our whole-of-Government efforts come into play – whether it is ComCare for social support, Financial Assistance Schemes in school to help their kids through school too. These are ways in which we help them.

For worker support, this is where Workfare makes a difference especially for the older workers to beef up and pump up. I am glad the Member noted that the maximum amount that we had given before 2020 was about $3,000-plus. That translates to about 30% or one-third of an older worker's salary, which studies have shown, has motivated some of our seniors to go back to work or continue working because they get the extra boost from Workfare to supplement their incomes.