Trend for Income Gap

24 Mr Saktiandi Supaat asked the Minister for Manpower (a) how the income gap has been trending over the past five years; (b) what are the longer-term strategic plans to narrow the income gap in a sustainable manner; and (c) how many people are in the bottom 20th percentile of household income over the past five years.

The Minister for Manpower (Mr Lim Swee Say): Mdm Speaker, the number of people in the bottom 20th percentiles of household income over the past five years has remained stable, alongside natural changes in the total number of working households and household size.

Over the last five years, the Gini coefficient remained relatively stable, at 0.472 in 2010 and 0.463 in 2015. Over the same period, the average household income from work per household member for the first and second decile both grew by about 24% in real terms. In fact, this is the highest among all the deciles.

The Government has also introduced transfers to help lower-income Singaporeans. This is reflected in the lower Gini coefficient of 0.41 in 2015, after Government taxes and transfers.

Nevertheless, a job is still the best welfare, and full employment is still the best protection for our workers. Our efforts to narrow the income gap in a sustainable manner must, first and foremost, be based on encouraging work and levelling up the skills, productivity and wages of low-wage workers.

This is the reason behind the implementation of Workfare Income Supplement (WIS) and Workfare Training Support (WTS) for all lower-wage workers and, likewise, the use of policy levers to implement the Progressive Wage Model (PWM) in the cleaning, security and landscaping sectors. These are our core measures to help low-wage workers to learn new skills, take on better jobs with higher productivity and secure fairer and better wages in an inclusive, progressive and sustainable way.

These measures are bearing fruits. The gap between real income growth of full-time employed Singapore Citizens at the 20th percentile and the median has narrowed in the last five years, compared to the previous five years, from 2.1% versus 2.9% per year to 2.9% versus 3%. In other words, in the previous five years, it was 2.1% for the 20th percentile versus 2.9% for the median. This has narrowed to 2.9% versus 3% in the last five years.

There is, however, still much to be done. We will continue to strengthen our support framework for low-wage workers. For example, PWM is today a ladder of minimum wage points. We are working to transform it to become a ladder of wage ranges so as to provide more scope for wage growth for our low-wage workers. This will help prevent wage stagnation at the various wage points, a common challenge faced by other countries with minimum wage policies.

Mdm Speaker: Mr Saktiandi Supaat.

Mr Saktiandi Supaat (Bishan-Toa Payoh): I thank the Minister for his answer. The reason why I asked the question is because I am concerned about the general trends globally with income inequality. I am aware that, as the Minister mentioned just now, the range of policies that Singapore has undertaken, such as PWM, the transfers and also transformation of the economy and creating jobs for the future. But there is a sustainable manner in which we want to undertake over the long term, in terms of addressing the income inequality from a longer-term strategic perspective. What other measures can there be? Is the Minister concerned about a potential risk of rising inequality from global trends that may actually impact Singapore even though we have not seen it at the moment?

Mr Lim Swee Say: Mdm Speaker, I share the concern of the Member. At the Group of 20 (G20) Labour and Employment Ministerial Meeting held last month in Beijing, one issue being discussed by the Labour Ministers from the G20 countries was the widening of income gap. Hence, they called for not just innovation-driven but also inclusive growth.

Madam, in the case of Singapore, as I mentioned, we adopted a slightly different approach. Our approach is through WIS, WTS and PWM. I am happy to say that the approach adopted by Singapore has drawn some interest from other countries because having implemented minimum wage for a long time, many countries have found that they have not found a way to help the low-wage workers to break away from this wage stagnation at the bottom. They have expressed interest in what Singapore is doing under our PWM.

Let me emphasise again that the implementation of PWM in Singapore is still in its early days. There is still a lot of room for us to strengthen it further. For example, in the case of the cleaning sector, we are now talking about transforming the ladder of minimum wage point into a ladder of wage ranges, so that there will be more scope for our cleaners to see their wages moving up within the wage range. This is something that the Tripartite Committee on Cleaners is now working on.

In the case of the landscaping sector, yes, we have a PWM. But for that sector, we believe that the solution is to go for skills specialisation because in the landscaping sector, there are more skills and jobs, more equipment and technologies being introduced.

In other words, we are not stopping at this PWM in terms of the basic framework. Rather, we are still looking for ways to further sustain that. Our aim is to ensure that the wage increase at the 20th percentile level in the coming years will, at least, be able to keep up with that of the median wage, if not higher. This is something that the National Trades Union Congress (NTUC), the Labour Movement, has been calling for in the past few years. At the Ministry of Manpower (MOM), we share the same commitment. I think the employers are with us as well. There is no easy way forward, but the tripartite partners, working together, must find a way to sustain the wage increase at the low-wage worker level.

Mdm Speaker: Mr Patrick Tay.

Mr Patrick Tay Teck Guan (West Coast): I thank the Minister for sharing the updates on the lower 20th percentile. With the early successes, we have done well with the lower-wage group. We have done well. But I think one area is the sandwich class, that is, those in the 30th to 60th percentiles. I think we can do more and do even better for that segment of the population. I hope MOM, together with our tripartite partners, will be able to go full force on this, particularly with this uncertain outlook in the economy.

Mr Lim Swee Say: Madam, I appreciate Mr Patrick Tay's comments. In a way, yes, we want to make sure that workers at all levels – be they in the bottom 20% or 30% percentiles and so on – to be able to continue to see their wages go up in a sustainable manner. I think we all agree that the best way to sustain that is through productivity, innovation, jobs transformation, skill upgrading.

I would say that this concerted effort is well underway. Just a few days ago last week, Deputy Prime Minister Tharman Shanmugaratnam launched the Industry Transformation Plan for the food and beverage (F&B) sector. F&B is a very traditional sector and has been in Singapore for a long, long time. But if you read the plan highlighted by Deputy Prime Minister Tharman, I feel very excited.

At MOM, whenever we see an Industry Transformation Plan being announced, we move in very quickly. We move in with the tripartite partners. If the jobs are going to be transformed, then we work closely together with the Ministry of Education (MOE) and SkillsFuture to ensure that the existing workers as well as the workers not in the sector today, can be upgraded and transformed to take on the better-paying jobs.

I agree with the Member that it is only through tripartite efforts that we can ensure that the wage increase can be sustained for the long term.