SINGAPORE — Some Opposition parties yesterday questioned the effectiveness of the Wage Credit Scheme (WCS), which marks the first time the Government is subsidising pay increments as it seeks to encourage companies to share productivity gains.

Calling for minimum wage, the Reform Party (RP) and Singapore Democratic Party (SDP) argued that the new scheme, which was announced in the Budget on Monday, would not close the income gap or lead to higher productivity.

The Government’s “old tactic of using wage subsidies … won’t teach business to use labour more productively”, said the RP in preliminary comments to Budget 2013 posted on Facebook.

SDP Treasurer Vincent Wijeysingha said the WCS — under which the Government co-funds 40 per cent of wage increases for Singaporean workers earning up to S$4,000 a month over three years — is “similar” to the Workfare scheme, where the Government tops up wages of the lower income.

Identifying “downward pressure on wages brought about by the importation of lower-wage foreign labour” as the root cause of the widening income gap, Dr Wijeysingha said the WCS would not be an “effective remedy”.

The Democratic Progressive Party issued a statement welcoming efforts to redistribute wealth in the Budget, but said it was uneasy with the use of taxpayers’ money to increase wages.

The SDP added that given the Government’s plans to increase the number of foreign workers here, as recently published in the Population White Paper, raising levies for work permit and S Pass holders “only increases the cost of doing business without affecting our dependence on foreign workers”.

The RP agreed with the import of lower-skilled foreign labour but called for a cap on employment pass holders, and for employment passes to be allocated by auction.

Meanwhile, Singapore People’s Party Chairman Lina Chiam urged a harder push towards economic restructuring, even as the Budget moves Singapore “in the right direction”.

Mrs Chiam, a Non-Constituency Member of Parliament, suggested that economic agencies provide post-graduate scholarships to support small and medium enterprises in developing managerial talent.

The parties said they would study the Budget before making further comments or proposals. NEO CHAI CHIN