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Peg wage supplements to workers’ income, not age: Labour MP Zainal

SINGAPORE — Labour Member of Parliament (MP) Zainal Sapari has called for the Workfare Income Supplement (WIS) to be overhauled, saying that payouts should not differentiate workers by age and that the cash portion should be doubled.

Workfare Income Supplement payouts should be the same across different age groups and based solely on a recipient’s income, suggested Member of Parliament Zainal Sapari.

Workfare Income Supplement payouts should be the same across different age groups and based solely on a recipient’s income, suggested Member of Parliament Zainal Sapari.

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SINGAPORE — Labour Member of Parliament (MP) Zainal Sapari has called for the Workfare Income Supplement (WIS) to be overhauled, saying that payouts should not differentiate workers by age and that the cash portion should be doubled.

With the WIS scheme up for review this year, Mr Zainal, assistant secretary-general of the National Trades Union Congress (NTUC), said in a blog post on the LabourBeat website on Tuesday (Feb 12) that this is “the best time” to question the assumptions and intent of the scheme.

Started in 2007, the WIS is a Government scheme to help boost the income of low-wage workers and is reviewed every three years.

PROPOSED CHANGES TO SCHEME

  • WIS payouts should be the same across different age groups and based solely on a recipient’s income, suggested Mr Zainal. Right now, an older worker who earns the same income as a younger one would receive a higher payout. While the initial aim was to incentivise older workers to continue working, older low-wage workers were likely to do so regardless of the WIS amount, while younger workers were likely to have more young dependents and might require a higher payout, he added.

  • Increase cash payout from 40 per cent to 80 per cent, with the remaining 20 per cent to go towards the Central Provident Fund (CPF). This would give workers a higher disposable income to meet their immediate needs.

LACK OF SUPPORT FOR PROGRESSIVE WAGE MODEL

Mr Zainal also questioned the reach of the Progressive Wage Model (PWM).

Introduced in 2014, the model pegs workers’ wages to their skill and experience levels.  It is mandatory for the cleaning, security, landscape and lift maintenance sectors to adopt the PWM.

However, Mr Zainal said that this mandatory model has yet to be extended to other sectors due to a lack of support from tripartite partners and industry stakeholders.

With many industries facing a challenging business environment, he said that “any effort to increase workers’ wages must be supported by an increase in productivity”.

If the PWM cannot be extended beyond the present sectors, then other policy interventions may be necessary to raise the pay of low-wage workers, he added.

WHAT EXPERTS SAY

Industry experts interviewed by TODAY said that while the proposed changes to the WIS bode well for low-income workers, the Government will have to manage the trade-offs in expanding its scope.

Mr Irvin Seah, senior economist with DBS bank, said that the question would be how the Government will “fund the WIS going forward”.

“The proposed changes mean that the WIS expenditure from the Government’s perspective will increase substantially. While doubling the cash payout would definitely benefit people by widening the scope and quantum of WIS, the Government will face a trade-off on fiscal position,” he said.

Ms Selena Ling, head of treasury research and strategy at OCBC bank, said that with other schemes in place to incentivise older workers to remain employed, the WIS could now focus on the sole objective of supplementing the income of low-wage workers, regardless of their age.

“By equalising across age groups and differentiating WIS payouts by income, this could mean a more level playing field for the targeted industries,” she said.

“After all, the Special Employment Credit scheme was meant to target older workers by providing employers with support to hire older workers.”

However, Mr Seah warned that it will be difficult to get buy-in from more industries for the PWM. Even if the Government makes the PWM mandatory in other industries, companies are more likely to invest in technology to boost their productivity, leading to them replacing workers. 

“It’s a delicate balancing act,” said Mr Seah. “We have to bear in mind that when we push for investment in technology, we could potentially drive away some jobs. This may dilute the effectiveness of the PWM.”

MORE ABOUT WIS:

  • The scheme supplements the income and retirement savings of workers through cash payments and CPF contributions.

  • To qualify for WIS, recipients must be Singaporeans aged 35 and above

  • Recipients must earn up to S$2,000 a month

  • All persons with disabilities qualify for WIS

  • Payouts are dependent on the age and income of the recipient. Older workers, or those who earn less, receive higher payouts.

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