Budget 2011: Analysis snippets (Part 2)

by Leong Sze Hian

I refer to the Budget Statement 2011.

Singaporeans’ wages grew 0.44%

Although the Budget statement said:

“Consider what happened to low-income Singaporean workers, at the 20th percentile of incomes. Their wages grew by about 23% in the last decade, or by 5% in real terms”,

I see from Annex A that the real income growth was 4.5 per cent. So, the real income growth per annum over the last decade was 0.44 per cent.

Also, what is interesting is that it is based on Singaporeans’ income, a departure from almost all labour statistics which lump Singaporeans and permanent residents (PRs) together. Moreover, it is based only on full-time employed Singaporeans. In the past, I believe the statistics used were always on all workers, including part-time workers.

If the Budget 2011 can give the data for Singaporeans only, why is it that we have been consistently been unable to break-down the data to Singaporeans and PRs, for unemployment, jobs, etc?

Therefore, real incomes may be lower, if all Singaporean workers (full-time and part-time) are included, which I believe was the case in previous years.

Change data definition – better statistics?

In this connection, last year’s resident full-time and part-time workers’ real income increased by 1.3 and 10 per cent respectively. But these figures may look better because of the change in definition in 2009 to classify part-time workers as those working less than 35 hours a week, instead of 30 hours previously. This may make the part-timers’ income higher because those previously working more than 30 hours may boost up their overall earnings, and full-timers income may also look higher because those working less than 35 hours would no longer be in their category. In other words, the presumably bottom rung of full-timers were moved to become presumably the top rung of part-timers.

Notwithstanding the above, the combined data for all workers was perhaps more revealing, with only a real median income growth of 0.5 per cent last year.

Similarlly, the household income statistics is also perhaps unique, as it is based on “Singaporean” households, instead of the usual resident (Singaporean and PR) households.

Budget surplus or deficit?

If we include land sales which is estimated to be about $15 billion, exclude the Top-ups to Endowment and Trust Funds of $7.14 billion and the $4 billion Resilence Package returned to the reserves, does it mean that the Budget would have had a surplus of about $25.86 billion, instead of  a deficit of $0.28 billion? (Note: Transfers to top-up endowment funds are not expenditure per se, as only the interest every year from endowment funds are utilised)

Upgrade! Upgrade!

“We are moving ahead with our Continuing Education and Training (CET) plans. Last year, we announced the Workfare Training Scheme (WTS) to give additional training support for older, low-wage workers. This year, we will strengthen our support for professionals, managers, executives and technicians (PMETs), who in fact now make up more than half of our workforce”

The almost yearly ritual of upgrading skills to improve productivity, does not appear to have helped workers much, as recent labour statistics indicste that wages may be continuing to dcline for lower-income workers and that the more educated and older one is, the harder it may be to get a job when you are unemployed.  As long as we have liberal foreign labour policies, like allowing foreign graduates to have a pass to stay in Singapore for a year to look for a job, the continuing rhethoric to upgrade may not work, from the perspective of outcomes for workers.

Workfare so little cash?

“D.15. As the economy has performed exceptionally and our revenues have been strong in 2010, I will provide a one-off Special Bonus payment for those on the Workfare Income Supplement (WIS) scheme. The Workfare Special Bonus will be given for work done in 2010, as well as for this and next year. The Bonus will amount to 50% more WIS for work done in 2010, and 25% more WIS each year for work done in 2011 and 2012. Employees will receive these bonuses fully in cash”

For a age 45 to 54 workers earning $1,200, the Workfare payout is $286 in cash and $714 to CPF. So, the extra cash that the worker can use is only about $24 a month. With this Budget’s once-off 50 per cent additional all cash Workfare payout, followed by 25 per cent in the next two years, he would only get an additional $500 a year or $42 a month this year, followed by $250 a year or about $21 a month. How substantial is this for the elderly lower-income worker?

Self-employed “lagi” less?

“Self-Employed Persons who make their Medisave contributions will also benefit. They will receive half of their bonus in cash, and the other half in their CPF Medisave accounts”

For the self-employed, it is even less, as only half of the once-off Workfare payout will be in cash. For a age 46 to 54 self employed person earning $1,200 a month, he has to contribute $408 in cash to get $333 Workfare entirely to his CPF. Now the once-off Workfare bonus payout is only 50 per cent in cash, which means that he will only get $166.50 or about $14 a month in cash this year, followed by about $7 in the next two years.
The fundamental problem of Workfare remains – Why would a already cash-strapped self-employed person contribute $408 of his precious cash to get $333 to his Medisave which he can only use if he falls sick or for medical insurance premiums, and hope for once-off special Workfare bonus partial cash payouts in future Budgets?

Not cash benefits?

The following Budget 2011 benefits are not cash that Singaporeans can use:-

  • $500 millon Medisave top-ups
  • $175 million Special CPF Housing Grant (SHG)
  • $10 billion to upgrade homes and rejuvenate estates over the next 10 years
  • $200 million U-Save and S & CC rebates (as these are to offset increased and possibly increasing costs)

You can read Part One here. Mr Leong will be speaking at this afternoon’s TOC Budget Forum 2011.