By Leong Sze Hian
On March 18, Ministry of Finance released a press release, “Employers to Receive First Tranche of Wage Credit Scheme Payouts by End March 2014“.
It said that over 74,000 employers will receive about $800 million in the first tranche of Wage Credit Scheme (WCS) payouts by 31 March 2014. SMEs will receive around three-quarters of the sum disbursed. The WCS payouts had helped to co-fund 40% of the wage increases given in 2013 to approximately two in three Singaporean employees who earned a gross monthly wage of $4,000 and below in 2012.
It also states that two third of the Singaporeans eligible for the scheme received pay rises last year and was funded by the Wage Credit Scheme (WCS) payouts.
But looking it from another angle, does it mean that 1 out of 3 Singaporean workers who earn less than $4,000 did not get any pay rise at all?
Breakdown of those with no pay increase?
It is said that lower-income Singaporeans in the bottom 20%, received a larger median pay rise of 10 per cent, compared to 8 per cent for all employees under this scheme.
So how many in the bottom fifth and median did not receive any pay rise at all?
The real median income (excluding employer CPF contribution) growth was only 1.8 per cent last year.
Wage credit scheme to help increase productivity and wages?
It is pointed out that the WCS was introduced in 2013 as part of a three-year transition support package to help businesses to cope with rising wage costs. The package would then allow the companies to free up resources to invest in productivity, and share their productivity gains with their employees.
But hear this, productivity growth last year was close to zero.
So, after spending $800 million – the outcome was extremely disappointing on all fronts – one-third of the workers did not get any pay rise, low real median income growth and zero productivity growth.
Perhaps it may be better to pay the $800 million and the future wage credit directly to lower income Singaporeans instead.