In recent times, both pre and post the general election, the Peoples’ Action Party (PAP) led Government has been focused on jobs, publicly reinforcing the Government’s commitment to improving the livelihoods of the people. While it would be easy to dismiss job concerns as a COVID-19 related side effect, the truth might be far more nuanced. Arguably, decreasing standards of living and fears for job losses have been hot button issues way before COVID-19 reared its ugly head.
There have been concerns about the growing number of PMETs in Singapore as local PMETs were losing their jobs. Elderly people needing to work way past their retirement age is also not a new problem. Given where we are, is there a need for the Government to re look and re consider the social safety nets that the country currently has?
It is noteworthy that Singapore remains one of the few developed countries in the world that does not have a minimum wage. The Government has always rejected calls for a minimum wage to be imposed on the basis that its own Progressive Wage Model works better.
However, it remains debatable if this is indeed the case. Back in 2015, this was an election issue which is still relevant today. Indeed, the Workers’ Party has publicly advocated for the implementation of a minimum wage. Arguably, Singapore would benefit from a minimum wage system. As it stands however, we have since 2007, introduced something called “Workfare” instead of a minimum wage system.
Does Workfare as it stands, help low income Singaporeans climb out of poverty?
According to its website, Workfare payouts are targeted at lower-income workers with less household support, with higher payouts for older workers. Workfare can comprise up to an extra 30 per cent of the worker’s monthly income.
Looking at its example however, it is clear that a far larger proportion of the payout goes towards an individual’s CPF as opposed to his or her immediate disposable income. While the rationale behind this is to help that individual save up for retirement, does this actually work when one also looks at how the CPF is paid out post retirement?
The CPF system has a myriad of rules that are complicated and hard to follow. Through a raft of changes that have taken place over the span of years, it is no longer as straightforward as withdrawing it when you reach retirement age. Instead, depending on how much you have in your CPF account, you could find yourself unable to access the lion’s share of your CPF monies. How does this gel with what Workfare is trying to achieve for a low income person?
Are we in a situation where a low income person who could really benefit from having more cash in hand now ends up with his or her Workfare payout paid into a CPF account that he or she would then later struggle to withdraw post retirement?
If so, it could be that Workfare ends up being a double bind for such a low income person, forever trapped in a cycle of not being fully able to access the cash that he or she needs?
Would it not be simpler to impose a minimum wage to empower low income individuals to attain a certain standard of living that befits a developed country?
Secondly, the Workfare system does not incentivise employers to pay a fair or living wage. By saying that the Government will top up where the employer fails, an errant employer would actually benefit by paying their employees less! Is this way of thinking in line with the Government’s emphasis on self sufficiency?
The Government does not believe in a welfare system in Singapore because it does not think that welfare would encourage people to be self sufficient and would instead, encourage over reliance on the Government for handouts. But, isn’t Workfare creating the same thing the Government wants to avoid for individuals for employers?
Unwittingly perhaps, do we have a system that rewards irresponsible employers while penalising low income workers? Under Workfare, are we unwittingly encouraging employers to rely on the Government to supplement the pay package instead of being self sufficient in offering a fair and living wage?
