Rising income disparity has been a hot-button issue in many developed countries, and Singapore is not spared. To address this issue, the government has over the years, introduced various schemes and measures to bridge the income gap between lower-wage workers and the median wage.
In Budget 2022, the government has set aside $9 billion, or $1.8 billion per year for the next 5 years, to spend on lower-wage workers and enhanced the schemes with the aim of benefiting more than 500,000 workers, in line with its goal of “moving forward together as a nation”.
Here are the 6 enhancements introduced in Budget 2022 that support lower-wage workers going forward.
Enhancements To Workfare Income Supplement Scheme
From 2023, the Workfare Income Supplement (WIS) scheme will be significantly enhanced to boost the income of lower-wage workers.
Introduced in 2007, Workfare aims to boost the income of lower-wage workers and to help them save more for their retirement.
Workfare is paid out to the eligible individual directly in the form of CPF top-ups and cash. For example, as an employee, the individual will receive 40% of Workfare in cash and 60% in CPF top-ups. Whereas, as a self-employed, the individual receives 10% of Workfare in cash and 90% in CPF top-ups.
Five enhancements were introduced to Workfare, in Budget 2022. These enhancements are expected to benefit at least a further 40,000 workers than those who are currently on the scheme.
Read Also: Guide To Workfare Income Supplement Scheme And How Much Those Who Are Eligible Will Receive
#1 Minimum Qualifying Income Of $500 To Receive Workfare
The first new enhancement to Workfare is the introduction of a minimum income criterion.
Eligible Singaporean workers need to earn at least $500 in order to receive the Workfare Income Supplement payouts from next year, 2023.
This new criterion was set to encourage part-timers and casual workers to take up regular, full-time work.
This threshold is also in line with mandatory employee CPF contributions. Under the CPF Act, employers must contribute to CPF if their employees earn at least $50 a month, whether they are on full-time, part-time, temporary, contract or casual basis. However, for workers earning $50 to no more than $500 per month, there is no employee’s share of CPF contributions.
#2 Extension Of Workfare To Those Aged 30 To 34
Currently, only lower-wage workers aged 35 and above are qualified to receive income support from Workfare. This will be extended to lower-wage workers aged 30 to 34.
Based on the Labour Force in Singapore Advance Release 2021, 27.1% of full-time employed workers are within the age band of 30-39 years old and of those,12.2% earn at or below $2,200. With the expansion of the age band, many younger lower-wage workers will benefit from the income support, which can help them save more for their retirement.
From 2023, workers in the age group of 30 to 34 can receive a maximum annual payout of $2,100. For self-employed workers, they will receive $1,400, which is two-thirds of the employee payout.
#3 Qualifying Monthly Income Cap For Workfare Will Be Raised From $2,300 To $2,500
The current qualifying monthly income cap of $2,300 will now be raised to $2,500, starting next year 2023. To qualify for this, the average gross monthly income earned should not exceed $2,500 in the past 12 months.
This higher cap limit was to account for the income growth of Singaporeans.
#4 Higher Annual Workfare Payouts Of Up To $4,200
The government will raise the WIS payout across all age bands. For example, a person aged between 35 and 44 years old who currently receives $1,700 in WIS payout, will receive $1,300 more starting next year.
Likewise, workers in the oldest age band, aged 60 and above, will receive $4,200, or $200 more, next year.
Self-employed workers will also receive higher payouts across the different age bands. They will continue to receive two-thirds of the revised payout that the employed workers will receive.
For a summary of the WIS payouts for the different age bands and employment categories, please refer to the table below.
Source: Workfare
#5 Persons With Disability Will Qualify For The Highest Workfare Payout Of $4,200 Regardless Of Their Age
The final enhancement to Workfare is for persons with disabilities (PwDs).
Currently, PwDs receive WIS payouts based on their income and age band. For PwDs aged 13 to less than 35 years, they receive an annual WIS payout of up to $1,700.
However, starting work year 2023, all eligible PwDs will qualify for the highest WIS payout tier of $4,200 regardless of their age.
For a self-employed person, they will receive $2,800, which is two-thirds of an employee’s payout.
Next, we look at the key enhancements made to the Progressive Wage Model that affect lower-wage workers.
#6 Wider Coverage For Lower-Wage Workers Under The Progressive Wage Model
The Progressive Wage Model (PWM), which was introduced in 2012, gives Singaporean workers in the low-wage sectors a clear career pathway to achieve higher salaries by improving their productivity through reskilling and upskilling.
Currently, the PWM covers the cleaning, security, landscape, and lift and escalator maintenance sectors. This will be extended to the retail, food services, and waste management sectors over the next two years, benefiting up to 52,000 local workers based on the Tripartite Workgroup on Lower-Wage Workers’ report.
Additionally, occupations such as in-house cleaners, security officers, landscape workers, administrators, and drivers across all sectors will also be covered under the PWM, which is expected to cover up to 55,000 local workers.
Read Also: Salary Guide: How Much Can You Earn As A Waste Collection Worker
Companies within the PWM who implement these Progressive Wages can tap on the newly introduced Progressive Wage Credit Scheme (PWCS). The scheme applies to both resident low-wage workers earning up to $2,500, which is an increase of $200 from the previous classification, and workers earning above $2,500 and up to $3,000.
It provides tiered transitional co-funding support of up to 50% if the (lower-wage workers) employees receive gross monthly wage increases of at least $100 each for two years between 2022 and 2026.
Furthermore, the government will make it mandatory for companies employing foreign workers to pay all their local workers at least the Local Qualifying Salary (LQS) of $1,400, which will cover around 99,000 local workers.
The enhancements made to Progressive Wages are expected to cover around 94% of all full-time lower-wage workers.
Together with the enhancements to Workfare, the government expects that the incomes of lower-wage workers will grow faster than the median wage growth over the coming decade.
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