NTUC urges higher wage payouts for younger low-income workers

Currently, for two workers earning $1,200 a month, a 65-year-old would receive $300 a month through Workfare, while a 35-year-old would receive only $125, said National Trades Union Congress assistant secretary-general Zainal Sapari.
Currently, for two workers earning $1,200 a month, a 65-year-old would receive $300 a month through Workfare, while a 35-year-old would receive only $125, said National Trades Union Congress assistant secretary-general Zainal Sapari.PHOTO: ST FILE

The labour movement wants the Government to raise the income supplements for younger low-wage workers to reduce income inequality.

Payouts from the Workfare Income Supplement (WIS) scheme, which tops up the incomes of those aged 35 and older and earning up to $2,000 a month, should be the same for workers of all ages, instead of increasing with age, said National Trades Union Congress (NTUC) assistant secretary-general Zainal Sapari yesterday.

He made the call in a blog post ahead of this year's Budget Day on Feb 18, adding that it is timely to question the assumptions and intent of the scheme, as it is up for review.

He said one reason to raise the level of support for younger workers is that they are more likely to have young dependants.

The scheme gives higher payouts to older workers to incentivise them to join the workforce, but older low-wage workers are likely to work regardless of the WIS quantum, Mr Zainal said.

"I am not advocating for any reduction in the WIS payout to older workers, but for the payout to be the same across the different age groups based on their income," he added.

Currently, for workers earning $1,200 a month, a 65-year-old will get $300 a month through WIS, while a 35-year-old is given only $125, he noted. "If the WIS is intended to be an income supplement to reduce income inequality, then the payout quantum should be differentiated based on income only."

Mr Zainal also recommended that the cash component of the WIS payout be raised to 80 per cent, up from 40 per cent. The rest goes into the Central Provident Fund (CPF) accounts of the workers.

"Since WIS is to supplement income, it should therefore translate to higher disposable income for the workers to address their immediate needs," he said.

Results of the review of WIS will be out this year. The scheme was last enhanced in 2017.

Meanwhile, the NTUC also wants to make the progressive wage model mandatory in more sectors, beyond the existing cleaning, landscaping, security and lift maintenance industries.

Mr Zainal said the NTUC will keep working with industry stakeholders to assess the feasibility of expanding the model, which sets out career progression and minimum salaries for workers based on different skill levels.

He noted that even though many countries have a national minimum wage policy aimed at safeguarding workers' welfare, studies on the effectiveness of a minimum wage have been inconclusive.

In Singapore, WIS and Workfare Training Support, as well as the progressive wage model, have been implemented instead to help vulnerable workers in a sustainable manner through raising productivity and wages, he added.

Singapore University of Social Sciences economist Walter Theseira agreed with the call to review the underlying assumptions of the scheme.

But on raising the payout's cash component, he said if a worker has persistently low income, he may not set aside enough retirement savings apart from that in the CPF.

"The idea to give more payouts in cash is sound, but for it not to create a significant retirement liability problem years later, it has to be combined with larger overall payout quanta. That, in turn, is something which has to be examined for the cost implication," he said.

A version of this article appeared in the print edition of The Straits Times on February 13, 2019, with the headline 'NTUC urges higher wage payouts for younger low-income workers'. Print Edition | Subscribe