SINGAPORE - The minimum $500 a month salary for a worker to qualify for the Workfare Income Supplement is not a cutback for lower-wage workers, said Manpower Minister Tan See Leng in Parliament on Tuesday (March 1).

He was responding to MPs who raised concerns about this new criterion, which was announced in the Budget by Finance Minister Lawrence Wong on Feb 18.

Mr Wong had said the new minimum pay aims to encourage part-timers and casual workers to take up regular, full-time work.

Dr Tan on Tuesday also clarified that the move will affect about 20,000 Workfare recipients, all of whom are casual or part-time workers.

Leader of the Opposition Pritam Singh had claimed on Monday that the change will affect 46,600 workers, based on the number of employed residents aged 15 and above earning less than $500 a month in 2021.

But Dr Tan said: "Not all of these 46,600 qualify for Workfare due to criteria such as age, spousal assessable income, and annual value of their place of residence. In other words, nothing to do with the salary they earn.

"Some would be students earning extra pocket money while they study or some of them are from higher-income households. They are not the intended targets of Workfare."

He added that the Progressive Wage Model (PWM) expansion and the new local qualifying salary (LQS) requirements will raise many workers beyond the $500 threshold.

The PWM lays out a wage ladder for workers to get better pay pegged to skills and training, while the LQS refers to the amount that firms hiring foreign workers will have to pay local workers.

Dr Tan said: "With the new LQS requirement, firms that hire foreign workers must pay all their locals working part-time at least $9 per hour. At this wage, a part-time worker needs to work only about two working days a week to meet the $500 minimum income criterion."

He added: "In short, for workers who are earning less than $500, the best way to help them is to help them find a job of the appropriate quality and quantity of working hours to earn at least $500. Then Workfare can come in to provide an additional boost."

Mr Singh, who is also the Workers' Party chief, highlighted that there might be individuals who just cannot do full-time work for various reasons.

Dr Tan replied: "The whole policy construct is to encourage, to nudge our local able-bodied Singaporean towards gainful employment and also a higher sense of achievement."

He added that the $500 is fixed at this particular point in time, with other schemes like the PWM and LQS to take effect in coming months.

"When that rising tide comes up, we will certainly see where this group of Singaporeans who are still not affected would fall into. I think that we can then review the policy," he added.

Senior Minister of State for Manpower Zaqy Mohamad said there is also concessionary Workfare provided to those who are receiving ComCare.

"If you qualify for ComCare, then automatically you will get Workfare as well, even if you are a part-time worker earning less than $500," he said.

"So this separates our truly low-income part-time workers who may be constrained, for whatever reason, whether caregiving or other constraints, that they are still provided assistance not just from ComCare. Holistically, they also get Workfare."

On foreign workers, Dr Tan also reassured companies that there will be a long runway before the new policies fully kick in to give them time to adjust.

The Budget announced a multi-year road map to raise the qualifying salaries for Employment Pass and S Pass holders, among other measures.

"Businesses, especially our small and medium-sized enterprises (SMEs), have expressed concern about rising costs. I want to assure SMEs that we understand these concerns and have taken great care when designing the timing of our moves. We are well aware that if businesses do not succeed, there will not be good jobs for Singaporeans," he said.

He added that if the salaries are not adjusted, firms may choose to hire foreigners simply because they are cheaper than locals.

"There will not be a level playing field. Our efforts to upskill our workforce and sharpen our business competitiveness will therefore be diluted."

He added that Singapore remains open to foreign workers who can complement the local workforce.

Ultimately, SMEs need to transform, pivot and adapt, he said. They can redesign jobs to make them more attractive and productive, and expand and upskill their local workforce.

"Some business owners told me that it is hard to find manpower even with the support, given that our unemployment is so low and our labour market is tight," Dr Tan said.

But he pointed out that there are about 20 per cent or 260,000 women aged 25 to 64 who are not in the labour force. Firms will need to tap this segment by offering flexible work arrangements, for instance.

"Training and restructuring take time, so I hope businesses will take a longer-term view on this," he said.

"To support businesses in their planning, we have laid out our foreign workforce policy moves for the next few years, so businesses have greater certainty, predictability and time to adjust."