Ministries respond to minimum-income report

Wage floor: Pedestrians in Singapore’s central business district. A report says the government should raise income levels to help lower-wage workers. — Bloomberg

SINGAPORE: The issue of whether more can be done in Singapore to help lower-wage workers and their families was rekindled last Thursday.

A report by researchers from Nanyang Technological University (NTU) and the Lee Kuan Yew School of Public Policy (LKYSPP) published last Thursday said that a family of four, consisting of parents, a pre-teen and a teenager, needs at least S$6,693 a month to afford a basic standard of living.

The Minimum Income Standards (MIS) Report 2023 recommended setting a universal wage floor to help lower-wage workers and families cope with rising costs of living, and reforming the Central Provident Fund (CPF) and social support schemes to ensure that poorer retirees would not fall behind.

Shortly after the release of the report, the government said that the report “is not just about basic needs like housing, food and clothing, but (it) is what individuals would like to have”.

In a joint statement last Thursday night, the ministries of finance, manpower, and social and family development underlined the government’s approach – that it is committed to supporting Singaporeans throughout their lives, especially those in need.

It invests in human capital, including through broad-based subsidies and transfers in education, healthcare and public housing that benefit most citizens, so that Singaporeans can get better jobs and higher incomes, the ministries said.

They noted that social spending almost doubled over the past decade, from S$18bil in financial year 2011 to S$34bil in 2021.

Support is tilted towards those in greater need, with help schemes targeted at those from lower-income backgrounds or who are unable to work, they said.

For instance, in 2022, resident households in one and two-room Housing Board flats received more than S$12,000 per household member on average from government schemes.

“The government regularly reviews our scope and coverage of assistance to ensure it is relevant and adequate,” the ministries said.

In an earlier study in 2021, the same researchers calculated that a family of four would need S$6,426 a month for a basic standard of living, while a single parent with a toddler would need S$3,218 a month.

After adjusting for inflation, the figures have now risen to S$6,693 and S$3,369, respectively.

These figures are the “living wages” required for basic needs, yet around 30% of working households in Singapore earn less than these thresholds, the latest report said.

Ng Kok Hoe of LKYSPP said at the report’s public launch at the school in Bukit Timah that the research team used public data sources such as the 2022 consumer price index (CPI) to update the prices of individual items in the household budgets, from which the living wage amounts were derived.

NTU Associate Professor Teo You Yenn said that focus groups held for about 300 participants in the earlier study agreed that basic needs, as covered in the household budgets that were developed, go beyond mere survival.

She said: “They encompass needs for belonging, respect, independence, security and social participation.”

In their joint response, the ministries said the report’s findings and recommendations should be interpreted as an expression of what individuals would like to have, and not their basic needs.

“As a society, we will need to have conversations around how we can collectively reach this goal,” the ministries said, noting that self-help, community support and government aid all play a part.

The idea of a universal wage floor is “not necessarily the best way” to achieve a decent wage, the ministries noted.

“Set too low, the wage floor will benefit fewer workers than the Progressive Wage Model (PWM). Set too high, workers who are less skilled risk losing their jobs, especially if their jobs can be automated,” they said.

The PWM is a wage ladder introduced in 2014. It pegs wage rises to skills upgrading and productivity increases. — The Straits Times/ANN

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