Economics, Main Stories, The Singapore Model, Uncle Leong's corner - Monday, February 8, 2010 2:31 - 31 Comments

Do upgrading skills and Workfare help low-wage workers?

By Leong Sze Hian

I refer to the report “Measures to encourage low-wage workers to take up training expected during Budget” (CNA, Feb 7).

It states that “Manpower Minister Gan Kim Yong has hinted that issues such as making it easier for low-wage workers to continue to upgrade themselves and making the Workfare Income Supplement Scheme more accessible will be tackled in the Budget later this month”.

Since this statement and the Economic Strategies Committees’ recommendations on manpower are hinged on the rationale that more training, skills upgrading and Workfare will help to solve the problems that low-wage workers face, I think a good starting point may be to evaluate the success of the SPUR scheme.

In this connection, I refer to the articles “Fewer in full-time jobs” (Today, Jan 7), “42,000 workers have found jobs after Spur training” (Today, Dec 22), “42,000 unemployed find jobs through Spur” (My Paper, Dec 22), and media reports that 264,000 people have committed to training under the SPUR programme.

Since two-thirds have either started or completed training, does it mean that one-third, or about 88,000, have not even started training yet, after one year of the SPUR scheme?

So, is it correct to say that the initial goal of having 220,000 training places has been exceeded?

Media reports state that 42,000 who went through SPUR have managed to find jobs.

So, how many people are still unable to find jobs, after re-training under SPUR?

How many of the 264,000 who have committed to training are employees, and how many were not employed when they were on a SPUR course?

If we add the SPUR unemployed trainees to the average number of unemployed residents last year, which was about 87,000, what would be the total figure?

How many of the 87,000 unemployed have gone through SPUR?

The above statistics may help all stakeholders to review, evaluate and re-design SPUR, so that its effectiveness can be benchmarked for analysis in the future.

The rhetoric on more training and upgrading skills to help low-wage workers is not new, but it does not appear to have been very successful, given the fact that 401,600 resident workers earn less than $1,200 a month as of June 2009, and after adjusting for inflation at 1.4% per annum, the real increase in income for the first two quintiles of households from 1997/98 to 2007/08 was -1.7 and 0.9 per cent per annum respectively.

By the way, the CNA report “Survey shows Singapore in bottom 10 of salary rise rankings” (Apr 7, 2009), stated that: “Employees in Singapore will see some of the lowest pay rises this year compared to their counterparts in other places.”

Out of 53 countries surveyed, Singapore is in the bottom 10 — at number 43. Why is this so?

Mr Gan said his Ministry is studying if the qualifying period for Workfare should be shortened.

To qualify, low-wage workers must have worked for at least three months in a six-month period during a calendar year, or at least six months in a year.

Mr Gan said: “Having discussed this at length with our tripartite partners, we feel that an important objective of Workfare is to encourage regular work.”

”As part of the Workfare qualifying criteria, we will still require a minimum qualifying period and hopefully we encourage our Workfare recipients to go for regular work all the time, so that they can receive Workfare on a regular basis”.

I think the logic of the argument may not be quite sound — it may not be so much that low-wage workers don’t want to work for “at least three months in a six-month period during a calendar year, or at least six months in a year”, but whether they can get work in the first place?

Why would any low-wage worker choose not to work “regularly”, as the minister put it?

Perhaps one could get feedback from low-wage workers and apply some common sense rather than rely on “tripartite partners”?

In my view, perhaps the most important consideration may be to ask why should a low-wage worker be penalised by not making him or her eligible for Workfare, just because he can’t get “regular” work?

With 328,000 qualifying for Workfare, if we include those who did not qualify, or the self-employed who may have chosen not to contribute because the entire Workfare goes to their CPF making them even more “cash poor”, how many older (over age 35) workers are there in total?

If not for the temporary assistance during the recession, given to low wage workers through the one-off WIS Special Payment, which was given in cash, instead of CPF, will the number of workers receiving Workfare decline again from the 2006 figure of 362,000 to the 2008 figure of 297,000?

Why did a staggering 106,000 self-employed Singaporeans drop out of Workfare in 2007, after just 1 year?

According to the CPF Board Question and Answer website:

Q: Why do Self-Employed Persons (SEPs) and informal workers not get cash under Workfare but all the Workfare is paid into Medisave instead?

A: A key principle of Workfare is that each beneficiary has a personal responsibility to save for his own future needs. If Workfare for SEPs and informal workers is given in cash, the net result would be that the Workfare recipient would not be saving on his own.
The Workfare payment for SEPs/ informal workers are fully credited to their Medisave Account as SEPs/ informal workers are required to only contribute to their Medisave Account and at much lower rates compared to employees. To benefit informal workers, we have decided to allow informal workers to contribute to Medisave at the rates applicable to SEPs.

I think the answer and consequently perhaps the solution may be obvious — give Workfare in cash to the self-employed and employees too, as putting all or the bulk of Workfare in the CPF Medisave account does not really help low-wage workers in their already very tight cash-flow.

You can’t use Medisave to put food on the table — only when you are hospitalised or need out-patient treatment for a chronic illness!