SINGAPORE –The issue of whether more can be done in Singapore to help lower-wage workers and their families was rekindled on Thursday.
A report by researchers from Nanyang Technological University (NTU) and the Lee Kuan Yew School of Public Policy (LKYSPP) published on Thursday said that a family of four, consisting of parents, a pre-teen and a teenager, needs at least $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 on 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 $18 billion in financial year 2011 to $34 billion in FY2021.
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 $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.
Living wage to support a basic standard of living
In an earlier study in 2021, the same researchers calculated that a family of four would need $6,426 a month for a basic standard of living, while a single parent with a toddler would need $3,218 a month.
After adjusting for inflation, the figures have now risen to $6,693 and $3,369, respectively.
These figures are the “living wages” required for basic needs, yet around 30 per cent of working households in Singapore earn less than these thresholds, the latest report said.
Dr 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 skill upgrading and productivity increases.
Most recently, it was expanded to include sectors such as retail, food services and waste management, and occupations like those of administrators and drivers.
The ministries said the PWM and other measures under the wider progressive wage umbrella now cover up to nine in 10 lower-wage workers, and will continue to expand to cover more workers.
The wages required under the PWM will also increase significantly, they said. For example, wages for retail workers under the model will increase by more than 8 per cent a year from 2023 to 2025, while wages for most cleaners will increase by more than 10 per cent a year from 2023 to 2028.
Retirement adequacy
On retirement adequacy, the report said Singapore’s pension system consists mainly of mandatory individual savings in CPF, with “limited state-funded social assistance”.
The report found that the monthly payout received by a single senior aged above 65 from his CPF Basic Retirement Sum (BRS) amounts to only 55 per cent of what he needs for a basic standard of living.
Additionally, only 65 per cent of the active CPF members who turned 55 in 2021 had either saved enough for the BRS and owned a property, or had saved the Full Retirement Sum, the report noted.
Social assistance schemes like ComCare Long-Term Assistance and the Silver Support Scheme are the main channels of financial assistance for retirees with low incomes.
However, ComCare Long-Term Assistance amounts to just 43 per cent of what a retired senior needs, while Silver Support reaches more recipients but meets just 10 per cent to 20 per cent of their needs, the report said.
“Mandatory savings are not an adequate preparation for retirement when the wages from which the savings are drawn are insufficient to begin with,” it added.
In response, the ministries said that the Government is already reviewing how retirement adequacy can be strengthened, and that those who work and contribute consistently to their CPF accounts will be able to meet their basic retirement needs.
“We recognise that there are groups who are unable to benefit fully from the system, including those unable to work and/or accumulate sufficient CPF savings,” they said. Such groups include lower-income workers and caregivers.
The ministries noted that support for these groups is being strengthened, such as through the recently announced Majulah Package for those aged 50 and above, and upcoming enhancements to measures such as the Silver Support Scheme and Workfare Income Supplement.
Reviewing and updating policies
The report said that a number of schemes, such as subsidies for infant care, childcare and student care, as well as the Silver Support Scheme, were not updated between 2020 and 2022 despite high inflation.
It added: “Pegging the amounts of assistance to current price levels – known as indexing – should be introduced to ensure policies are more responsive to reality and do not fall behind at precisely those times when they are most needed.”
The ministries said the scope, coverage and payout amounts of government schemes are regularly reviewed to ensure those schemes remain relevant and adequate.
For instance, the ministries said, the ComCare payout amount was raised in 2022, while its per capita household income benchmark was raised in July 2023.
The regular reviews go beyond updates to scheme parameters, they said. “We also review longer-term trends and introduce new policies or schemes to address emerging or new challenges.”
They cited the example of aligning CPF contributions by platform workers and platform companies with those of employees and employers, respectively, to help platform workers meet their retirement and housing needs.
“From time to time, we have introduced one-off measures to deal with specific issues or as part of bonus sharing with Singaporeans. These do not replace permanent elements of our social safety nets,” the ministries said.
The researchers touched on the impact of the one-off measures in Budget 2023, such as the Assurance Package and Community Development Council vouchers, but added the caveat that the full-year 2023 CPI is not yet available to adjust for prevailing goods prices.
By their calculations, these measures would cover 2.4 per cent to 3.9 per cent of the basic needs of a family of four, and 8.3 per cent to 12.7 per cent of the basic needs of a single senior above 65.
The ministries also said they welcome studies that provide additional insights into public discussion on social policies.
“The report offers an additional data point on the expectations and aspirations of Singaporeans, which will continue to evolve over time,” they said.
Research overstates basic needs, understates govt support: Ministries
The ministries took issue with the data and methodology used in the report, which outlines wage levels required to meet the basic needs of various types of households.
Like the earlier 2021 report, it runs the risk of overstating the minimum income for basic needs while understating the amount of government support received by lower-income families, the ministries said.
“The MIS approach used is highly dependent on respondent profiles and on group dynamics. As the focus groups included higher-income participants, the conclusions may not be an accurate reflection of basic needs,” they said.
For example, the ministries said, some expenses taken into account when calculating MIS included discretionary expenses such as jewellery, perfumes and overseas holidays.
They said: “Our own analysis suggests that the proposed monthly MIS budget of around $1,680 per capita is similar to the average monthly expenditure of $1,650 per capita for all families with children, rather than reflecting a more basic set of needs.”
Responding to questions from the audience on basic needs items at the report’s launch, Dr Ng of LKYSPP said the researchers’ approach ensured that no single individual gets to define basic needs or discretionary spending.
Participants collectively decided on what counted as basic needs items. Full agreement was needed to add or strike off items on the list, Dr Ng said.
https://www.straitstimes.com/singap...in-singapore-draws-response-from-3-ministries
