Tuesday, November 30, 2010

Workfare better than minimum wage: PM

Nov 29, 2010
By Cai Haoxiang

SINGAPORE has something better than a minimum wage and it is called Workfare, said Prime Minister Lee Hsien Loong yesterday, in his first public remarks on the issue of whether there should be a minimum wage in Singapore.

He said the Workfare Income Supplement scheme is more effective at helping low-income Singaporeans as it is more targeted, and is funded by the Government instead of the employer.

'People say, why not have a minimum wage in Singapore? Actually, we have something better than the minimum wage, we have Workfare,' he said at the 31st PAP party conference yesterday.

'With the minimum wage, we put the burden on the employer.

'He has to pay extra, so instead of encouraging the employer to hire more low-income workers, you are discouraging him from hiring workers and the result is not going to be what we want,' he said, as he highlighted the minimum wage's tendency to increase unemployment.

The Government has spent a total of $1.65 billion in the last five years, or $400 million a year, to help 400,000 low-income workers, he noted.

Workfare started as a pilot scheme in 2006 and was institutionalised in 2007.

The scheme gives cash and Central Provident Fund monies to Singaporeans aged 35 and above who earn up to $1,700 monthly - roughly the 30th percentile of wage-earners here.

A 65-year-old earning $1,000 a month will get the maximum payout of $2,800 a year, of which $800 will be in cash and $2,000 will go into his CPF account. The self-employed get up to $1,833 a year in their Medisave accounts.

The debate on whether to legislate a minimum wage in Singapore resurfaced in recent months after lawmakers in Hong Kong passed such a law in July.

Academics and politicians have weighed in on both sides of the issue in the media and other public fora.

Proponents say it will improve the lot of low-income Singaporeans who have suffered from the influx of cheap foreign labour, while critics say it is difficult to implement and locals will lose out if wages are set too high and jobs move abroad.

In his speech, Mr Lee listed other measures, in addition to Workfare, that the Government has introduced to help low-income Singaporeans.

These include an Additional Housing Grant of up to $40,000 for low-income households, over and above the market subsidy for flats and existing grants of up to $40,000 to buy new and resale flats.

Mr Lee also highlighted the three-year, $190 million Workfare Training Support (WTS) scheme that gives low-wage workers cash grants and course fee support, to encourage them to go for training and be equipped with skills to get better jobs.

Mr Lee also mentioned the three 'M's that underpin Singapore's health care system - Medisave, MediShield and Medifund - to help poor families afford good medical care.

He said that Singapore's health care social safety net works so well that there are very few residents who come to MPs' Meet-the-People sessions seeking help to pay their medical bills.

'When they do come, we are usually able to solve their problems,' he added.

Mr Lee also cited hardship fund ComCare, which grassroots leaders tap on to help needy residents.

PM Lee emphasised that there is no shortage of schemes to help needy Singaporeans, as long as they are willing to help themselves upgrade.

Singapore remembers the people at the margins, he said, whether they are from low-income groups, or are people whose household income places them just beyond qualifying for subsidised government flats.

'But most help must go to those who are most in need,' he said.

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