Should the Workfare Income Supplement scheme be reformed?

The government announced last week as part of the national budget that the Workfare Income Supplement (WIS) will be extended to workers earning a monthly wage of up to S$1,900 a month, up from the current S$1,700 cap.

This all sounds great for the lower income workers as they try to cope with rising costs of living.

Let’s face it, nothing is cheap these days; whether it’s utilities, food, transport, or housing, it seems like prices won’t stop going up!

However, are the extended Workfare benefits a long-term solution to alleviate people’s struggles or just a short-term measure designed to calm people down?

In essence, the intention behind raising the WIS minimum income cap is good.

But think about this – more workfare doesn’t necessarily translate into more disposable income to save or spend.

With inflation taken into consideration as prices of goods and services steadily rise, the $200 increase in cap can merely be perceived as an adjustment.

Also, the measure doesn’t take into account specific individual situations: for instance a breadwinner of a household of 4 earning $1,900 a month doesn’t have the same struggles as a single person without family commitments making the same salary.

Maybe it would be more adapted to award WIS pay-outs to workers according to their live-in dependents, meaning that the pay-out received would be calculated using the total household income divided by the number of dependents within that family unit.

For example, take Worker A who earns $1,600 a month. He has a wife and two kids, and that works out to an average of $400 per person per month. Worker B, on the other hand, is a single, unmarried person who lives alone. She earns the same salary as Worker A, yet has four times the spending power. A larger workfare pay-out should be given to Worker A – simple because he has many more mouths to feed.

The other issue is that WIS only covers workers aged 35 and above. The problem is that there are many younger workers who earn less than the cap of $1,900 below the age of 35 but they don’t qualify for the scheme. These younger workers are more likely to marry and have children but the senior workers get better benefits. In addition to the WIS pay-outs, a low wage worker aged 60 years and above will also get a top up of his pay of 30%.

While it makes sense that these schemes are meant to help senior workers get by in life while being able to maintain their financial independence – an absolutely necessary measure given the harsh conditions many elderly citizens currently live in – more often than not the younger workers with families are the ones who are in need of the extra cash.

The recently announced enhanced marriage and parenthood package does provide immediate relief to offset the costs of raising a child, but these are one-off benefits and we all know how expensive baby formula and diapers are these days!

So, do you think the WIS scheme should be overhauled? Should the WIS help low-wage workers under the age of 35? Do you think a more broad-based Workfare programme would encourage lower-income couples to have more children, which would, in turn, be beneficial to Singapore’s future?

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Najib A.

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