Wages: Workfare’s the long-term answer
- The Straits Times & Lianhe Zaobao (22 September 2010) : Wages: Workfare’s the long-term answer
Workfare is more sustainable in the long term
Wages: Workfare’s the long-term answer
- The Straits Times, 22 September 2010
Workfare is more sustainable in the long term
- Lianhe Zaobao, 22 September 2010
We refer to the recent debate on minimum wage in the media. Helping low-wage and low-skilled workers has always been a priority for the Government and our policies and measures are designed to help this group of workers benefit from inclusive growth in a sustainable way.
2. Singapore is a small, open economy and our labour market needs to remain flexible in order to maintain competitiveness and create jobs. Imposing a minimum wage that does not reflect the value of the workers’ contribution will do the opposite and reduce the flexibility of the labour market to respond to changing economic conditions.
3. More importantly, it may affect the ability of lower-skilled workers to secure a job because employers will be reluctant to employ them if the minimum wage is higher than the value of what they can contribute. These workers would be denied the opportunity to work for a lower wage that reflects their skills and ability, even if they wish to. Furthermore, companies that are unable to pass on the additional wage cost may become uncompetitive and decide to move out of Singapore, taking away jobs from Singaporeans. Contrary to what Prof Tommy Koh believes, instead of helping low wage workers, a minimum wage may lead to a lose-lose-lose situation: for our economy, the company, and most importantly, the workers whom we are trying to help.
4. Keeping the labour market flexible does not mean that the Government has taken a hands-off approach towards helping low-wage workers. We have introduced various targeted assistance programmes for them. One key pillar is Workfare, which costs around $500 million a year, is fully funded by the Government. The Workfare Income Supplement (WIS) Scheme tops up the income of eligible workers by up to $2,800 a year. The Government also introduced the Workfare Training Support (WTS) Scheme this year to help low-wage workers upskill and earn more. In this way, we can raise the total income of these workers, while preserving the work ethic and rewards performance, without the adverse effects of a minimum wage.
5. Our tripartite partners have also been working together to promote responsible outsourcing, good employment and training practices, and facilitates the redesign of jobs to increase their value.
6. These efforts will help to address the key challenges faced by the low-wage workers more effectively and improve their income in a sustainable way over the long term.