Irene Y.H. Ng, Associate Professor and Director of the Social Service Research Centre in the National University of Singapore, discusses ways to harness Budget 2020 for greater support of low income workers.
This year’s unity budget has something for everyone. It includes immediate measures to deal with the current Covid-19 epidemic, and longer term strategies to transform industries, address climate concerns, invest in students and support adult skills upgrading.
The commitment to support skills upgrading, especially for vulnerable lower skilled workers, is of particular importance. Today’s economic upheavals are commodifying low-skilled jobs and depressing their wages. In 2018, 9.3% of employed residents in Singapore were own account (or self-employed) workers, 7.2% were in contract-based employment (of which 2.0% were in contracts of less than a year’s duration), and 3.4% in casual employment (Ministry of Manpower, 2018).
International organizations and leading scholars have emphasized the necessity of skills investments in order to tackle the job revolution. In establishing a lifelong learning structure that has become part of the education system, Singapore is on the right track and in fact ahead of the curve.
Alongside the investments in skills, initiatives such as the Workfare Income Supplement (WIS) and the Progressive Wage Model (PWM) have propped wages up. Today, Singapore’s Gini Coefficient, a measure of income inequality,[1] has decreased by 5% since its peak in 2007. This is significant in a decade when inequality in other countries has increased. Nevertheless, Singapore’s income inequality remains one of the highest among developed countries, especially when government taxes and transfers are accounted for. Furthermore, today’s level of income inequality remains higher than the levels before the year 2000, and our prevalence of low wages also remains high (Ng, 2020).
More needs to be done to ensure the effectiveness of the current skills and wage upgrading initiatives. To counter the market trends that press wages down and drive inequality up, policies need to be enacted at all levels, from preventive to remedial, from individualized support to restructuring of systems.
First, in terms of assistance to help lower-income individuals, one basic but important step is a commitment to ensure that assistance keeps pace with costs of living. In a Straits Times commentary on 22 February, Walter Theseira argued that payouts to programmes such as Workfare Income Supplement, Silver Support, and ComCare should be indexed to inflation. Indeed, logically, if payout amounts are only reviewed every few years, the values of these assistances will be behind inflation by the time the amount is adjusted. This approach to review also does not guarantee any adjustments, whereas indexation ensures that the amounts keep up at least with inflation. In today’s climate, where jobs and wages are at risk, assurances of greater regularity in budgeted protection by the government goes a long way to support households, who need that buffer more than do the national coffers.
Second, the progressive wage model (PWM), which increases wages through skills ladders, needs to be accelerated to more sectors to have more widespread effects. In this year’s Ministry of Manpower Committee of Supply Debate, it was announced that the PWM will indeed expand to more sectors. Action needs to swiftly follow this announcement.
Eight years since the PWM started, the PWM has been implemented in only three sectors. First introduced in the cleaning sector as a set of guidelines in 2012, wage requirements were mandated in the cleaning sector in September 2015, in the landscaping sector in June 2016, and in the security sector in September 2016 (Ng, Ng & Lee, 2018). A PWM for lift technicians was announced in 2018, but has not yet been implemented. Many other low-wage sectors could benefit from wage restructuring and skills ladders. For example, PWMs in the retail and long-term care sectors will not only benefit staff in these sectors, but also improve service quality to the consumers of these services. Moreover, the multiplier effects of increased consumption by higher paid workers and improved social well-being of service users can be substantial.
Third, there need to be investments in career coaching to help harder-to-employ and harder-to-reskill individuals upgrade. The current broad programmes more easily reach people who are ready or looking for changes into jobs and industries that are already identified as part of our industry transformation road maps. Some current programmes that target low skilled workers include place-and-train programmes for rank-and-file workers, and the newly announced Workfare Skills Support and training allowance for freelancers. However, many low income earners are often too overwhelmed with the daily demands of making ends meet to look out for such programmes, or to overcome their fears, inertia and knowledge gaps to make the changes these programmes seek.
Career coaching programmes for low income individuals are being piloted in USA. For example, MyGoals by MDRC applies an “innovative employment coaching model” to help recipients “find work, build careers, and advance toward greater self-sufficiency” (MDRC, 2018). Admittedly, these forms of career coaching for harder-to-upgrade individuals will be costly in the short run, as it will take more work to motivate discouraged workers and to help someone who has been in manual jobs (with fewer transferable skills) start learning again. However, there is a potential long-term gain of such a coaching programme in the form of cost savings from a decreased dependence on welfare.
Fourth, there is urgent need to extend labour laws that protect workers to non-traditional work arrangements. Traditional benefits such as paid leave and medical benefits are either unavailable or greatly reduced for people in casual, short-term contracts, or own account work. Technology has made such arrangements much more accessible to employers and employees alike, and legislation needs to not only catch up, but also pre-emptively extend the protection of labour. For example, the EU has passed laws that define platform workers as employees, making provisions for protections such as ‘more predictable hours’ and ‘payment for cancelled work’ (University of Pennsylvania, 2019).
All in all, in terms of overcoming the challenges of low
skills and low wages, Budget 2020 has continued the crucial long-term strategy
of skills investment. To complement the skills strategy, I have proposed
greater guarantees in terms of inflation indexation of assistance, legislative
protection, and the expansion of intensive programmes such as PWM and career coaching
to rank-and-file workers. Expanding on the initial programmes to uplift low
wage workers such as Workfare or PWM will be more challenging than it has been
in previous years. But they are necessary if the fruits of our skills strategy
are to be distributed to Singaporeans who need the skills support most.
[1] Measured among resident employed households in Singapore (Department of Statistics, 2019).
References
Department of Statistics, Household Income Trends (2019)
MDRC, MyGoals for employment success (2018)
Ministry of Manpower, Labour force in Singapore 2018, (2018)
Irene Y.H. Ng, “Low wage work: Trends and possibilities” in I. Y. H. Ng and Y. W. Neo (eds.), Working with low-income families through the life course: Challenges to social services, pp. 77-90 (National University of Singapore, 2020)
Irene Y.H. Ng, Y.Y. Ng and P. C. Lee, “Singapore’s restructuring of low-wage work: Have cleaning job conditions improved?”, Economic and Labour Relations Review, 29(3): 308–327 (2018)
University of Pennsylvania, Gig Economy Protections: Did the EU Get It Right?, Knowledge@Wharton (2019)
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