Workfare Income Supplement

[pic 1]

  WIS (Workfare income supplement) was introduced by the government in first quarter 2007 budget speech as a permanent feature of Singapore’s social safety net for Singapore’s elder low income workers. WIS is paid out in cash and CPF up to 4 times a year for employees. Self-employed persons are paid annually. Its aim was to encourage workers to have a job in Singapore and have more retirement sum of money for housing or healthcare use. This will help for low-wage, low-skill workers to be upwardly mobile in the labor market and in society as well. There has been an increase of amount in 2010 with an income ceiling from $1,500 to $1,700, maximum possible payout from $2,400 to $2,800.

  From the graph, it depicts that there’s a significant increase on the employment rate as it increases with the age band as older workers are entitled to more supplements. This WIS scheme is integrated with the CPF system, which is based on the contributions from individual earning income. A study by Soon et al. (2012) revealed that the impact of WIS has worked well with the majority of low-wage workers. Low-wage workers preferred a higher CPF component as compared to pure cash. From the graph shown, we can conclude that the WIS has indeed helps with the employment rate to increase.

   WIS is implemented to cater to Singaporean that falls in the bottom 20%. To be eligible for WIS scheme, one must not earn more then $1,900, reside in a property of not more than $13,000 annually, and must be employed for two out of three months. However, there is a minimum wage of $1,000 to get eligible for the scheme. Workers that earned below $1,000 are not entitled to it, which will result in widening gap between higher and lower paid Singaporeans or companies to hesitate hiring them at a higher cost. Another problem that worries is that as government continues to extend the age retirement to encourage those elder workers to work. Elder workers are not given an equal pay and are not treated fairly. Thus, as they grow older, they are actually paid lesser, which resulted staying in chronic state of poverty and not accorded enough to retire.