Sunday, June 7, 2009

MOM misleading Singaporeans

From: "truth"
Date: Sun, 07 Jun 2009 13:39:29 GMT
Local: Sun, Jun 7 2009 9:39 pm
Subject: MOM misleading Singaporeans

Low-wage workers better off - really?
Sunday, 7 June 2009, 9:22 pm | 7 views

Leong Sze Hian / Columnist

The Ministry of Manpower has published a 74-page press release detailing
significance progress in the welfare of low-wage workers. But a closer
scrutiny of the report finds that the picture may not be so rosy. (Read the
Straits Times report here.)

IS THE Ministry of Manpower (MOM) blowing its own trumpet?

While its press release claims that low-wage workers have made significant
progress since 2006, they may in fact be presenting a distorted picture.

(Photo: A road sweeper keeping Singapore clean. Are these workers better off
since 2006? Courtesy of Kirk Siang / Creative Commons)

The press release says that "the wages of the 20th percentile full-time
employed resident increased from $1,200 a month in 2006 to $1,310 in 2008."

However, after adjusting for inflation, $1,200 in 2006 would be equivalent
to $1,304 in 2008.

This means that these low-wage workers received a wage increase of just $6
over 2 years, or just 0.25% per year.

So, while the headline of the press release proclaims: "Significant progress
for low-wage workers since 2006", are these workers really better off?

The ministry adds that "the number of residents earning $1,200 or less has
fallen from 360,000 in 2006 to below 300,000 in 2008." This is a little
misleading as the benchmark of $1,200 is from 2006. The ministry should have
used the 2008 benchmark instead, after adjusting for inflation.

The pertinent question should thus be: how many are earning less than
$1,304, instead of how many are still earning less than $1,200.

The number of part-time workers in the workforce as a share of total
employment increased from 3.2% in 1998 to 6.8% in 2008. There are currently
126,000 part-time workers, and their median monthly income has remained
unchanged at $600. Is this proof that the number of low-wage workers
(full-time and part-time) may have actually increased, rather than dwindled?

The press release also said:

"More people were working, especially from households living in smaller
flat types. The monthly household income of those living in 3-room HDB flats
or smaller also grew by over $300 from $1,910 to $2,220. Even after
factoring for inflation, this translated to a 3.5% per annum increase in
real terms".

However, this increase in household income may be due to more people working
per household rather than an actual increase in household income. What we
need to know is the employed per household data - whether it has gone up -
and the extent of it resulting in the 3.5% increase.

It is incredulous how the MOM chose to ignore inflation when talking about
the rise in income of low-wage workers. As for the rise in household income,
it seems like MOM is trying to paint a picture that workers are better off,
even when the reality on the ground might be different.

Housing Grants

The press statement also highlighted that "more than 10,000 lower-income
families received $144.3 million worth of Additional CPF Housing Grants

This works out to an average AHG of $13,983 per family.

In view of the very large increase in HDB flat prices from 2006 to 2008, the
AHG (or increase in the AHG) may have been lower than the flat's price
increase. For example, the HDB Resale Price Index increased by 37% from
101.8 in Q1 2006 to 139.4 in Q4 2008.

Is an AHG that is less than the flat's price increase really a subsidy?

Childcare Financial Assistance

The press statement noted that the Kindergarten Financial Assistance Scheme
(KiFAS) and the Centre-based Financial Assistance Scheme for Child Care
(CFAC) were reviewed and enhanced annually. It provides $41.6 million from
2006 to 2008, for over 11,200 children per year, on average.

This works out to an average of about $103 per child per month. This might
not be substantial enough - in light of the fact that the Today newspaper
reported in July 2008 that "some 1,500 students attending the seven PAP
Community Foundation (PCF) kindergartens in Woodlands will see their fees
shoot up by 30 to 100 per cent from July."

Inflation, it seems, might once again completely obliterate any supposed
benefits Singaporeans have gained over the past two years.


Why is it that the number of workers receiving Workfare declined from
362,000 in 2006 to 306,000 in 2007, and 297,000 in 2008, during a period of
record job creation?

Why did a staggering 106,000 self-employed Singaporeans drop out of Workfare
in 2007, after just 1 year?

Was it mainly because they had to contribute cash to their CPF, but receive
their entire Workfare as a top-up to their Medisave account? (Note: The
Resilence package now gives some workfare to them in cash.)

Home Ownership Plus Education (HOPE)

The press release stated that "an additional 1,200 families were approved
for assistance under the HOPE scheme, bringing the total number of families
approved on HOPE to about 1,700 at end-2008."

After 5 years of the HOPE scheme, it is arguably not very successful by any
measure, as only 1,700 out of 24,600 (presumably eligible families) have
been approved.

This represents only about 7% of all eligible families. The average payout
per HOPE family per year is quite a lot - $8,784. So, why are so few taking
it up or being approved?

I think the problem may be that the bulk of the benefits is in the form of a
housing grant of $50,000 disbursed in annual installments of $2,500 into the
mother's CPF account over 20 years, or until she reaches 45 years old. After
that, a training grant of up to $10,000, and cash incentives of $6,000 -
$20,000 will be given to help couples with family planning.

But while you may get $2,500 a year until age 45 to pay for a HDB flat,
would you want to risk losing the flat plus face litigation if you can't
service the mortgage in the future? Would you really go for training when
you are probably still struggling with work and free time?

Does it really make much difference for suffering families now?


As my final analysis, this 72-page press release may be of little meaning or
consolation to lower-wage Singaporeans, because for them the reality is that
they have been adversely affected by the downturn: many may have lost their
jobs, had wages cuts, no bonus, shorter work week, compulsory leave, and so

The government's threadbare social assistance schemes have not done much for
them over the past three years, and are unlikely to serve them any better in
the months ahead.

All the data that the government has released cannot conceal the reality
that Singapore has become a much more unequal society under the government's
growth-at-costs approach. In thinking about how to restructure the
Singapore economy, the government might want to rethink the premise of its
economic strategy.

No comments:

Post a Comment