Sunday, September 25, 2005

NTUC's plan for low income workers

NTUC has suggested that workers earning less than $1,000 be exempted from CPF. This will save them 20% of their wages. They need the full wages to meet a basic lifestyle, due to the high cost of living in Singapore.

NTUC suggested that the government should top up the CPF savings of these low income workers, so that they can buy their HDB flat.

I think that this is a wonderful idea.

In some countries, the government pays people who do not work. It is called unemployment benefit.

The approach by NTUC is to encourage these unemployed workers to work, even if it is a low income job. The government can help them by contributing to their CPF savings. It is an indirect way to give some help to these workers, but they must work.
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5 comments:

sharon tay said...

I certainly agree! If the government is willing to provide low-salaried workers with additional CPF or cash incentives (whichever is more feasible) - that will definitely be additional icing on a cake.

This will be an excellent way of encouraging more people to work and, will in turn, increase the country’s overall productivity.

September 27, 2005 6:00 PM
Moody Music said...

I disagree on this.

Many companies will be abusing this and give lower salary as the Government is subsidizing a portion of the salary.

Take for example. I worked for a fast-food company for 5 days a week at $60 a day. That's $300 a week or $1,200 a month. Suppose that the government is looking to subsidize those earning $1,000 and below, with $200 grants.

Although it might worked out to the same amount, but I may think to myself. Why should I work so hard for? If I work 4 days less, I still make about $1,160.

The very reason why Singapore has climbed so far is because we are realistic. We help those that really needs help, but refrain from those who just take it easy.

September 28, 2005 6:44 PM
sharon tay said...

Moody Music,

I understand where you are coming from. You are assuming that the government hands out sweets to anyone below the threshold earnings level of say, $1000. But let us give the Singapore government some credit. In this hypothetical case – alongside with the implementation of a policy, they will set up measures to prevent people from taking advantage of the gray areas.

Let me give you an example. An agency can be set up to conduct detailed analysis of the individual’s financial background. In addition, the agency can look into the reasons for the low earnings. If it suffices, then they can provide him with the incentives, and simultaneously work together with Job Centre to help the individual get a better job/upgrade skills so that they can try to take him off the scheme.

I think it is important that the scheme starts of with the (1) intention of helping people in the lower-income group and (2) has the motivation of helping them better their lifestyles.

That is why I think Mr. Tan’s suggestion is applaud-able. And, most certainly, feasible.

September 29, 2005 9:45 AM
Tan Kin Lian said...

This is my reply to Moody Music.

At present, the employers pay the market rate. This market rate is inadequate for the low income workers.

If the government pays the CPF contribution, it is indirectly giving some assistance to the low income workers and keeping the business cost low for the employer.

This is a win-win solution.

Of course, the taxpayer has to bear this cost. But this is better than unemployment benefit adopted in other countries.

I do not think that the employer can suppress the wages more, because of the CPF subsidy. The employer will still pay the market rate.

October 03, 2005 7:58 AM
sharon tay said...

Mr Tan, you have truly nailed the issue!

Many countries adopt the “welfare state” concept, and provide generous unemployment benefits. This usually decreases the motivation of the people to work, and hence, the economy suffers.

If CPF incentives can be provided, it will definitely encourage people to work. Like you have so aptly described – it is a win-win situation.

October 03, 2005 10:15 PM

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