median wage increase for Singapore workers only about $18 net!

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$660m wage credit payout to employers

I refer to the article “$660m in payouts for employers by end of March ” (Straits Times, Mar 18).

It states that “More than 85,000 employers will receive a total of about $660 million in Wage Credit Scheme (WCS) payouts by the end of this month.

Under the extended WCS, the Government co-funds 20 per cent of wage increases given to Singaporean employees earning a gross monthly wage of $4,000 and below, over 2015 to 2017.”

No mention of the no. of eligible workers?

When I read the above – the first “curious” thought that came to my mind was – why no mention of the number of workers who were eligible for the wage credit?

Since there is no breakdown of the workforce statistics into Singaporeans and permanent residents (PRs), and only Singaporeans can qualify for the wage credit – I estimate that the number earning up to $4000 to be about 900,000 (since the median gross income was $3,823).

Since the 20 per cent co-funding wage credit is computed from the last two years’ wage increase of at least $50 a year – I estimate the average wage increase per eligible worker for 2016 (assuming three quarters of the workers met the criteria) to be about $200 a month ($660 million divided by 0.4 (co-fund 20% for 2 years’ wage increases) divided by 675,000 (75% of workers).

To put this in perspective – $200 is a five per cent wage increase for a worker earning $4,000.

0.7% wage increase last year

Actually, my curiosity was aroused because I remember reading in the news that the median gross income of full-time employed Singaporeans only increased by 0.7 per cent to $3,823 last year.

This works out to a wage increase of about $27 monthly ($3,823 divided by 1.007 – $3,823).

Since this is including employer CPF contribution – the increase excluding employer CPF contribution is about $23 ($27 divided by 1.17).

$18 increase in take-home pay?

If we deduct the typical 20 per cent employee’s CPF contribution – the increase in take-home pay (disposable income) is only about $18 ($23 less 20%).

50% of S’poreans had less than $18 pay increase?

So, since this is the median – does it mean that about half of the full-time employed Singaporeans had a wage increase (take-home pay) of only $18 or less?

Total wage increase of all the workers earning up to $4,000 – $250m?

Hence, I estimate the total wage increase for workers earning less than $4,000 to be about $250 million ($23 x 12 months x 900,000 workers).

Now, let’s get back to the wage credit.

20% co-fund wage increase is $660m, but all workers’ wage increase $250m?

Here’s where it may be puzzling. If the Government paid $660 million to co-fund 20 per cent of the wage increase for those workers earning up to $4,000 who had at least a $50 wage increase – why is the estimated total wage increase for all the full-time employed Singaporeans earning up to $4,000, only about $250 million?

Why? – low or no wage increase or cut, unemployed, self-employed?

Well, some possible reasons may be that a significant number may have had a wage increase of less than $50, no wage increase, a wage cut, became unemployed (estimated to be over 100,000 Singaporeans), free-lance, self-employed, etc.

Leong Sze Hian

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