SINGAPORE: Looking at the measures in the unprecedented Unity, Resilience and Solidarity Budgets, it is heartening that the most vulnerable groups in this pandemic - low-wage workers, low-income families and the elderly - will receive direct assistance.
The cash-in-hand or vouchers disbursed, through the Solidarity Payment, Care and Support Package and Workfare Special Payment, provides help that is timely and most appropriate for such unprecedented times where there is wide scale job and income disruption.
How does cash assistance work alongside established support measures? While we are in unprecedented times, the current situation could give us some clues.
PREFERENCE FOR SELF-SUSTENANCE
The Singapore Government has traditionally avoided direct assistance, out of a deep concern that regular payments or assistance would deviate from the culture of self-reliance that it aims to foster, and contradict the ultimate aim of securing employment and economic stability for low-income families.
That is why it has preferred directing social spending on subsidies for utilities, housing, education and healthcare, with lower-income groups receiving more.
“I’ve seen the experiences of the Western countries where the more you give, the more one asks and I think that’s really the start of the erosion of the work ethic that Singaporeans have,” said Senior Minister of State for Law and Health Edwin Tong said in a 2018 interview.
Hence support for wages and businesses still remain the mainstay of government expenditure, even as the three Budgets this year have a direct cash component.
There is some evidence that suggests direct cash assistance might blunt the desire to work.
For example, US reformed a large federal welfare programme in 1996, replacing direct payments to single mothers with a programme that limited payments and made recipients work.
The share of never-married mothers with just a high school diploma working in the formal sector jumped from 64 per cent in 1996 to 76 per cent in 2000, according to figures from the Center on Budget and Public Priorities.
There are also concerns that direct cash assistance could be abused by opportunists. Law and Home Affairs Minister K Shanmugam told reporters on Apr 13 that there were some who were abusing the Temporary Relief Fund’s simplified process to make fraudulent claims.
A REGULAR CASH FLOW
These beliefs and concerns shape most assistance schemes in Singapore targeted at the low-income, where helping people stay employed and preserving the work ethic remain the top-line objectives.
While this emphasis on getting the poor to be self-reliant is laudable, it alone doesn’t help low-income families with their daily cash needs.
The Workfare Income Supplement (WIS), for instance, tops up the salaries of low-wage Singaporean workers.
Every month, workers receive about 28 per cent of their monthly wage. Even though there is a cash component, workers however take home only 40 per cent of the sum in cash.
The remaining 60 per cent goes directly to their Central Provident Fund (CPF) accounts.
For example, take a 65-year-old worker who earns S$1,200 a month. In 2020, he would receive S$333 monthly through Workfare: S$199 goes to his CPF and S$134 is in cash.
However, a substantial proportion of income for low-income families is usually from casual, contract or part-time work.
Part of this can be attributed to the multiple challenges faced by low-income families – a combination of little or no educational qualifications, chronic illnesses, and care-giving responsibilities for elderly parents or children with special needs.
Many take up work offered by the gig economy, as delivery app riders, or gigs they can do at-home, such as catering and baking services. The wages they receive can be low, even uncertain, with the consequences of a loss in income potentially dire.
This was the case even before COVID-19. For example, our research with the clients of crowdfunding charity Ray of Hope shows that a fall in household cash sets off a chain reaction of events that worsen family situations, despite the clients’ best efforts, due to the multiple issues they juggle.
In one instance, a client of Ray of Hope was recovering from an illness while holding down a job. When her ComCare Long-Term Assistance (ComCare) ended, her cash flow fell and her family situation quickly deteriorated.
Her bills and daily expenses for her children and parents accumulated faster than she could pay for them, causing her far more stress and anxiety. This slowed her recovery, which led to her employer downgrading her from a full-time to a part-time position.
COVID-19 MAKES IT TOUGHER
With COVID-19, the challenges for low-income families become much worse as their incomes are disrupted.
A survey by Beyond Social Services of 200 low-income families in March shows that many are more stressed and anxious, and more worried about their ability to pay for household and school-related expenses.
That is why government cash assistance in the three Budgets through the Temporary Relief Fund, the COVID-19 Support Grant and the Self-Employed Person Income Relief Scheme specifically for people whose incomes have been disrupted, is much welcomed.
In the first two weeks alone, since the scheme opened on Apr 1, the Ministry of Social and Family Development had reportedly received more than 300,000 applications for the Temporary Relief Fund.
The Unity, Resilience and Solidarity Budgets also include measures such as the Enhanced Workfare Special Payment, the expansion of the Silver Support Scheme to cover more needy elderly, and the S$300 in grocery vouchers going to Singaporeans in 1-room and 2-room HDB flats this year.
In light of COVID-19, the authorities will also be exercising more flexibility in deciding ComCare amounts and duration.
Additionally, the government is also making the cash assistance available quickly and with minimal paperwork.
OPPORTUNITY TO STUDY ENHANCEMENTS
These measures are extraordinary and unprecedented. But whether some of these enhancements – particularly putting more cash in the hands of low-income households – will continue after the pandemic remains to be seen.
Yet this exercise offers us a rare opportunity to study the effects of direct cash assistance. In particular, whether enhancing the safety nets for low-income families can help them thrive.
Will direct cash assistance help low-income families achieve economic stability? Are more able to get back into the workforce with cash assistance after getting laid off? How does cash assistance affect their future prospects? Does more generous ComCare in the first instance prevent families from having to apply again?
The Enhanced Workfare Special Payment, for instance, gives large boosts to take-home cash for low-income workers.
Recall the example of the 65-year old worker who would take home S$133 a month in cash from Workfare?
Well, under the Enhanced Workfare Special Payment he would get an additional S$3,000 this year – double his annual cash from Workfare. It would be worthwhile studying how that improves his family’s welfare.
The upcoming Emerging Stronger task force on economic resilience, chaired by Minister for Social and Family Development Desmond Lee and Group Chief Executive of PSA International, Tan Chong Meng, is a positive step and could explore these issues in greater detail.
Helping the most vulnerable in our society, and making social progress part of the conversation for economic resilience will ensure Singapore emerges from this pandemic stronger for everyone.
Martin Tan is the Executive Director of The Majurity Trust, a philanthropic organisation in Singapore.