Budget 2024: Half a million lower-wage Singaporeans to benefit from improved income top-up scheme

SINGAPORE: Low-wage workers who earn S$3,000 (US$2,200) a month or less will be eligible for the Workfare Income Supplement scheme from January 2025, Deputy Prime Minister Lawrence Wong announced in his Budget speech on Friday (Feb 16).

The qualifying monthly salary is currently S$2,500.

Those who are eligible for the scheme - Singapore citizens who are at least 30 years old or have disabilities - will also receive bigger payouts from Jan 1, 2025. 

The payout depends on the worker’s age and wages, but the maximum payment across all age bands will increase by around 17 per cent.

The Workfare Income Supplement scheme was introduced in 2007 to provide lower-wage citizens with cash payouts and Central Provident Fund (CPF) top-ups to encourage them to keep working and saving for retirement.

The Ministry of Finance said the enhancements will benefit around half a million Singaporeans.

TACKLING INEQUALITY

Mr Wong described Workfare as a key strategy in Singapore making progress on uplifting lower-wage workers and reducing disparities in wages.

“Our income inequality, as measured by the Gini coefficient, has declined to its lowest level over two decades,” he said.

“We do not want to succumb to the kind of harsh inequality we see in so many parts of the world. By creating more paths towards equality and mobility, we also put ourselves in a better position for continued growth,” Mr Wong, who is also Finance Minister, added.

Singapore has “paved our own way” after studying the experience of other countries, he said.

“We introduce significant innovations that work for us, our ethos, our society. This is the Singapore way.”

INCREASED SALARIES FOR LOCALS

With the Workfare scheme, various aspects have been tweaked over the years, including the age criteria and size of payouts.

Mr Wong said that raising the qualifying income cap “ensures that we continue to cover lower-wage workers, even as their wages grow”.

The higher income cap will also apply to the Workfare Skills Support scheme, which encourages lower-wage workers to go for training.

The increased payouts from next year will see the maximum payment – for persons with disabilities and workers above 60 years old – go from S$4,200 per year to S$4,900 per year.

Workers aged 35 to 44 will also receive up to S$3,500, an increase of S$500.

On Friday, Mr Wong also announced that companies that hire foreign workers will also need to pay locals more to keep pace with wage growth.

The local qualifying salary will be raised from S$1,400 to S$1,600 for full-time workers from Jul 1.

Minimum hourly rates will increase from S$9 to S$10.50 for part-time workers.

The foreign worker quota computation will depend on the number of local workers being paid the new qualifying salary.

For employers who are raising the wages of low-income workers, the government is providing more support than previously announced.

In 2022 and 2023, the government co-funded up to 75 per cent of wage increases. That was set to taper to 30 per cent this year.

Mr Wong announced that the government will now co-fund up to 50 per cent of wage increases for 2024.

In 2025 and 2026, the government will also raise the wage ceiling to qualify for co-funding to S$3,000, up from S$2,500.

“To provide for these enhancements, I will top up the (Progressive Wage Credit Scheme) fund by S$1 billion,” the Finance Minister said.

HIGHER HEALTHCARE SUBSIDIES

The per capita household income thresholds will be updated to provide more support, added Mr Wong.

More than 1 million Singaporeans will receive higher subsidies for healthcare and associated social support.

The monthly per capita household income threshold for each subsidy tier will increase between S$100 and S$800. These apply to services and schemes such as MediShield Life and CareShield Life Premium Subsidies or the Community Health Assist Scheme.

These changes will come at the cost of an additional S$300 million per year. Service providers will automatically extend subsidies to those who are eligible.

“No one will be denied appropriate healthcare and social support because they are unable to afford it,” the Ministry of Finance said.