SINGAPORE — A report on minimum household income required amid inflation “may not be an accurate reflection of basic needs”, and its findings should be interpreted instead as “what individuals would like to have”, the Singapore government said on Thursday (Sept 14).

In a joint statement, the Finance Ministry (MOF), Manpower Ministry (MOM) and Ministry of Social and Family Development (MSF) pointed out that, for instance, jewellery, perfumes and overseas holidays are expenditure items included in the report’s estimates of what constitutes minimum income standards.

MOF made similar points in 2021 in response to an earlier iteration of the report, authored by Dr Ng Kok Hoe — head of the social inclusion project at National University of Singapore’s Lee Kuan Yew School of Public Policy — and Associate Professor Teo You Yenn, who is provost chair in sociology at Nanyang Technological University.

Then, the researchers found, among others, that: 

The “reasonable starting point” for a living wage in Singapore was S$2,906 a month.A single parent with one child aged between two and six needed S$3,218 per month to meet their basic needs.Partnered parents with two children, one aged between seven and 12 and the other aged between 13 and 18, needed S$6,426 a month.A single elderly person needed S$1,421 a month.The budgets for the single and partnered parent households worked out to about S$1,600 per household member.

In their latest report launched on Thursday — titled Minimum Income Standard 2023: Household Budgets in a Time of Rising Costs and updated to capture the impact of price inflation, these figures have increased by up to 5 per cent, to S$2,990, S$3,369, S$6,693, S$1,492 and S$1,680 respectively.

‘NOT NECESSARILY THE BEST WAY’

This year’s research team, led by Dr Ng and Assoc Prof Teo, also suggested the prioritisation of three reforms related to income: Introducing a universal wage floor; tweaking the Central Provident Fund (CPF) model to “protect poorer people in old age”; and pegging assistance amounts to current prices to keep up with “actual” needs.

In response, MOF, MOM and MSF said they supported the intent of ensuring that lower-wage workers have jobs that pay them decently.

But “a universal wage floor is not necessarily the best way to achieve this”, they said.

“Set too low, the wage floor will benefit fewer workers than the Progressive Wage Model (PWM). Set too high, workers who are less-skilled risk losing their jobs, especially if their jobs can be automated.”

The ministries noted that the PWM — which aims to lift wages as workers upgrade skills and improve productivity — has recently been expanded to more sectors like retail, food services and waste management, as well as occupations like administrators and drivers. 

PWM wages for retail workers will also increase by over 8 per cent per year from 2023 to 2025, while those for most cleaners will increase by over 10 per cent yearly from 2023 to 2028.

On CPF, the ministries said they were reviewing how retirement adequacy could be strengthened.

“We recognise that there are groups who are unable to benefit fully from the system, including those unable to work and/or accumulate sufficient CPF savings,” they noted, citing lower-income workers and caregivers as examples.

“We have been strengthening support for such members through other means such as the Majulah Package for seniors aged 50 and above, and upcoming enhancements to Silver Support and Workfare.”

The ministries added that they regularly review the scope, coverage and payout quanta of their schemes, to ensure they stay relevant and adequate.

They pointed to how the amount of cash assistance and the per capita household income benchmark for ComCare — a support scheme for lower-income households – were raised in August last year and July respectively.

“We also review longer term trends and introduce new policies or schemes to address emerging or new challenges,” the ministries said. “For example, we recently introduced moves to address the retirement and housing adequacy of platform workers, by aligning the CPF contributions by platform workers and platform companies with that of employees and employers respectively.”

‘LIMITATIONS OF APPROACH’

Commenting on the methodology of the report, MOF, MOM and MSF said the authors used “certain simplifying assumptions” to derive their findings. The “limitations” of the report’s approach, first highlighted back in 2021, remain the same for this year’s, said the ministries.

These include a dependence on respondent profiles as well as focus groups that also comprised higher-income participants, they pointed out.

It was through focus group discussions that the study defined a basic standard of living in Singapore as “about, but more than just, housing, food, and clothing”. 

“It is about having opportunities to education, employment and work-life balance, as well as access to healthcare. It enables a sense of belonging, respect, security, and independence. It also includes choices to participate in social activities, and the freedom to engage in one’s cultural and religious practices,” the authors wrote.

In response to this, the ministries said: “We should therefore interpret the findings and recommendations through the same lens – that this is what individuals would like to have.”

They added that the report also assumes that lower-income families would receive the same level of financial help as median households. 

“However, lower-income families qualify for and receive more financial help,” the ministries pointed out. “As such, there is a risk of overstating the minimum income and understating the amount of government support received by lower-income families.

“Our own analysis suggests that the proposed monthly minimum income standard budget of around S$1,680 per capita is similar to the average monthly expenditure of $1,650 per capita for all families with children, rather than reflecting a more basic set of needs,” they added.

“Nevertheless, the report offers an additional data point on the expectations and aspirations of Singaporeans, which will continue to evolve over time.”

The ministries said they welcomed research studies which “provide additional insights to our public discourse on social policies and how we can collectively develop a social compact”.

“The government is committed to supporting Singaporeans, especially those in need,” they added.

“We will continue to work with fellow Singaporeans, researchers including the authors of (Minimum Income Standard) 2023 and community partners to build a consensus around what we aspire to be and how we get there.” CNA

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