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Ethos Issue 3, Oct 2007
Singapore’s Social Support
System: Two Anomalies
Chua Hak Bin
In the longer-term, a natural evolution
will be for the current HDB-centred social support system
to shift towards a more Workfare-centred social support system.
The Workfare Income Supplement scheme is a significant shift
to enhance the social safety net for the lower income segment.
Workfare lifts the graph line upwards for the lower income
segment, with the largest increases for the poorest segment.
The chart line moves closer towards the ideal.
However, the inherent structural weakness
of Workfare is that the income support stops during bad times,
when such help is most needed. The low-wage workers are moreover
exactly the group most vulnerable to layoffs during downturns.
Being retrenched is rarely of their choosing and finding a
job is especially difficult during recessions.
The next recession will be the real test
for Workfare. The scheme may have to be fine-tuned to allow
for some continuation of an income supplement for some fixed
time period upon retrenchment. Some trade-offs will be needed
to reach a balance between providing support and minimising
abuse.
Dr Chua Hak Bin is Director, Asia Pacific
Economics & Market Analysis, at Global Capital Markets,
Citigroup.
| NOTES |
| 01. |
This was highlighted in an important
Department of Statistics General Household Survey 2005.
The report showed that the lower income households saw
their incomes falling from 2000–2005, while the
top income segments saw a more than 2% annual rise.
Income inequality appears to be widening. |
| 02. |
The Housing and Development Board
(HDB) is Singapore’s public housing authority. HDB’s
role, as stated on its website, is to provide affordable
and quality homes and to support larger national objectives
such as social cohesion and strong family ties. As at
2006, 80% of the resident population own the flat they
lived in. |
| 03. |
See www.hdb.gov.sg
for more details on the complexity of the HDB housing
grant scheme. |
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