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Ethos Perspectives
Making Work Pay
Comment/Analysis
Increased labour force participation
has been suggested as the best strategy for fighting poverty
and increasing income equity. This is unlikely to be sufficient
going forward. Poverty, as shown by current indicators, can
be rampant even in high employment economies such the US and
UK, than say in low employment economies like Belgium or the
Germany. More work, by itself, does not guarantee less poverty.
Adverse working conditions could in fact intensify the problems
of low-wage households, by imposing increased work pressure,
occupation-related health threats, and additional stressors
on the family.
In this context, the experience from other
countries suggests that wage supplementation can contribute
to alleviating poverty, reducing inequality and promoting
social inclusion. On top of encouraging people to take up
jobs, it also helps improve job retention: the increased economic
incentive to remain employed may not be the sole reason; greater
income also helps workers meet family needs, tide over crises,
and thus help to maintain long-term employment.
In the longer run, the financial wellbeing
of households is associated with better educational and behavioural
outcomes for children. Left unchecked, societies risk today’s
inequality translating to tomorrow’s social immobility.
Making work pay is an essential part of
Singapore’s progress in the age of globalisation. Singapore
owes its success to a strong work ethic, a drive to constantly
increase its productivity, and stable societal conditions.
These factors have largely remained, and should be reinforced.
What has changed—and threatens to
undermine the work incentive—is the employment landscape.
Low wage competition from China, India and Latin America have
depressed our wages; even with economic growth, the jobs created
are mainly targeted at professionals, managers and executives;
benefits trickle down slowly to the lower skilled. In this
environment, lower skilled workers could work harder and longer,
the unemployed could be co-opted into the labour force; but
without education, it is difficult for them to earn much more.
This problem, therefore, will remain in the short to mediumterm.
Going forward, downward wage pressures,
as well as expanding social and economical needs, will lead
to greater pressures on governments to spend more on social
welfare. Wage supplementation is not a panacea, nor will it
be cheap. However, it has been shown to help foster social
inclusion, and also create economic opportunity for lower-income
segments of the population. Such economic inclusion is a worthwhile
pursuit. It is in line with our social values and meets our
economic interests of increasing employment.
Prepared by
Andrew Kwok
Research Associate, Centre for Governance and Leadership,
CSC
Shireen Lim
Senior Executive, Management Development, Institute of Policy
Development, CSC
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