Home News 50% of S’poreans had less than $18 net pay increase?

50% of S’poreans had less than $18 net pay increase?

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By: Leong Sze Hian

$660m wage credit payout to employers

“More than 85,000 employers will receive a total of about $660 million in Wage Credit Scheme (WCS) payouts by the end of this month. Under the extended WCS, the Government co-funds 20 per cent of wage increases given to Singaporean employees earning a gross monthly wage of $4,000 and below, over 2015 to 2017.” –  ST article $660m in payouts for employers by end of March, dated 18 March 2017

No mention of the no. of eligible workers?

When I read the above – the first “curious” thought that came to my mind was – why no mention of the number of workers who were eligible for the wage credit?

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Since there is no breakdown of the workforce statistics into Singaporeans and permanent residents (PRs), and only Singaporeans can qualify for the wage credit – I estimate that the number earning up to $4000 to be about 900,000 (since the median gross income was $3,823).

Since the 20 per cent co-funding wage credit is computed from the last two years’ wage increase of at least $50 a year – I estimate the average wage increase per eligible worker for 2016 (assuming three quarters of the workers met the criteria) to be about $200 a month ($660 million divided by 0.4 (co-fund 20% for 2 years’ wage increases) divided by 675,000 (75% of workers).

To put this in perspective – $200 is a five per cent wage increase for a worker earning $4,000.

0.7% wage increase last year

Actually, my curiosity was aroused because I remember reading in the news that the median gross income of full-time employed Singaporeans only increased by 0.7 per cent to $3,823 last year.

This works out to a wage increase of about $27 monthly ($3,823 divided by 1.007 – $3,823).

Since this is including employer CPF contribution – the increase excluding employer CPF contribution is about $23 ($27 divided by 1.17).

$18 increase in take-home pay? 

If we deduct the typical 20 per cent employee’s CPF contribution – the increase in take-home pay (disposable income) is only about $18 ($23 less 20%).

50% of S’poreans had less than $18 pay increase?

So, since this is the median – does it mean that about half of the full-time employed Singaporeans had a wage increase (take-home pay) of only $18 or less?

Total wage increase of all the workers earning up to $4,000 – $250m?

Hence, I estimate the total wage increase for workers earning less than $4,000 to be about $250 million ($23 x 12 months x 900,000 workers).

Now, let’s get back to the wage credit.

20% co-fund wage increase is $660m, but all workers’ wage increase $250m?

Here’s where it may be puzzling. If the Government paid $660 million to co-fund 20 per cent of the wage increase for those workers earning up to $4,000 who had at least a $50 wage increase – why is the estimated total wage increase for all the full-time employed Singaporeans earning up to $4,000, only about $250 million?

Why? – low or no wage increase or cut, unemployed, self-employed?

Well, some possible reasons may be that a significant number may have had a wage increase of less than $50, no wage increase, a wage cut, became unemployed (estimated to be over 100,000 Singaporeans), free-lance, self-employed, etc.

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