This was one of several key findings in the Minimum Income Standard (MIS) 2023 report, which was published on Thursday (14 September) by researchers from Nanyang Technological University (NTU) and the Lee Kuan Yew School of Public Policy (LKYSPP).
Researchers in the report employed the MIS method – a process that relied mainly on consensus-based focus group discussions to produce data – to come up with an inflation-adjusted (2020 – 2022) monthly MIS budget for three indicative Singaporean household types.
The report stated that households with a single parent with one child aged between two and six would require at least S$3,369 per month, while households with a single elderly person aged 65 years and older would require at least S$1,492 per month.
Some 30% of working households cannot meet basic needs
When compared to the actual income per household member, the MIS budgets were close to the average of the third decile group. This meant that around 30 per cent of all working households in Singapore earn less than the amount required to meet their basic needs, according to the report.
Furthermore, the report said that while income gains helped to narrow the distance with MIS budgets for some groups of workers between 2020 and 2022, the gains were "insufficient to alter the overall picture of wage distribution and adequacy".
"Workers in the best-paid occupations, hired on fixed-term or permanent contracts, or with diploma or higher qualifications still comfortably exceed the MIS budgets. In contrast, workers in traditionally low-wage jobs, hired on a casual basis, or with less than secondary education remain a long way short of earning enough to meet a basic standard of living," the report said.
The report also argued that the existing wage intervention mechanisms, namely the Progressive Wage Model (PWM) and the Workfare Income Supplement (WIS), were only adequate for smaller households like a single elderly person.
The researchers concluded that parents in low-wage jobs covered by the current PWM wage guidelines will not earn enough, even after including the WIS top-ups, to meet their basic household needs, and added that the wage situation is even "more concerning" for low-wage workers in sectors left out of the PWM. It recommended setting a universal wage floor that allows a "decent standard of living" for low-wage workers and families to cope with rising costs of living.
Public schemes and basic standard of living
Another area that the researchers looked at was whether public schemes helped households achieve a basic standard of living. The report analysed public schemes relative to basic income needs and argued that there were shortfalls in schemes such as subsidies for children, cash vouchers, as well as the Central Provident Fund's (CPF) retirement income scheme.
The report argued that while there was a wide variety of schemes covering almost all Singaporean adults and households, the total amounts provided over the course of the year made up only a small percentage of the costs of basic needs required by single-parent and partnered-parent households.
"Clearly, they will not significantly alter the outlook for income security," said the report.
The report concluded with policy recommendations to reform the CPF and social support schemes to ensure that poorer retirees do not fall behind. It added that the range of public schemes should be more transparent and that cash assistance amounts should be pegged to more realistic benchmarks in order for the policies to be more effective.
On Thursday evening, the Ministry of Finance (MOF), Ministry of Manpower (MOM) and Ministry of Social and Family Development (MSF) issued a joint statement in response to the MIS report's publication.
The ministries pointed out that the MIS report is based on methodology developed in the UK and replicated in places such as France, Ireland, and Japan and that the authors used publicly available data and "certain simplifying assumptions to derive their findings".
Noting that they had previously highlighted the limitations of the report's approach, the ministries said that the conclusions in the report "may not be an accurate reflection of basic needs" due to its "high dependence on respondent profiles and on group dynamics".
Researchers of the MIS report stated that its methodology relied mainly on focus group discussions to produce data reflecting the "lived realities and ordinary habits of people living in contemporary Singapore", "embody the values and principles that ordinary Singaporeans identify with and capture "concrete items and precise budgets that map onto values and principles".
"Our own analysis suggests that the proposed monthly MIS budget of around S$1,680 per capita is similar to the average monthly expenditure of S$1,650 per capita for all families with children rather than reflecting a more basic set of needs," the ministries said.
On the policy recommendations on wages, the government said that it supports "the intent of ensuring that our lower-wage workers have jobs that pay them a decent wage" while countering that a universal wage floor is "not necessarily the best way to achieve this".
"Set too low, the wage floor will benefit fewer workers than the PWM. Set too high, workers who are less skilled risk losing their jobs, especially if their jobs can be automated," they said.
The ministries also acknowledged that they were reviewing how retirement adequacy could be strengthened for those who were unable to work or accumulate sufficient CPF savings.
"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," said the ministries.