When workers get Workfare, spouse work more

This post came out from The Straits Times (26 November 2015)

Spouses of workers who become eligible for the Workfare Income Supplement scheme do not put their feet up once the extra cash starts coming in but instead, they tend to work even more. The somewhat surprising finding is from a new survey into the programme done by the Ministry of Trade and Industry (MTI) economists, and is in stark contrast with outcomes seen in workfare programmes in other countries. Studies overseas show that spouses tend to take it a bit easier once income supplements start coming into the household.

The Workfare programme is meant to help older, low-income Singaporeans enter and remain in the workforce. Workers earning $1,900 or less each month can get income supplements of up to $3,500 a year, depending on age. Older workers receive more.

Eligibility depends on an individual's income. This is in contrast to other countries such as the United States and Britain where household income determines if a worker can get pay supplements. Because of that criteria, workfare schemes in those countries have had the unintended effect of reducing spousal employment rates, noted the MTI economists. For instance, if a husband is already working, the wife may stop working to keep the total household income low enough for the family to remain eligible for income supplements.

In Singapore, however, the Workfare programme "did not appear to have any adverse impact... in fact, there were positive effects on spousal labour market outcomes for some age groups", the economists said. Specifically, husbands whose wives were over 55 were encouraged to get a job after their wives became eligible for Workfare.

And in general, people who were already working were motivated to work more days when their spouses became eligible for Workfare. Wives tended to work about four to six more days a year while husbands worked two more days a year. "The smaller increase in work effort may be because the husbands were already working almost every month of the year", whereas the wives may have already put in place childcare arrangements that gave them the flexibility to work more days, the economists said.

About 408,000 workers received Workfare payments of work done last year, the Central Provident Fund Board said earlier this year.


Thoughts:

1. Social engineering but it is a useful step to incentivise people to start working and be self reliant. This reduces the likely effect of older people to be dependent on financial assistance while maintaining their dignity to lead an independent life!
2. It would be useful to see if Workfare can be combined with another scheme to encourage older workers to help fill jobs that Singaporeans normally shun so that we can reduce reliance on foreign workers. However, most of these retail, service jobs are also mainly served by much younger workforce Do we need to have a mindset shift in this aspect?

Thoughts anyone?

Yours,

Something Small Thinking Big