Thursday 27 November 2014

When workers get Workfare, spouses work more

By Melissa Tan, The Straits Times, 26 Nov 2014

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 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 about two more days 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 for work done last year, the Central Provident Fund Board said earlier this year.

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