COVER PAGE

Lorem ipsum dolor sit amet, consectetur adipiscing elit.

© Copyright National University of Singapore. All Rights Reserved.

INTRODUCTION
• Main concerns: growing income inequality between high and low
incomes
• Causes:
a. export-oriented growth model-> not evenly distributed to all segments of
the population
b. traditional welfare system -> limitations in addressing the specific needs of low-
wage workers
• To reduce income inequality and assist low-income workers, the Singapore
Government introduced the Workfare Income Supplement (WIS) policy in
2007
• Purpose of thesis : To investigates the impact of the Workfare Income
Supplement (WIS) policy on income inequality in Singapore.

© Copyright National University of Singapore. All Rights Reserved.

 METHODOLOGY
• Objective: explore the impact of Workfare Income
Supplement (WIS) policy on Singapore income inequality
• Methods:
– 1) compare trends in the percentage of households with
different income levels over a 20-year period.
– 2) calculating dispersion variance of Singaporean’s income.
• Data:
– the percentage of households with different monthly
income levels, such as the percentage of households earning
from $1,000 to $2,000, the percentage of households
earning from $2,000 to $3,000, etc. (Singapore Department
of Statistics (SingStat) website )

© Copyright National University of Singapore. All Rights Reserved.

METHODOLOGY(1)
• Method 1: calculate the percentage of households earning below $3,000
and the percentage of households earning above $3,000.
• Result:

– downward trend in the percentage of households earning below $3,000

over the past two decades (sharp and intense downward after 2007)
– upward trend int the percentage of households earning above $3,000

• Conclusion: WIS policy has a positive impact on income inequality

reduction

© Copyright National University of Singapore. All Rights Reserved.

 THE OTHER METHODOLOGY
• Objective: explore the impact of Workfare Income
Supplement (WIS) policy on Singapore income inequality
• Methods:
– 1) Divide income levels
– 2) Calculate the probability distribution
– 3) Calculate the expected value
– 4) Calculate the variance
– 5) Apply the function:

© Copyright National University of Singapore. All Rights Reserved.

METHODOLOGY(2)
• Result:

– there is a general upward trend in the income variance over this period,
indicating that the disparity in annual incomes among Singaporeans
has been increasing
– The increase in variance reflects a widening income gap, suggesting
that the degree of income inequality has been rising. Such changes
could be attributed to a multitude of factors

© Copyright National University of Singapore. All Rights Reserved.

METHODOLOGY(2)
• After the introduction of the WIS policy in 2007, the trend of
increasing income variance could potentially be explained by several
factors:
– 1)Limited coverage of the policy
– 2):Market forces: Other forces in the labor market, such as changes in
skill demands, automation, and globalization.
– 3)Uneven economic growth
– 4)Lag in policy effects
– 5)Top income growth
– 6)Changes in social and economic structures

Conclusion: It should be noted that variance is merely a measure of

income disparity and does not fully reflect all dimensions of income
inequality

© Copyright National University of Singapore. All Rights Reserved.

CRITIQUE
• WIS is so limited that it doesn't lift poor workers out of poverty
– Prices ratio in Singapore are relatively high, so it is difficult to survive
in Singapore relying on WIS.
– wages make up just 44% of Singapore’s GDP and capital 56%, but the
OECD average is 50-60.
• It may not be necessary to differentiate payment amounts based on
age to incentivize older workers to work.
– If WIS is intended to be an income supplement to reduce income
inequality, then payment amounts should be differentiated based on
income alone.
• Increase cash payment ratio and reduce CPF payment ratio
– Since WIS is meant to supplement income, it should translate into
higher disposable income for workers to meet their immediate needs.
– Some people think the cash ratio should reach 60% or even 80% from
40%.

© Copyright National University of Singapore. All Rights Reserved.

ALTERNATIVE PERSPECTIVES
• minimum wage laws
– May be simpler to implement and reduce low-income people’s
dependence on other social welfare programs.
– May be more effective in ensuring a minimum level of income for all
workers.
– it may lead to a reduction in employment, and it cannot make a positive
contribution to life after retirement as CPF
Overall, compared with minimum wage laws, WIS is
undoubtedly a more suitable policy for Singapore today.
• PWM(Progressive Wage Model)
– Promote equity and also encourage lifelong learning and upskilling.
– Rely more on market mechanisms and industry standards, directly
related to industry growth and demand
Overall, PWN is a good supplement to WIS, which can make up
for some shortcomings of WIS to a certain extent

© Copyright National University of Singapore. All Rights Reserved.

THANK YOU

© Copyright National University of Singapore. All Rights Reserved.