Singapore Govt challenges “Minimum Income Standard 2023” report’s representation of basic needs

SINGAPORE: The Singapore government clarified on Thursday (14 Sep) that a recent report suggesting minimum household income requirements amid inflation “might not accurately reflect basic needs”. Instead, the findings should be seen as “what individuals would like to have.”

The clarification was part of a joint statement from the Finance Ministry (MOF), Manpower Ministry (MOM), and the Ministry of Social and Family Development (MSF).

The recently published report, “Minimum Income Standard 2023: Household Budgets in a Time of Rising Costs,” unveils figures detailing the necessary income households require to maintain a basic standard of living, using the Minimum Income Standard (MIS) method.

This method establishes universal basic needs by amalgamating diverse views and opinions. It aims to achieve consensus from ordinary members of society across different backgrounds and then translates these perspectives into precise household budgets. This determines the cost of a basic standard of living in Singapore.

The study, spearheaded by Dr Ng Kok Hoe of the Lee Kuan Yew School of Public Policy (LKYSPP), builds upon research initiated in 2019 using the MIS method. It specifically focuses on working-age households in 2021 and presents the latest MIS budgets, adjusted for inflation from 2020 to 2022.

It suggests figures up to 5% higher than previous estimations.

The report detailed that:

• The “reasonable starting point” for a living wage in Singapore was S$2,906 a month.
• A single parent with a child aged two to six required S$3,218 per month.
• Partnered parents with two children, one aged between seven and 12 and the other between 13 and 18, required S$6,426 a month.
• A single elderly individual required S$1,421 a month.
• Budgets for both single and partnered parent households averaged around S$1,600 per member. Given recent price inflation, these figures have risen by up to 5% in the current report.

The joint statement inferred that the proposed monthly MIS budget of roughly S$1,680 per person aligns more with the average monthly expenditure of S$1,650 for families with children than with fundamental necessities.

The joint statement also highlighted that the report factored in luxury items such as jewellery, perfumes, and overseas holidays when estimating minimum income standards. Because the study’s focus groups included higher-income participants, its conclusions might not accurately mirror basic necessities.

Addressing the holistic definition of a basic standard of living in Singapore proposed by the report’s authors, the ministries responded, “This is what individuals would like to have.”

The ministries expressed concern that the report might exaggerate minimum income while downplaying government support, particularly for lower-income households. However, they acknowledged the report provides valuable insights into Singaporean aspirations.

The 2023 MIS report proposes three significant income reforms: introducing a universal wage floor, revising the Central Provident Fund (CPF) model to better serve the elderly, and pegging assistance amounts to current inflation rates.

Several observations were also made regarding wage work feasibility during specific life stages and the importance of public initiatives like cash transfers and retirement income policies. Within CPF, modest increases in retirement sums reportedly made a minimal impact on retirement income adequacy.

The ministries, while supporting the intent behind the reforms, expressed reservations about the universal wage floor, citing potential job loss risks, especially if positions could be automated.

Efforts to expand the Progressive Wage Model (PWM) were highlighted, indicating future wage increases for sectors like retail and cleaning.

The ministries acknowledged the existing CPF system’s limitations, especially for lower-income workers. Initiatives like the Majulah Package and Silver Support and Workfare were cited as ways to address these gaps.

The ministries reiterated their commitment to ensuring support schemes stay relevant, highlighting recent ComCare scheme adjustments, and noting that the government regularly reviews its scope and coverage of assistance to ensure it is relevant and adequate.