Most Firms Surveyed Will Not Pass on Wage Subsidy

imageThe Straits Times reported on Wednesday that 75% of the “around 50” companies surveyed by the Singapore Business Federation will not be giving wage increments to their staff despite the Wage Credit Scheme (WCS). This report raised several questions when I read it.

First was the questionable headline of the report that said “Some firms won’t pass on wage subsidy”.  Wouldn’t a more accurate headline be “Most firms surveyed by SBF will not pass on wage subsidy”? Did ST deliberately try to downplay this important and negative finding? One can argue that ST did include in smaller text a sub headline that said 75% of around 5o firms surveyed will give staff same pay rises as last year. While this is factual, wouldn’t it be more accurate, in the spirit of WCS, for the sub headline to say “75% of around 50 firms surveyed will not give higher pay rises despite WCS”?

Some may say I am nitpicking. But those familiar with word play and spin will understand my point here. Saying a bottle is half full somehow sounds better than saying it is half empty doesn’t it?

The way ST wrote this report made me read it twice to be clear that I got the facts right.

And the facts were clear that the majority of firms will not use the WCS to give higher pay increases to their employees. Only 21% of those surveyed “are likely” to give a bigger increment because of the scheme. Note  the non-definite words “are likely” which implies they may also decide not to do so.  To add insult to injury, many of those surveyed said they would use the subsidy to defray their operating costs!

If this survey is representative of all employers in Singapore, what then does it say about the WCS? Should it be renamed Costs Credit Scheme since most will use it to cope with higher costs? Why then should public funds be used to subsidise for-profit businesses which include mega MNCs and GLCs?  And it is for three straight years that the government will co-pay 40% of wage rises of Singaporean workers earning $4,000 and under.

I had first written about the WCS in a previous post, questioning if it is proper for the government to use public funds to subsidise wage increments even if it is to encourage employers to give Higher increments to boost low wage earners income.  While the intent is not a bad one, ie to help low wage workers, my question is now even more pertinent as it looks like the WCS objective may not be achieved if the employers don’t use the money to giver higher rises.  Is it proper then for the government to subsidise the companies’ operating costs? Why isn’t there strict criteria on how WCS will be utilised? Can the government do something about it to ensure it is subsidising for the right reason?

So many questions and so few answers. I wonder what the next bigger survey will unveil. If there is one.

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5 Responses to Most Firms Surveyed Will Not Pass on Wage Subsidy

  1. Zen says:

    I am grateful that the firms surveyed were upfront about their intentions. Presumably, after the flak this lot has received, in any future survey, we will hear more the kind of answers we’d like to hear. Viz, Yes, workers’ pay will be raised more. In real life, it won’t, and whatever money these firms get for their workers’ salary increases will still be used for operating costs.

  2. yes i wonder too what the next survey will disclose as the first was done right after the the WCS announcement. Why the govt can allow the companies to use WCS as costs subsidy is beyond comprehension.

  3. ilovesingapore says:

    The WCS also has a loophole that could hurt Singaporeans. It actually incentivises companies to lay off a percentage of their Singaporean workers and force the rest to do all the work for slightly higher wages.

    For instance, if a company has 100 Singaporeans on the payroll, each earning 3K, it can lay off 20 and give the other 80 a $500 hike each and get them to do all of the work. This way, its costs would actually go down significantly since the govt bankrolls 40% of the 500-dollar hike and its CPF outflow is also reduced. Company wins, majority of employees are happy, govt earns goodwill. But a sizeable number of Singaporeans could find themselves out of work.

    I think the govt should close this loophole so that companies don’t have an incentive to sack local employees.

  4. GG says:

    The WCS is applicable to Singaporeans. Singaporeans are already a minority in many companies. How far can it be applied ? I think most employers are pretty much saying this scheme won’t matter in the short run.

  5. Angry Citizen says:

    Ask any SME onwer and they will tell you the whole Wage Credit Scheme is a hare-brained idea thought up by some PAP minister and his b___ licking government administrators who will probably get a medal this coming National Day. If we don’t wake these people up our country will go to the dogs sooner than we think.

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