Schemes Work Hand in Hand to Boost Wages

• Main Author: HOON, Hian Teck
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2013
• Subjects: Asian Studies; Economics; Labor Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/1579; https://ink.library.smu.edu.sg/context/soe_research/article/2578/viewcontent/st_20130227_1.pdf
• Institution: Singapore Management University

Professor Hoon Hian Teck discussed how this year's Budget helps both workers and companies push for higher productivity. The Workfare Income Supplement (WIS) scheme in 2007 provided one answer to boost the earnings of low-wage workers. The Wage Credit Scheme (WCS) introduced in Budget 2013 is another innovative policy instrument that works in tandem with the Productivity and Innovation Credit (PIC) scheme to help SMEs on their journey to becoming more productive. Under WCS, the Government covers 40 per cent of the wage increase from increased productivity (obtained through the PIC scheme), leaving the firm with a higher profit. Since the WCS will only be in force from 2013 to 2015, some firms that might already have future plans to mechanise or innovate might choose to bring forward their investment plans. The WIS scheme, by supplementing a worker's wage, shifts out his labour supply; while the WCS, in giving firms incentives to boost labour productivity in order to enjoy the wage credit, acts to shift out labour demand.