Posted by theonlinecitizen on October 21, 2011
Leong Sze Hian /
I refer to the articles “COE for big cars rockets to near S$76,000” (Channel NewsAsia, Oct 19) and “Vehicle growth rate to be slashed to 0.5%” (Channel NewsAsia, Oct 14).
The latter states that “Singapore’s annual vehicle population growth rate will be slashed to 0.5% from the current 1.5% by August next year”. This may lead to higher transport costs, which particularly affect those who need a vehicle for business or work.
Higher cost of living?
Consequently, business costs may rise and be passed on to consumers, raising the cost of living.
Arguably, those who may be hardest hit in coping with inflation would be the lower-income older workers. In this regard, the 20th percentile of workers only had a 0.3% cumulative increase in wages over the last 10 years.
10, 30 or 50% wage increase?
In the opening of Parliament in October, there were calls to put Singaporeans first in employment, and to raise the real median wage in the next 10 years by 50%, if not the originally announced target of 30%, instead of the 10% over the last 10 years or so.
Special Employment Credit (SEC)
So, what is the latest measure implemented to encourage older Singaporeans? The Special Employment Credit (SEC).
In this connection, I refer to the article “Older workers’ wage subsidy: First payment by end-Sept” (ST, Sep 20).
It states that “51,000 employers will receive a total of $17 million. In all, these bosses hired 167,000 such workers in the first half of this year”.
This works out to a Special Employment Credit (SEC) per month of only $17 ($17 million divided by 167,000 workers by 6 months) per employee and $56 ($17 million divided by 51,000 employers by 6 months) per employer for the period of January to June.
According to the SEC website, employers get a SEC of only $5 for employees aged above 55 with a monthly income of $1,600.
This means that the SEC is only about 0.3% of the employee’s income or 3.7% ($5 SEC divided by employer’s CPF contribution at 8.5% of $1,600 – $136) of the employer’s CPF contribution of $136 for age above 55 to 60, in this example.
Moreover, since the SEC is taxable, the net after tax SEC is only about $4.10, in this example.
The highest SEC is $35 for an employee aged above 60 with income of $1,000.
Since the SEC decreases as a worker’s pay increases, some employers may be disincentivised to increase the worker’s pay.
As to the SEC website saying that its goal is “to encourage employers to employ older low-wage Singaporean workers”, will employers be incentivised to employ older low-wage workers for just a few dollars of SEC?
