Poor are better off now, but can more be done?

Poor are better off now, but can more be done?
Port rigger Abdul Latiff Abdul Wahab has been given an income boost of $1,000 a year, thanks to the Workfare Income Supplement scheme, but he and his wife, Madam Fatimah Aziz, are also spending more on groceries due to rising prices.

The headlines last month seemed like cause for celebration.

Households in the bottom fifth have seen the fastest income growth among all groups and an improving quality of life, thanks in part to more government help.

Yet, this news, coming from the latest five-yearly Household Expenditure Survey, also raises thorny questions.

Government handouts seem to have improved lives at the bottom, but is there a danger of an over-reliance on such forms of help? And just who should we be focusing on, when we talk about helping the poor?

Critics initially sounded alarm bells over how the bottom fifth seemed to be spending much more than they were earning, but a check by Insight showed that this problem was not as bad as it seemed.

Data from retirees, who do not work, was included in the aggregated income and expenditure figures. When retiree figures were excluded, the gap between income and spending narrowed.

The data shows that the bottom fifth of households, ranked by income per household member, is a highly varied group.

Many are indeed low-income families who need more help.

But a quarter of them are retiree households, some of whom may be doing well, with large properties and ample savings to live off, even if their income is technically zero.

As the Government continues to strengthen safety nets, Insight looks at whether a finer-grained approach might better help the needy, while also ensuring more bang for the welfare buck.

A decade of more transfers

Households in the bottom fifth are earning more from work. Over the past five years, their employment income grew by 4.3 per cent each year, on average.

But, at the same time, a growing proportion of their household income is coming from non-work sources like regular government transfers, money from relatives and friends, rental or investment.

While this is true of all income groups, the bottom fifth has seen the sharpest rise. Their non-work income is now at 26.5 per cent of total household income, up from 18.9 per cent five years ago and 14.7 per cent a decade ago.

Regular government transfers, in particular, formed 9.3 per cent of their monthly household income last year, compared with between 0.1 per cent and 3.5 per cent for all other income quintiles.

These recurrent transfers include the Workfare Income Supplement (WIS), which tops up the pay of low-wage workers, goods and services tax (GST) vouchers, social assistance and bursaries.

The Department of Statistics, which helmed the survey, told Insight that a breakdown of the different sorts of government transfers was unavailable.

But experts highlight the WIS, which was made permanent in 2007 and has been expanded since, as especially significant.

For National University of Singapore associate professor of social work Irene Ng, it was "a game-changer".

Previously, help was given mostly to those who could not work and had no other sources of support, such as the elderly and disabled, she says. "With Workfare, there is a recognition of the struggles of those who are working, yet are not earning enough."

Unlike one-off transfers or subsidies on specific items, such as housing, the WIS provides regular, sustained help, notes DBS Bank economist Irvin Seah. "The WIS is there all the time. It helps to fulfil basic needs."

Whether thanks to higher wages or government help, spending patterns at the bottom suggest day-to-day life has improved.

Of the total monthly spending by a household in the bottom fifth, 12.8 per cent goes towards food, in the form of groceries.

This is down from 14.1 per cent five years ago - a shift which suggests that this group is, in a sense, better off, says Nanyang Technological University (NTU) head of economics Euston Quah. "As these households gain more income, the proportion spent on basic goods should decrease, as they now move to better and higher quality goods," says Professor Quah.

Indeed, households in the bottom fifth are spending more on eating out, instead.

They now spend an average of $44.20 a month at restaurants, cafes and pubs, up from $24 before.

More of these households also own "luxury" consumer goods such as digital cameras and cable TV, compared with five years ago, observes NTU economist Walter Theseira.

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