SINGAPORE: In 2024, Singapore’s Gini coefficient, a statistical measure illustrating the gap between the richest and poorest in a country's income or wealth distribution, fell to a record low of 0.365 (after accounting for government transfers and taxes). This marked a significant milestone in efforts to reduce income inequality, particularly sustained policies aimed at strengthening social safety nets and redistributing resources to support lower-income households.
For example, households in one- and two-room Housing and Development Board flats received an average of S$16,805 per household member from a range of government schemes, more than twice the amount received by all resident households.
However, while these transfers provide essential financial relief and improve immediate well-being, they alone do not foster long-term economic mobility. Sustainable wage growth and skills development remain key to uplifting workers.
To address this, Budget 2025 has introduced several measures to enhance workforce support. One key initiative is the expansion of the Workfare Skills Support (WSS) scheme, which provides lower-wage workers aged 30 and above with monthly training allowances when they enrol in selected part-time or full-time courses.
Under the revised scheme, part-time trainees will receive a fixed monthly allowance of S$300, while full-time participants can receive up to 50 per cent of their average income over the past 12 months.
By shifting the focus towards incentivising skill acquisition, this policy takes a crucial step towards equipping lower-wage workers with the tools for upward mobility and long-term financial stability.
Singapore has long prioritised policies to uplift lower-wage workers, particularly through the Progressive Wage Model (PWM) and Workfare Income Supplement (WIS).
Introduced in 2012, the PWM mandates structured wage increases tied to skills upgrading and productivity gains. Employers in sectors such as cleaning, security, landscape and food services must establish career progression pathways for lower-income workers, ensuring steady and sustained income growth.
In contrast, WIS provides direct cash payments and Central Provident Fund contributions to lower-income workers, supplementing wages while incentivising continued employment.
The newly enhanced WSS takes a different approach. Instead of relying on industry-specific employer mandates or wage subsidies, it directly incentivises skill acquisition by offering financial support to workers who enrol in training.
With the onus now on the worker, WSS seeks to address a key obstacle to upskilling: The opportunity cost of learning.
One of the biggest challenges lower-wage workers face when considering training is the trade-off between earning and learning. Many cannot afford to forgo income to attend courses, even if these courses could lead to better-paying jobs in the long run.
The expanded training allowances under WSS help offset this immediate financial burden, making it more feasible for workers to invest in their future earning potential.
Nonetheless, opportunity cost is not just a short-term barrier. It also compounds over time. Lowering the WSS eligibility age to 30 directly addresses this long-term cost of delayed upskilling.
Traditionally, many upskilling initiatives have focused on mid-career workers in their 40s and 50s. However, human capital theory suggests that the earlier workers acquire new skills, the greater their lifetime earnings potential.
Delaying training comes with a cumulative opportunity cost: Every year spent in a low-wage job is a year of foregone income growth and career progression. Encouraging earlier upskilling helps prevent workers from being locked into long-term wage stagnation and accelerates their pathway to higher earnings.
Moreover, in today’s fast-changing economy, skills can quickly become obsolete. Workers who graduated just five years ago may already find their skills outdated, making continuous learning essential for career resilience.
By addressing both short-term income loss and the long-term costs of delaying skills investment, WSS strengthens workforce adaptability and economic mobility in an era of rapid technological change.
For these initiatives to succeed, they must be readily accessible to workers.
Workers need clear, direct pathways to access support. Many eligible workers may not know how to apply for training allowances or may be completely unaware of these opportunities.
Without proactive outreach, these programmes risk being underutilised and ineffective. Ensuring easy access and strong engagement is key to maximising their impact.
Equally important is industry alignment. Training programmes must equip workers with skills that match industry needs. If workers invest time in training but struggle to secure better jobs, the benefits are lost. Policymakers, educators, and employers must work together to ensure training leads to real career advancement.
Employer support is the final piece of the puzzle. Even with barriers to upskilling reduced, the impact is limited if employers do not recognise or reward formal training. Companies must acknowledge newly acquired skills and support workers by providing the flexibility needed for training, such as leave allowances.
Without this shift, lower-wage workers will continue to face barriers to advancement despite their efforts.
As Singapore’s economy evolves, wage support alone is not enough to ensure economic mobility. Instead, investing in human capital, by making training more accessible and financially viable, is a more sustainable strategy.
The expansion of the Workfare Skills Support scheme in Budget 2025 represents a positive shift in this direction.
Ultimately, the goal should be to reduce long-term dependence on government transfers by equipping workers with skills that lead to more sustainable and financially secure employment.
When well-executed, these initiatives can not only uplift lower-wage workers but also contribute to a more resilient, productive and inclusive workforce in Singapore.
Chua Yeow Hwee is an Assistant Professor in Economics at the Nanyang Technological University (NTU). He is also the Deputy Director of the Economic Growth Centre at NTU. The opinions expressed are those of the writer and do not represent the views and opinions of the institutions that he is in.
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For example, households in one- and two-room Housing and Development Board flats received an average of S$16,805 per household member from a range of government schemes, more than twice the amount received by all resident households.
However, while these transfers provide essential financial relief and improve immediate well-being, they alone do not foster long-term economic mobility. Sustainable wage growth and skills development remain key to uplifting workers.
To address this, Budget 2025 has introduced several measures to enhance workforce support. One key initiative is the expansion of the Workfare Skills Support (WSS) scheme, which provides lower-wage workers aged 30 and above with monthly training allowances when they enrol in selected part-time or full-time courses.
Under the revised scheme, part-time trainees will receive a fixed monthly allowance of S$300, while full-time participants can receive up to 50 per cent of their average income over the past 12 months.
By shifting the focus towards incentivising skill acquisition, this policy takes a crucial step towards equipping lower-wage workers with the tools for upward mobility and long-term financial stability.
EXISTING SUPPORT MECHANISMS FOR LOWER-WAGE WORKERS
Singapore has long prioritised policies to uplift lower-wage workers, particularly through the Progressive Wage Model (PWM) and Workfare Income Supplement (WIS).
Introduced in 2012, the PWM mandates structured wage increases tied to skills upgrading and productivity gains. Employers in sectors such as cleaning, security, landscape and food services must establish career progression pathways for lower-income workers, ensuring steady and sustained income growth.
In contrast, WIS provides direct cash payments and Central Provident Fund contributions to lower-income workers, supplementing wages while incentivising continued employment.
The newly enhanced WSS takes a different approach. Instead of relying on industry-specific employer mandates or wage subsidies, it directly incentivises skill acquisition by offering financial support to workers who enrol in training.
With the onus now on the worker, WSS seeks to address a key obstacle to upskilling: The opportunity cost of learning.
Related:
WHY THIS MATTERS FOR LOWER-WAGE WORKERS
One of the biggest challenges lower-wage workers face when considering training is the trade-off between earning and learning. Many cannot afford to forgo income to attend courses, even if these courses could lead to better-paying jobs in the long run.
The expanded training allowances under WSS help offset this immediate financial burden, making it more feasible for workers to invest in their future earning potential.
Nonetheless, opportunity cost is not just a short-term barrier. It also compounds over time. Lowering the WSS eligibility age to 30 directly addresses this long-term cost of delayed upskilling.
Traditionally, many upskilling initiatives have focused on mid-career workers in their 40s and 50s. However, human capital theory suggests that the earlier workers acquire new skills, the greater their lifetime earnings potential.
Delaying training comes with a cumulative opportunity cost: Every year spent in a low-wage job is a year of foregone income growth and career progression. Encouraging earlier upskilling helps prevent workers from being locked into long-term wage stagnation and accelerates their pathway to higher earnings.
Moreover, in today’s fast-changing economy, skills can quickly become obsolete. Workers who graduated just five years ago may already find their skills outdated, making continuous learning essential for career resilience.
By addressing both short-term income loss and the long-term costs of delaying skills investment, WSS strengthens workforce adaptability and economic mobility in an era of rapid technological change.
Related:
COLLABORATION IS KEY
For these initiatives to succeed, they must be readily accessible to workers.
Workers need clear, direct pathways to access support. Many eligible workers may not know how to apply for training allowances or may be completely unaware of these opportunities.
Without proactive outreach, these programmes risk being underutilised and ineffective. Ensuring easy access and strong engagement is key to maximising their impact.
Equally important is industry alignment. Training programmes must equip workers with skills that match industry needs. If workers invest time in training but struggle to secure better jobs, the benefits are lost. Policymakers, educators, and employers must work together to ensure training leads to real career advancement.
Employer support is the final piece of the puzzle. Even with barriers to upskilling reduced, the impact is limited if employers do not recognise or reward formal training. Companies must acknowledge newly acquired skills and support workers by providing the flexibility needed for training, such as leave allowances.
Without this shift, lower-wage workers will continue to face barriers to advancement despite their efforts.
BEYOND TRANSFERS: A SUSTAINABLE PATH FORWARD
As Singapore’s economy evolves, wage support alone is not enough to ensure economic mobility. Instead, investing in human capital, by making training more accessible and financially viable, is a more sustainable strategy.
The expansion of the Workfare Skills Support scheme in Budget 2025 represents a positive shift in this direction.
Ultimately, the goal should be to reduce long-term dependence on government transfers by equipping workers with skills that lead to more sustainable and financially secure employment.
When well-executed, these initiatives can not only uplift lower-wage workers but also contribute to a more resilient, productive and inclusive workforce in Singapore.
Chua Yeow Hwee is an Assistant Professor in Economics at the Nanyang Technological University (NTU). He is also the Deputy Director of the Economic Growth Centre at NTU. The opinions expressed are those of the writer and do not represent the views and opinions of the institutions that he is in.
Continue reading...