While the general prices of goods and services rise at a docile tempo, many Singaporeans are still feeling the squeeze due to prickly increases in three major areas – healthcare, food, and education.
With the possibility of the goods and services tax (GST) to be increased to 9% (from the current rate of 7%) anytime between 2021 and 2025, the pinch will be felt with so much more intensity.
However, Finance Minister Heng Swee Keat said that the GST hike will be enforced in a “progressive manner.” By this he meant that the Government will continue to take up GST on publicly subsidized education and healthcare, and improve the permanent GST Voucher scheme when the hike kicks in. The improved GST Voucher system will provide more assistance to lower-income households and seniors.
With the improved GST Voucher system, the government will likewise carry out an offset package for a period of time in order to aid Singaporeans adjust to the GST increase, with lower- and middle-income households receiving more support.
What economists are saying
Economists have said that while schemes such as GST vouchers and rebates off utilities bills are useful, the long-term solution to cost-of-living concerns lies in ensuring pay increases in low-wage jobs and pushing on with economic restructuring efforts to create better jobs for all.
Dr. Walter Theseira, Associate Professor of Economics at Singapore University of Social Sciences said that the focus here must be at the low-wage worker. “Rather than artificially hold costs down which also affects workers in those industries, it would make more sense to spend effort raising wages,” he said.
DBS Bank senior economist also said that “Cost of living is a problem but as long as a person has a job and an income, things can be resolved,” and added by saying “So we have to continue investing in our social safety net and by that, I’m not just talking about public assistance schemes.”
He then concluded, “The best solution is to keep creating jobs and invest in the training of our workers so that everyone remains employable and can have a job.” On this note, it can be recalled that
Singapore National Employers Federation chairman Robert Yap called on bosses sometime last year to take a long-term approach in helping low-wage workers “by embarking on initiatives to enhance their earning capacity through better skills and better jobs”.
With all these insights from the country’s hard-working minds, it is then imperative for the 2019 Budget to give more attention to how low wage earners’ income can be raised in order for these wage earners to better acclimatise themselves to a possible impending inflation.
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