TMT researched this report to better understand the gap between current assistance schemes, and the incomes that families need to reach in order to escape poverty i.e. when they do not need outside assistance to meet their living costs. By clarifying what this gap looks like, philanthropists will have a clearer view of the interventions and funding amounts required to help families escape poverty.
We studied the role that “benefit cliffs” play in trapping some people in poverty in Singapore. A “benefit cliff” occurs when families are suddenly are no longer eligible for assistance, because their income has crossed a certain threshold, or because their assistance has expired. The lost assistance exceeds any income gain, and families suffer a sudden drop in their already limited spending power. In such a situation, low-income families might rationally decide that they would be better off not working. The result is that they are unable to lift themselves out of poverty even with public assistance.
TMT’s research highlighted 3 programmes for which the cliffs are especially damaging:1 HDB Public Rental Scheme
2 ComCare Short-to-Medium-Term Assistance
In addition, ComCare has additional benefit cliffs in terms of time. It lasts just 3 to 6 months, which is not enough for families to reach a stable situation.
The report also explores why, despite Singapore’s “Multiple Lines of Assistance” approach, families’ needs may still not be adequately covered.
There are 3 main reasons:
First, assistance does not do enough to help a low-income family’s cashflow.
Most assistance is in the form of subsidies and goes directly to the providers of goods and services. Low-income families receive very little cash from the 2 main government programmes that do give direct payments: ComCare and Workfare.
For Workfare in particular, over 1 in 5 Singaporean workers receive this but only 40% of the payment is in cash. For example a 65-year old worker earning $1,200 would receive $300 through Workfare, of which $120 would be in cash.
Second, a person’s access to social assistance depends to a large degree on how resourceful or capable his/her social worker is.Many programmes have their own specific qualifying conditions, and require applications involving social workers.
Third, it is unclear to those applying for assistance how much they will actually get.
Agencies determine the amount of assistance to give, and its duration on a “case-by-case” basis and using opaque criteria in their means testing.
Lastly, the report includes 4 case studies from Ray of Hope (ROH) clients. These detail how benefit cliffs – especially for ComCare – shape the decisions of low-income families as they strive to improve their lives, and show how benefit cliffs can undermine the social sector’s desired outcomes.