This guide provides an overview of the Wage Credit Scheme (WCS), which was initially introduced in Budget 2013. The WCS is intended to help Singapore companies manage the rising labor costs while still allowing employers to retain, develop and train workers.

The Wage Credit Scheme (WCS) is part of the 3-Year Transition Support Package introduced in Budget 2013. Under the WCS, the Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage of up to $4,000. Wage increases that are given in 2013 to 2015 will be eligible for WCS.

Illustration of WCS benefits

  • If an employer increases the gross monthly wage of his employee by $200 in 2013, the Government will co-fund 40% of the $200 wage increase and for the subsequent two years if the increase is sustained.
  • If further $200 increases are given in 2014 and 2015, the Government will co-fund 40% of the further wage increases, i.e. total wage increase of $400 and $600 in 2014 and 2015 respectively.
  • At the end of three years, the employer has paid a total of $14,400 more in wages to the employee and the Government has co-funded $5,760.

Wage Credit Scheme - Illustration of Benefits

Gross Monthly Wage

Gross monthly wage is the total wages paid by the employer to the employee in the calendar year, divided by the number of months in which CPF contributions were made. Total wages paid to an employee is computed from the CPF contributions that the employer makes for the employee in the year. Total wages include basic salary and additional wages such as overtime pay and bonuses, and exclude employer’s CPF contributions.

Gross Monthly Wage

Eligibility

How to qualify for co-funding in calendar year 2013

Employees must be
  • Singapore Citizen;
  • Earns a gross monthly wage less than $4,000;
  • Was employed for at least three months in 2012;
  • Is on employer’s payroll for at least 3 months in 2013 (i.e. employer must have paid employee CPF contributions for at least three months in 2013);
  • Owners of companies or businesses are not considered as employees even if he has paid himself CPF contribution.
Qualifying employers
  • Employers need not submit any application to IRAS.
  • All employers will automatically be covered under WCS except government-related entities and entities not registered in Singapore.
Qualifying wage increases
  • WCS aims to support productivity gain sharing between employers and employees through meaningful wage increases, especially for lower wage workers.
  • Once an employee’s gross monthly wage exceeds $4,000, the portion of the wage increase that brings the gross monthly wage above $4,000 will not be eligible for co-funding under WCS.

 

Payment of WCS payout

Eligible employers will receive a payout automatically annually. The first payout will be in the second quarter of 2014, and the last payout will be in 2016.

The Wage Credit co-funds businesses giving wage increases to their employees and is taxable.