About 40,000 more low-wage workers will come under the Workfare Income Supplement (WIS) scheme this year, after the monthly income ceiling of the scheme is raised from $1,700 to $1,900.

Workfare payouts will also be increased across the board. The maximum payout will be increased from $2,800 to $3,500.

These workers will also get 40 per cent of their payouts in cash, instead of 29 per cent now. The rest goes to their Central Provident Fund accounts.

The higher Workfare payouts will enable the Government to raise the workers' and employers' CPF contribution rates from January next year without cutting the low-wage workers' take-home pay, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam.

Their CPF rates were cut in 2007 to boost their take-home pay, but it raised concerns that these workers may not be have enough for their retirement.

Describing the WIS enhancements as a "significant boost", Mr Tharman added that a 60-year-old cleaner who earns $1,000 each month will get $3,500 in Workfare a year, or 3.5 months of additional income.

In all, 480,000 workers at the bottom 30th percentile of Singaporean income earners will benefit from the WIS changes. They will start getting the higher payouts in June this year.

The minister announced the Workfare changes after he pledged that the Government will continue to take steps to narrow income inequality and give all Singaporeans a real chance to do well and have a fulfilling life.

Besides enhancing the WIS, the Government will also plug a loophole where a low-wage worker is eligible to receive Workfare payouts even though he has a well-to-do spouse or owns more than one property. Only a small percentage of current WIS recipients fall into this category now, the minister said.

He also announced that the Workfare Training Support Scheme which provides training subsidies to low-wage workers and their employers will also be enhanced.