In a speech in Parliament on Tuesday, May 15, Ong Ye Kung, Singapore’s Minister for Education, said that the government would continue to tackle inequality by helping the underprivileged in society. He also said that the larger emphasis must be in helping people to become self-reliant, which is better than “easy and unconditional” doleouts.
Mr. Ong acknowledged that inequality is a problem that Singapore has grappled with since the very beginning, and the fight to address it continues to this day. However, unlike in other developed countries where the economy has stalled and the number of those who are economically disadvantaged is on the rise, the median income of Singapore has consistently been increasing.
He said in his speech that in the country, “Low-and middle-income families continue to experience real income growth and social mobility. Singaporeans have been enjoying a rising standard of living and are motivated to do well. This is both a result of our culture- who we are -as well as public policies.”
The Minister enumerated the different aspects of inequality, which are: the income gap, middle-income core; mobility from bottom up and interaction between different groups.
Concerning the income gap, Mr. Ong emphasized to Parliament that the country’s progressive system of taxation, as well as other policies, are effective in mitigating income disparity.
And when it comes to how important it is to have a robust middle-income core, Mr. Ong pointed out that the Gini coefficient in the country, which is at 0.36, is equal to that of the UK, and even better than that of the United States (0.39). The Gini coefficient is used to measure inequality in a given area, and the closer the figure is to zero, the less inequality there is. Countries that ave a strong welfare system, such as Japan and certain European countries, have a low Gini coefficient.
However, as Mr. Ong said, that the most significant proof that the middle-income group in Singapore is growing is that people’s lifestyles are changing over the years, since more families are enjoying overseas vacations, bigger homes or apartments, birthday celebrations in restaurants, and the like.
He believes that middle-income families want to do better, and desire for their children’s lives to be even more prosperous than theirs. However, with the existing high base, climbing even higher economic rungs has gotten more difficult, with improvements coming “most likely in steps and not in leaps.”
The Minister also emphasized that “We should also not define a better life purely in economic and material terms, but also other aspects of a holistic quality of life – from a more pleasant and greener environment, to a more cohesive and caring society, and with a greater pride in being Singaporeans.”
When it comes to mobility, in Singapore 14 percent of the youth who grew up in families in the lowest income quintile were able to jump to the highest quintile. This percentage is better than in Denmark, where the number is at 11.7 percent, the UK, where it’s 9 percent, and the US, where it is at 7.5 percent.
What has contributed to this is the country’s pubic policies including access to high educational standards, home ownership, and the belief in meritocracy.
Mr. Ong believes that while children families who have experienced economic mobility have been able to inherit the advantages of prosperity, the opposite is true of those who have been less successful.
“For families who cannot move up despite the strong and better support, we find their circumstances more dire and challenging than poor families of the past. Social stratification is starting to become entrenched.”
As he discussed social mixing, Mr. Ong mentioned how specific public policies such as education, National Service and housing, have endeavored to create a society that is “blind” to race, family background and income.
“People are free to choose their friends and who they want to be with. But when groups are predominantly formed along socio-economic status – whether one is rich or poor – it is the start of stratification and that will poison society over time. Our policies will need to work against this trend, to actively bring Singaporeans of all backgrounds together.”
The Minister for Education warned that establishing universal welfare will not solve all the problems of inequality that the country faces.
Singapore’s prosperity has come with its own problems for families from all economic strata, with some sectors with higher income becoming socially detached, while the growing middle class contends with how difficult it is to advance materially, given the country’s high base. Families with low income, additionally, continue to struggle toward upliftment.
But universal welfare is not the answer because ultimately, as Mr. Ong says, “No handout is actually free. Someone has to pay for it.”
“Proponents argued that with universal welfare, there will be no stigma associated with social assistance, and the dignity of the low-income will be preserved. A few countries have implemented universal welfare,” he said, emphasizing that in the countries that have gone with universal welfare, taxes are very high (30 percent in average), with Goods and Services Tax coming in at 20-25 percent.
The situation is very different in Singapore, where, as Mr. Ong pointed out, the GST is in the single digits, and half of the country has no personal income taxes. Universal welfare would be shouldered by rising income taxes for everyone, including those in the middle income sector.
The Minister for Education believes therefore that a far more effective solution would be to help people help themselves, saying, “What’s the difference? We make help available to them, but we also preserve their motivation, so that they continue to strive, instead of being passive recipients of welfare.”
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