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Forum Replies

Social Cohesion Not Left to Market Forces

22 May 2013

Mr Paul Chan (ST, 16 May) was rightly concerned about rising inequality, as well as the vulnerability of white collar workers to forces of globalisation and technology.

However, his bleak portrayal of incomes over the last decade or two was inaccurate. The median Singaporean household has seen income per member grow by 30% since 2000 after adjusting for inflation. Households at the 20th income percentile experienced 15% growth in real incomes. They have seen much greater gains since 1990.

Neither has there been a “price tsunami” since 1990. CPI inflation in Singapore has averaged 2.0% per year since then, below global inflation of 9.0%. Inflation has been uncomfortably high in recent years, mainly because of cars and the upswing in the property market which increases imputed rentals on owner-occupied homes. The Government is addressing these problems, and inflation is moderating.

Rankings of cities by costs faced by expatriates, such as by the EIU, do not reflect costs for ordinary citizens. A study last year by the Asian Competitiveness Institute, found the average worker’s purchasing power in Singapore to be higher than in other Asian cities.

These facts describe improvements for the majority. However, there are Singaporeans in low-income jobs such as cleaners and security guards who have seen little improvement over the last decade. We must improve their wages, and the Government, NTUC and business community are working to achieve this through the Progressive Wage Model.

We are not leaving social cohesion to market forces. The Government has taken major steps to uplift lower-income Singaporeans through permanent schemes such as Workfare, enhanced housing grants and education subsidies, and GST Vouchers. In 2012, the Government’s targeted benefits for the bottom 20% of households averaged about $6,000 per household.

We are working in new ways to promote social mobility from young. And we are reviewing healthcare financing and other schemes to help older Singaporeans, who had much lower pay when they were working.

We thank Mr Chan for his comments. Countries in the same league as us have seen real incomes for median households grow much more slowly in the last decade compared to Singapore. They illustrate the realities of global competition. Raising productivity, upgrading every job, and fostering an inclusive society are hence our vital goals in the years ahead, and require continuing initiative from Government, businesses and the community.

Lim Bee Khim (Ms)
Corporate Communications
Ministry of Finance