Additional Measures to Address Rising Wealth Inequality in Singapore

Parliamentary Question by Mr Yip Hon Weng:

To ask the Prime Minister and Minister for Finance in light of a recent report which highlighted that Singapore’s average wealth has continued to rise but wealth inequality has also risen in the same period (a) what additional measures is the Government taking to address wealth inequality beyond the current Government handouts and CPF top-ups; and (b) whether there is a need to enhance the Progressive Wage Model to ensure that salaries, particularly in the lower and middle income brackets, can rise more rapidly to narrow wealth inequality.

Parliamentary Reply by Second Minister for Finance, Mr Chee Hong Tat:

The following reply will also cover the matters raised in Parliamentary Question by Mr Zhulkarnain Abdul Rahim, which is scheduled for a subsequent sitting.

Wealth inequality is difficult to measure accurately given the challenges in obtaining comprehensive wealth data. This is because wealth takes many different forms, some of which are difficult to value. Furthermore, financial wealth is highly mobile across borders, and bank deposit data in Singapore is protected by the Banking Act. Many countries and international organisations face similar data challenges in measuring wealth inequality accurately. Studies, such as UBS’ Global Wealth Report which the member may be referring to, would have made several assumptions to overcome these data challenges. Such a methodology would affect the comparability of wealth inequality estimates across countries and over time. The UBS estimates should be read in this light.

Nevertheless, we are working to improve our own data collection on income and wealth.

More importantly, we have been proactively putting measures in place to tackle wealth inequality. 

Our Central Provident Fund (CPF) and HDB home ownership allow the vast majority of Singaporeans to own and build up significant net assets during their lifetimes. These provide them with a strong sense of security in owning their own homes and peace of mind in their old age. We provide significant housing grants of up to $120,000 to help the less well-off own a home, with the latest enhancement to our housing grants announced at the National Day Rally 2024. These grants are on top of the significant market discounts applied when new flats are priced, to ensure they are affordable for Singaporeans.

We have implemented a progressive system of taxes and transfers, with wealth taxes in the form of stamp duties, property tax, and the Additional Registration Fee for motor vehicles. We have made these taxes more progressive over the years. In recent Budgets, we introduced higher marginal Buyer’s Stamp Duty rates for higher-value properties and raised property tax rates for all non-owner-occupied residential properties and higher-value owner-occupied residential properties. Our transfers are means-tested, with some of these schemes based on criteria including multiple property ownership and/or the annual value of the home, as a proxy for wealth. 

Our highly subsidised and high-quality education system provides every Singaporean, regardless of starting point, a strong foundation in life and multiple pathways to success. We invest an average of more than $250,000 in every Singaporean child from the pre-school level to ITE, polytechnic or university pathways to prepare them for their first career.

For lower-wage Singaporeans, we have put in place measures to support wage growth, which supports wealth accumulation in turn. With the Progressive Wage Model (PWM) that provides a wage-skills ladder where annual wage increases are tied to improvements in skills and productivity, real wages of lower-wage workers at the 20th percentile rose cumulatively by 30% from 2013 to 2023, faster than that of the median worker at 22%. Over the past two years, tripartite partners have enhanced existing PWMs and introduced new PWMs for food services, waste management, administrators and drivers. In addition, we raised the Local Qualifying Salary from $1,400 to $1,600 from July 2024, and enhanced the Workfare Income Supplement (WIS) Scheme to provide lower-wage workers aged 30 and above with additional cash and CPF support.

Further, we recently introduced the ITE Progression Award to encourage young ITE graduates to upskill to a diploma earlier, with $5,000 in their Post-Secondary Education Accounts to support their upskilling efforts, and a $10,000 CPF top-up upon completion of the diploma to boost their savings for home purchases or retirement. This will help ITE graduates secure a better starting pay and lifetime earning trajectory through their improved skills and competencies, and provide support for their home ownership or retirement, thereby supporting wealth accumulation.  

The Government will continue to explore ways to tackle wealth inequality, including by keeping our social support measures progressive and targeted at lower and middle-income households.