Government’s Efforts to Address Socio-Economic Inequality

Parliamentary Reply by Mr Leon Perera:

To ask the Minister for Finance whether the Ministry will regularly review the Government’s commitment to reduce socio-economic inequality and publish the results of such reviews in light of recent findings from a study by Oxfam and Development Finance International that ranks Singapore in the eighty-sixth placing in the world in this regard.

Parliamentary Reply by Senior Minister of State Ms Indranee Rajah:

The Government is concerned about inequality and takes serious efforts to address it. Our concern underpins the design of many of our policies and schemes. 

2.    Our key strategy for tackling inequality is to ensure that all Singaporeans, especially those who are less well off, are able to access good opportunities, earn higher incomes and enjoy a higher standard of living. We do this by providing the necessary support to our citizens at various stages of life, with more support going to the disadvantaged and vulnerable groups. 

3.    We invest heavily in education so that every child, regardless of socio-economic background, can have access to a good education and develop to his full potential. A child who attends primary and secondary school receives around $11,000 in educational subsidies per year. Children from lower-income families receive even more support through MOE’s Financial Assistance Scheme and bursaries. Students with more needs receive additional support through various support programmes. These ensure that we preserve social mobility for our next generation. 

4.    For workers, we introduced the SkillsFuture movement to support skills upgrading so that they can take on better jobs. We also have the Progressive Wage Model to help lower-wage workers upskill and earn better wages, and Workfare to supplement their income. We have seen encouraging results so far. In the last five years, incomes of lower-wage workers have grown in tandem with median income growth^[1] .  

5.    For those in their silver years, we have introduced the Silver Support Scheme to provide additional support to seniors who have low incomes through life and have little family support. 

6.    Our means-tested health and long-term care subsidies also ensure that those with lower income receive more assistance, while the GST Voucher scheme supports lower-income families with their day to day expenses. 

7.    All these schemes add up to a system that is highly progressive. All in all, low-income households receive almost $4 of benefits for every dollar of tax paid, while the middle-income households receive almost $2 for every dollar of tax paid. 

8.    Mr Perera referred to the ranking by Oxfam and Development Finance International. The rankings were based on the absolute amount of social spending, with the assumption that the higher the level of spending, the better will be the situation, regardless of whether the spending leads to effective outcomes. The authors have acknowledged the limitations of their study in representing the different circumstances of individual countries. This is the case for Singapore, where we target our subsidies and assistance to those who are more needy. This focused approach to reducing inequality enables us to keep our tax burden low while ensuring our social expenditure is prudent, fair and progressive. 

9.    Our approach has served us well so far. We have kept inequality in check, even as income gaps widen elsewhere. Our Gini coefficient has moderated over the last five years. Our people have also seen good income growth with the lower-income seeing their real per capita household income grow by close to 20% over the last five years^[2] .  

10.    Such indicators are published every year in the Key Household Income Trends report by the Department of Statistics, and every two years in the biennial Singapore Public Sector Outcomes Review (SPOR) by the Ministry of Finance. The Government has been and remains committed to addressing inequality. 

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^[1] The real wage growth of full-time employed Singaporeans at the 20^th percentile has averaged 3.2% per year from 2011-2016, similar to that of the 50^th percentile. Source: Labour Market Report (2016), Ministry of Manpower.
^[2] Source: Key Household Income Trends (2016). Singapore Department of Statistics.