Singapore: Poverty looms in Isle of Riches

Posted by Seah Chiang Nee under Policy Watch on 6 July 2008

About 300,000 workers, or 20% of the population earn S$1200 or less a month half of them S$900 or less. If the island's economy is booming, why are so many citizens worse off than they were 10 years ago?

If the PAP cannot improve the lives of the middle class and the poor, it could face a crisis in the 2011 election.

WHEN the republic celebrates its national day next month with its traditional stirring parade and patriotic songs, the mood of many of its citizens will be less than joyful.

On Aug 9 they will try to put aside an unusual combination of bad news including crushing inflation and threat of a global recession to wave flags and watch the fireworks.

But it will be with a heavy heart. To put it simply, Singapore's 43rd birthday is coming at a bad time, possibly one of the worst in decades.

Ironically, the economy of the richest nation in South-East Asia had been firing on all cylinders in recent years.

A booming construction sector, record tourist arrivals and a fast-growing financial sector have contributed to a gross domestic product growth of nearly 8% last year.

The number of millionaires (in US dollar terms) increased to 77,000, making Singapore the seventh in the world in growth of people with high net worth.

That was the recent past. The present is less cheery. A Newsweek correspondent who visited here in 2007 asked: "If the island's economy is booming, why are so many citizens worse off than they were 10 years ago?"

Even as the country prospered, the lives of lower middle class and the poor have become tougher over the past decade. It has in fact become bleak for the elderly and unskilled, who work as cleaners and labourers, admits the Ministry of Manpower.

Their wages have remained stagnant for 10 years, unlike other groups such as managers, professionals, sales and service workers, as well as plant and machine operators.

Last year, managers the best-paid group earned 4.86 times more than cleaners and labourers. The gap has widened in 10 years. It was 4.13 times in 1997.

A government committee on low-income earners says 300,000 workers, or 20% of the population earn S$1200 (RM2760) or less a month half of them S$900 or less.

"Income gaps are widening," said Finance Minister Tharman Shanmugaratnam, while Minister Mentor Lee Kuan Yew admitted that a narrowing was not likely any time soon because of cheap labour from China and India.

Inflation, the worst in 26 years, has further aggravated the problem since it is affecting the poorer class more than others.

The wage gap has become a particularly acute problem among older and lower-skilled workers, who are among the most disenchanted population in Singapore.

Commentators believe that the political fortunes of the ruling People's Action Party (PAP) are tied to its ability to tackle this dilemma at a time when Lee's influential presence enters its sunset years.

If inflation worsens further or if the PAP cannot improve the lives of the middle class and the poor, it could face a crisis in the 2011 election.

An unusually frank write-up in the government-controlled Channel News Asia last year said that middle class stagnation could lead to social instability.

"Anecdotally, it seems to me that our society is already beginning to fray at the edges. There is an increasing coarseness to life," the writer said.

"People have no more time to be considerate to others; even scavengers have to become pushy for fear of losing out to competitors."

On a possible scenario if poverty spreads, he sounded a warning to the contended rich: "Even if you close your eyes to vagrants around us, you can't avoid breathing the air that you share with them.

"Even if you drive around in a sealed BMW or Lexus, one day, homeless kids will catch up with you at traffic junctions offering to clean your windshield.

"Or you find yourself taking the long walk to your parked car, because the shorter route takes you past suspicious-looking men who might be desperate enough to snatch your bag.

"I wonder if the decay has begun to set in, even as we continue to boast of high GDP growth rates."

The island state has become a rich oasis with pockets of rising poverty, where the homeless sleep at void decks or beaches.

Workers in their 60s or 70s clean toilets and sweep floors, instead of enjoying their retirement with grandchildren as is befitting the world's seventh richest nation (in per capita GDP).

To say the government is not worried is understating the fact. It has set up a special body to study measures to improve the earnings of these 300,000 people.

Ideologically, Lee has always rejected subsidies or welfare schemes for the needy. The younger ministers, led by his son Prime Minister Lee Hsien Loong, have, however, been tweaking the no-welfare system by dishing out more cash and topping up savings of the lower-income workers.

Called Workfare, it provides hundreds to thousands of dollars to poorer families. Much of it has, however, been eaten up by the higher cost of living.

Some economists have called for a new social safety net to meet Singapore's modern needs. Yeoh Lam Keong suggests identifying a basket of goods and services that is necessary for individuals and families to enjoy a minimum standard of living.

Based on this index, the government should formulate new policies to help low-income earners counter the effects of globalisation.

"We are in a strong fiscal position and if any country in the world can afford to find a better solution to deal with this growing income divide, it is Singapore," Yeoh said.

Sources and Relevant Links:

The Star Poverty looms in Isle of Riches 5 July 2008

The Star Income Gap: The different faces of Singapore 12 April 2008

Think Centre Listen to the voice of 300,000 "vulnerable poor" 30 April 2007

Think Centre Is Singapore an inclusive society?06 December 2006

Think Centre Industrial peace must be achieved with justice! 01 December 2003

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