Inequality a rising challenge for Singapore's policymakers

SINGAPORE (Dec 31): Rayner Loi was taken aback when the mother of a boy he was mentoring teared up while thanking him for taking her son to dinner. Loi then realised the boy would have gone to bed hungry otherwise. “She told me how much it meant to her and her son because on most days, she couldn’t afford to put dinner on the table,” says Loi. “I walked away from that feeling a great sense of injustice because around that time, I had also read about Singapore’s food waste situation. I also found out, through my own research, that one in 10 people — about 10% — suffer from food insecurity [in Singapore].”

Loi was inspired to start a business to tackle the problem. His initial idea was to purchase leftover food from restaurants at the end of the day to redistribute to the needy. But he had to change his concept after encountering tremendous difficulty in getting the business off the ground. “When I spoke to restaurants, I realised they ­weren’t really interested. They saw it as too much of a hassle and it just didn’t make sense for them… It was very, very challenging,” Loi rues. Now 24, Loi is the CEO and co-founder of Good For Food, a start-up that aims to help commercial kitchens reduce food cost and waste through big data analytics.

His encounter with the boy is particularly poignant when viewed against the backdrop of the lifestyle of the ultra-rich depicted in Crazy Rich Asians, the 2018 hit movie set in Singapore. It is this gaping inequality between the haves and have-nots that has been at the centre of a raging conversation in Singapore this past year. And it will likely continue to be so in 2019 and beyond.

Falling through the cracks

The wave was set in motion at the start of 2018 when associate professor Teo You Yenn, head of sociology at Nanyang Technological University, launched her bestselling book, This Is What Inequality Looks Like. After speaking to more than 200 people from low-income families, Teo wrote about the day-to-day challenges that were holding them and their children back.

The book came soon after the release of the results of a nationwide survey by the Ministry of Culture, Community and Youth (MCCY) in partnership with the Institute of Policy Studies (IPS), which asked some 3,000 Singapore citizens and permanent residents about the nature of their social ties.

Released at the end of December 2017, the survey found that social class boundaries tended to be more salient than gender, racial and religious boundaries in Singapore. Researchers behind the survey said more effort could be made to encourage Singaporeans from different school backgrounds and housing types to mix.

“Many Singaporeans care about the problems of poverty and inequality, have aspirations toward greater equality and are interested in knowing more about how to think about these issues,” Teo is quoted as saying in an interview. “All of us have a stake in thinking about and discussing what we want to see in our society.”

Instead of seeing the poor in Singapore as merely people who have “fallen through the cracks”, Teo urged a careful consideration of how policies that have benefited others could be systemically working against this group. And her advice reached the ears of the politicians.

During the first parliamentary sessions of 2018, both the IPS survey and Teo’s book on inequality were cited several times as members debated the government’s spending plans for the financial year. Proceedings included an impassioned speech by then-Nominated Member of Parliament Kuik Shiao-Yin, who urged her fellow MPs to take action.

“Inequality is a deeply emotional issue for young Singaporeans. I dare say it’s one of the biggest issues they care about. Now is the time to really go talk to the next generation of Singapore taxpayers before 2021 hits, and listen to what matters to them,” Kuik said in her budget speech on Feb 28.

The gravity of the national conversation on social inequality was not lost on Singapore’s political leaders. In his speech during the debate on the President’s address on May 16, Prime Minister Lee Hsien Loong said the city state must ensure “there are no rigid class distinctions or barriers that keep good people down” and outlined government efforts to support social mobility and meritocracy, such as keeping the education system open.

Minister for Education Ong Ye Kung weighed in, pointing out that Singapore’s belief in meritocracy and public policies such as home ownership and universal access to good general education have led to greater social mobility than in other developed nations.

Ong noted that 14% of young Singaporeans whose parents were in the lowest income quintile while they were growing up have managed to move up to the top quintile. This compares well against the 7.5% in the US, 9% in the UK and 11.7% in Denmark. “Low- and middle-income families continue to experience real income growth and social mobility,” Ong said in parliament on May 15.

The social inequality debate reignited in October with Regardless of Class, a documentary on Channel NewsAsia hosted by Senior Minister of State Dr Janil Puthucheary. The piece featured struggling families, security guards who are abused by condo residents and a discussion among students from various academic streams who — with painful honesty — talked about how they perceived each other.

In the same month, ambassador-at-large professor Tommy Koh advocated a minimum wage policy in Singapore at IPS’ 30th anniversary conference. “I think the current income disruption of Singapore is a moral disgrace,” he said. “Mr Lee Kuan Yew envisaged an income distribution which resembles an olive… Today, our income distribution resembles a pear.”

Koh reiterated his stance at a roundtable in November, which included Temasek Holdings chairman and former labour chief and cabinet minister Lim Boon Heng, and National Trades Union Congress assistant secretary-general Zainal Sapari.

“Singapore is too unequal. I’m embarrassed by being ranked by the UN as the second-most unequal society. Let’s try to make Singapore a more equal society,” said Koh at the event. “My dream is, I want a Singapore that is prosperous, just and equitable. I want a Singapore in which every working man and woman can live in dignity.”

Inequality debate to rage on

Going into 2019, conversations on social inequality are expected to continue as, ironically, more people become better off. “Singapore has passed the phase where most people feel they are doing better than before, and living the Singapore Dream,” says associate professor Tan Ern Ser, a sociologist at the National University of Singapore (NUS).

He adds such concerns were unlikely to have been so high on the national agenda in earlier decades. The late 1970s and early 1980s was sort of a “golden age” for Singapore, Tan says. “[It was] a time when people felt that they were doing better than before and better than their parents, and meritocracy was therefore working well, and inequality didn’t matter much.”

Tan believes that some of the social inequality issues that could emerge over 2019 include the continual disruption of the economy, wage stagnation, job loss and reemployment of seniors. And, with the general election widely expected to be called in 2019, he expects some of these issues to become hot-button topics.

To help alleviate the challenges of social mobility, Tan says youth in Singapore must be given the opportunities and resources to overcome what they lack in terms of economic, social and cultural capital. “This will prevent the entrenchment of poverty and low income, and facilitate [the] upward mobility of young Singaporeans, regardless of social background,” he adds. “Most importantly, we need to have a vibrant economy with sufficient jobs that pay decent wages.”

“Generally, inequality evokes strong emotions. For the media, income inequality is an attention-grabbing headline,” says associate professor Nitin Pangarkar, NUS Business School. “Since it is an issue that evokes strong emotions, it will continue to be in focus. Media spotlight will make it an even bigger issue.”

Still, Pangarkar says the key concern for policymakers should not be whether Singapore devolves into a nation with a class divide. The most important things to look at, he explains, are whether there is equal opportunity and mobility across classes.

“According to data provided by the Singapore government, there is a good deal of mobility across classes,” Pangarkar says. “In Singapore, regardless of class, people have access to universal basics such as education, healthcare, housing, et cetera. That is a much better situation than in many other countries.”

On the other hand, Pangarsar notes that level of inequality tends to be higher in cities. “It is also an entrepreneurship-driven economy, where there are spectacular successes and catastrophic failures, leading to inequality,” he says. “You cannot do much about this other than building a safety net such as unemployment insurance, a social security type of scheme, et cetera. If you do more, it will blunt entrepreneurship.”

“In my view, all that the government should do is to facilitate equal opportunity and provide a safety net,” Pangasar adds. “Most countries implementing aggressive policies to equalise income have suffered from poor overall economic performance. Some, such as Sweden, are already rethinking these policies.”

Sumit Agarwal, a Low Tuck Kwong Distinguished Professor at NUS Business School, agrees. He points out that Singapore already has value-added taxes and redistributive policies such as tax benefits for marginalised sub-groups including single mothers and the elderly.

And while Agarwal agrees with the idea of a minimum wage to create a safety net and help low-income workers from falling below the poverty line, he warns of the “displacement effect” this might have for smaller businesses. He suggests studying the impact that Singapore’s Progressive Wage Model has had on both workers and businesses in the cleaning, security and landscape sectors to see if it can be replicated in all other industries. “I don’t think anybody has looked at the data and what is happening in terms of profitability for businesses, and what it’s doing for the workers,” he says.

While Agarwal acknowledges that there are inequality issues, he suggests that part of the unhappiness driving the conversations on the ground might be due to a “perception problem”. The most important part, he says, is looking at the “anxiety levels” of people in terms of cost of living, instead of the actual cost of living itself.

To illustrate, Agarwal says an average Singaporean who lives in an HDB apartment in the heartlands could be shocked at how high prices have risen when he goes for dinner in town. “But when he looks around the restaurant, he thinks to himself: Other people can afford this, which means it’s just me.”

“That is not to say there are no inequality issues,” Agarwal says. “But some of it is real, and some of it is perception.”

The challenge for Singapore, then, is to figure out what the real issues are — and how to solve them.

This story appears in The Edge Singapore (Issue 863, week of Dec 31) which is on sale now. Subscribe here