Proposals to narrow income gap fly thick and fast at forum

Calibrate foreign labour policies. Continue social transfers. Invest more in education and healthcare.

These were among the ideas put forth by a financial expert, a minister of state and an opposition politician, the three panellists at a forum on how the income gap in Singapore could be addressed.

Leong Sze Hian, statistician and former president of the Society of Financial Service Professionals, said current foreign manpower policies are a key reason for the depression of wages among the lower rungs of the workforce.

“We need to calibrate and review a lot of the foreign labour policies because currently most of them are applied across the board,” he explained. “They need to be more targeted to different sectors and industries... you cannot have a system where 72 (working) hours a week becomes the norm for everyone. No one can continue working that kind of environment, and wages will continue to go down.”

Citing the example of cleaners in Singapore, whose real incomes he pointed out fell 38 per cent over the past decade after adjusting for inflation, he said even though some of them earn about $1,300 a month, their shifts last 12 hours at a stretch and take one day off every two weeks.

“So we cannot focus solely on increasing wages. We must also look at the work conditions (they are dealing with),” he said, noting also that Singapore continues to be the country clocking in the longest working hours in the world.

Leong also called for greater social spending, in particular in mitigation of rising health insurance costs for the poor — pointing out that some of them have experienced a more than five-fold jump in the cost of their MediShield premiums since 2005.

Minister of State for Community Development, Youth and Sports Halimah Yacob also stressed the importance of social transfers, the practice of government intervention to even the distribution of wealth, as she advocated continued investments in Singapore’s social infrastructure in healthcare and education, particularly.

“The situation is evolving so rapidly, circumstances change, so we have to revise our policies and go along (with it),” she said, acknowledging the need for regular reviews of government policies.

“It’s not just a question of helping parents (of young children) have a better job, a higher income, but also to break the cycle of poverty, so helping the children (by ensuring a good preschool education) is a very important investment, and that must continue to be done,” she told Yahoo! Singapore on the sidelines of the event.

Income inequality in Singapore, as measured by the Gini co-efficient, inched up last year to 0.473 from 0.472 the year before. However, after adjusting for government transfers and taxes, it fell to 0.452 from 0.455 over the same period.

Opposition politician Nicole Seah touched on improving assistance for the poor by highlighting the need for better support for the social work industry, while calling for a larger number of employment agencies to help better match constituents to jobs that are geographically closer to them.

She, too, commented on the high risk of health spending in Singapore, due to its lack of a universal healthcare model like the ones in other developed Asian economies such as Japan, Hong Kong and Taiwan.

“If the system limits claims for chronic long-term healthcare, that’s an area that will hit low- to medium-income families the most,” she said.

Noting the country’s aging population, Seah also said that the government can help mitigate the rising costs of aging by building subsidised eldercare and childcare centres — a move she says will not only create jobs but also help pass on cost savings from subsidised rental to needy Singaporeans.

“I think (these changes) really need to stem from a willingness to change the system; to start making more radical and proactive changes to the system as a whole, rather than make existing tweaks thinking that we are not going to fix something as long as it’s not broken,” she said.

During the forum, however, Halimah pointed out that although Singapore does face the problem of stagnating wages at its lower rungs, non-income determinants of inequality such as education and healthcare have not worsened.

Citing the half-billion-dollar package being dedicated to developing eldercare in more locations around the island, as well as a five-year plan to develop childcare as examples, she said the government is channelling a lot of effort and resources into improving both areas.

She, too, agreed on the need for more active labour market policy interventions at all levels, and that more can be done for professionals, managers, executives and technicians in terms of job matching, but highlighted the scale and complexity of the issue as a whole.

“There is no short-term quick remedy for income inequality—there is no silver bullet (that can solve everything)... it’s a global challenge, (and) while our situation is not so dire, social expenditure must still increase,” she said.