Wednesday, 2 September 2015

Singapore GE2015: Cost of Living. A civil servant speaks her mind.

Sharing what my civil servant friend shared with me about the Cost of Living issue Singaporeans face ...

Chowing down your food with friends—$3 plate of Hokkien mee, $4.50 plate of orh luak (oyster omelette), $8 plate of BBQ chicken wings and $12 plate of BBQ stingray—at a hot and crowded hawker centre, watching as super zhng-ed out luxury sports cars worth over $1 million whiz past? Yes, it pisses me off too.

But refusing to buy $0.30 tissue from an old aunty as you work your way through your food? Yep, I’m sure that pisses the Aunty off as well, especially when she can’t afford your $27.50 meal.

Simply put, we can see an income gap in Singapore everywhere we look. It is one of the highest amongst developed countries. How high? There is a number called the Gini coefficient. Essentially, the closer the number is to 1, the greater the income inequality. Singapore’s was 0.464 in 2014. Compared to places like the USA’s 0.401 and UK’s 0.35, we aren’t doing so well.

How should Singapore overcome this income gap? Solutions have been much debated abroad and locally.

Some say minimum wage for those in lower-skilled jobs—like fast food chains—is the answer. In fact, they think minimum wage would help these employees better cope with the rising cost of living. But is this really a viable solution? Other countries have tried, but their unemployment rate is much higher than Singapore’s. In Europe, high minimum wages have been accompanied by severe unemployment. Typically, those with the lowest skills are most badly affected. This makes sense, if you think about it. Companies would find it simpler to come up with automated ways of carrying out these jobs, so they don’t have to pay minimum wage to hire workers.

And why would companies choose to do business in Singapore, when there are many other neighbouring countries that do not have minimum wage? I am no expert, but surely this solution could negatively impact Singaporeans’ jobs.

Perhaps this is why the government has not implemented minimum wage. Instead they supplement the wages of lower-income Singaporeans. For example, Workfare has become a longstanding feature of our system. For Singaporeans 35 and above, and earning $1,900 or less, get up to $3,500 more a year in cash and CPF contributions.

Even those near the middle are getting help. More recently, the government has been co-funding 40% of wage increases for Singaporeans earning $4,000 per month and below through the Wage Credit Scheme.

What else can they do in the long-run? In a 2014 report, the Organisation for Economic Co-operation and Development (OECD) lists a few other solutions, one of them being to better match jobs with skills, and yet another to promote equity in education. Singapore may already be heading down this path. Last year, PM noted that some of the ways to deal with the gap between rich and poor in Singapore was to ensure that Singaporeans who chose a technical route could succeed too, and all had access to housing, education and healthcare.

For example, SkillsFuture will give polytechnic and ITE graduates good career progression and allow them to earn more when they start in the workforce, by ensuring these students get a chance at hands-on learning in the industry.

As for quality housing, education and healthcare… well, the government provides housing grants (which go up to $60,000) for those looking to buy HDB flats, helps lower-income families afford kindergarten fees with KiFAS (lower-income families possibly pay as little as $1 per month), and the new MediShield Life will provide universal insurance for hospitalisation.

A lot of these schemes will benefit both the Aunty selling tissue paper packets, and you having your hawker feast. So, while we complain about the unfairness of it all, we should also admit this: income inequality is real, but the government hasn’t been sitting on its white horses. With some luck and hard work, we may be able to keep the gap from widening beyond what’s healthy.

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