Rising Income Gap in Singapore Leaves Working Class Behind

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Singapore has emerged as one of the greatest success stories in modern times. Once an impoverished backwater port in the British Empire, the city-state has emerged as one of the wealthiest and most successful countries in the world, and is a true economic miracle. Yet, as the country’s economy booms, thousands are being left behind, struggling to cope with rising living costs and a growing gap between the rich and the poor.

Singapore’s working class wages stagnant

In 2012, median household incomes rose by 2.7 percent, even after factoring in inflation. Still, many working class families have seen their wages stagnant in recent years. The Ministry of Manpower has acknowledged that from 2000 to 2010, the wages of the bottom 20 percent of Singaporeans only rose .3 percent in real terms.

During that same period, incomes for the middle class grew by a respectable 11 percent. Singapore also has the highest percentage of millionaires, with 17 percent of its citizens having a disposable private wealth of at least one million dollars. The unemployment rate in the country has regularly come in at below 3 percent over the last several years. 

With a Gini Score of 48.1, Singapore has one of the highest inequalities of any fully-developed democratic country in the world. Gini scores are used to measure the distribution of wealth in society, with higher scores equating to higher inequality. To put this in perspective the United States, long-regarded as having high levels of inequality, has a Gini of 45. Canada, on the other hand, has a Gini score of only 31.1. Many European countries have Gini scores in the 20’s. Notably, Hong Kong has an even higher Gini coefficient of 53.7.

Government takes steps to address problem

The government has argued, however, that when the wealthy prosper, the rest of the country also prospers. The government has also taken several steps to assist working class families cope with rising living costs. Chief among them has been the provision of public housing, of which over 80 percent of Singaporeans rely on. Housing quality provided by the Housing Development Board (HDB) generally rivals privately built housing units.

Still, with inflation continuing to rise at rapid rates, some 2.6% in November alone, many working class families are struggling to cope. Despite government efforts to control inflation, the recent November reading was the highest in 11 months. Accommodation costs continue to climb in the city-state, where land is in short supply.

Owning a car is also notoriously expensive in the city-state. A basic Toyota Corolla can cost more than $100,000 USD. Car owners must also pay expensive yearly taxes, high gasoline costs, and heavy tolls to enter high traffic areas. Singapore does have an extensive public transportation system, but as the population has grown, largely through immigration, the public transportation system has struggled to meet demand.

Some Singaporeans blame the influx of cheap labor from India and other countries for suppressing wages. The government has countered that without a steady supply of cheap labor to fill low skill jobs inflation would rise steeply, squeezing working and middle class families even more. Instead of trying to raise wages for low cost laborers, the government would prefer to increase the skills and knowledge of its citizens.

Income gap could reach critical mass

While the Singaporean government has essentially tried to ignore the problem, they may be forced to address it in the near future. The People’s Action Party has watched its approval rating plummet in recent years. While the government does not release a breakdown of voting trends, it is likely that PAP is losing support from younger and more progressive voters.

In response, the Singaporan government has increased social spending. The government is increasing spending on health care, especially for the poor and aging. The government is also increasing support for housing costs and reforming the education system to provide more assistance to the poor. Without reform, the PAP may find itself on the outside looking in.

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