Social stratification is starting to become entrenched: Ye Kung

Singapore

THOUGH Singapore's progress has created new problems and inequalities, universal welfare is not the solution, said Education Minister Ong Ye Kung during the debate on the President's Address on Tuesday.

Universal welfare would not only require higher taxes but - more importantly - could hurt the motivation of those in low-income groups, he said: "The government must continue to extend assistance to the disadvantaged, and it will. But making handouts easy and unconditional is not dignity. Self-reliance is."

In his speech, Mr Ong sought to show that Singapore was not faring badly in four aspects of inequality: the income gap, income distribution, social mobility and social mixing.

First, though Singapore's income gap is larger than in other developed countries, it is not too different from other major cities, he said.

This inequality is moderated by a progressive tax system, redistribution and philanthropy, he added.

Second, while some studies show that GDP growth worsens inequality, Singapore's experience has been that falling inequality coincides with periods of growth - thanks to its model of "inclusive growth".

And unlike many countries where real median income growth has practically stagnated, Singapore has seen healthy growth in this figure.

Third, in social mobility, Mr Ong cited statistics showing that Singapore is doing better than countries such as the United States, the United Kingdom and Denmark.

While Singapore's belief in meritocracy is a major contributing factor, public policies also play a large role, he said, pointing to access to good general education, support for students from lower-income families, and home ownership policies.

Yet Singapore's success has led to new issues. Families who have done well can give their children a headstart, while families who cannot move up are in more dire circumstances than in the past, he said: "Social stratification is starting to become entrenched."

Finally, while Singaporeans have always been "relatively blind" to differences in race, income and family backgrounds, he acknowledged that there has recently been less social mixing in the education system and a threat of stratification.

Yet he cautioned against the idea that these problems could be solved by universal welfare, under which help is given, not just to the low-income, but also the middle-income.

"No handout is free," he said. In countries with universal welfare, average income tax is about 30 per cent and GST, typically 20 to 25 per cent.

With half of Singapore's population not paying personal income tax and GST still in single digit, taxes "on ordinary folks" would have to be much higher to support universal welfare.

An even greater concern, he added, is the impact on motivation.

Singapore's approach is thus not welfare, but enabling people to help themselves: "We make help available to them, but we also preserve their motivation, so that they continue to strive, instead of being passive recipients of welfare."

Mr Ong noted recent moves to address inequality through the education system, from strengthening the pre-school sector to tweaking admission policies.

One of the best counters to inequality is SkillsFuture, which gives many pathways to success, he added.

But with more needing to be done, he pledged to take "an entrepreneurial attitude" and be willing to pilot interesting approaches.

"Today, we may be in a better situation than other developed countries. But tackling inequality requires ceaseless striving," he said.