Support for adult education, ITE grads among upcoming Forward Singapore proposals: DPM Wong

SINGAPORE will boost support for adult education and help push up salaries of Institute of Technical Education (ITE) graduates, among moves to tackle the “twin challenges of inequality and mobility”, said Deputy Prime Minister Lawrence Wong, giving a preview of recommendations in the upcoming Forward Singapore report.

Speaking at the annual dinner of the Economic Society of Singapore at the Fairmont Singapore on Tuesday (Sep 26), Wong laid out three priorities: improving the lives of those in the middle, helping the lower income segment and enabling social mobility.

First, Singapore must “advance the well-being of the broad middle” by helping them get well-paying jobs and ensuring real income growth.

“The best way to achieve this is through a strong and dynamic economy,” said Wong, reiterating the need to stay open, attract investment and nurture home-grown enterprises.

Having more “high-value and productive” companies means better prospects for the broad middle, he added. In the last decade, a large share of middle-income workers had “upward income mobility” – because many switched to work in more productive firms, such as larger local companies or multinational corporations.

Singapore must double down on economic restructuring and not prop up “non-viable activities”, so resources can be channelled to more productive areas, said Wong.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Yet technological advancement also means disruption. Older workers in their 40s and 50s are especially vulnerable, and may have caregiving responsibilities that pose obstacles to refreshing their skills.

“We plan to step up investments in adult education and training and significantly strengthen SkillsFuture,” said Wong.

This includes SkillsFuture Credit top-ups for mid-career workers, as well as training allowances for mid-career workers attending full-time, longer courses.

The revamped SkillsFuture system will include support for the involuntarily unemployed, in a long-foreshadowed move. Instead of unemployment insurance, this will be an “appropriately sized” government-funded benefit to help workers upskill.

The second priority is to tackle inequality and uplift the lower-income segments. Singapore is “not doing too badly” in income inequality, on par with countries such as the UK and better than the US, noted Wong.

While the Republic is “nowhere near as equal” as the Nordic countries, those have very high income and value-added taxes – unlike Singapore’s relatively low tax burden, explained Wong.

Singapore’s fiscal system is also highly progressive, he added. Its effective income tax schedule spans 50 percentage points: from 22 per cent at the top, to minus 28 per cent for senior lower-income workers who get more benefits than they pay in taxes.

As for wealth inequality, Wong reiterated past problems with taxing net wealth, which is why Singapore targets property. For asset-rich but cash-poor seniors, the government is reviewing how schemes to unlock their property’s value – staying in the same house but taking a home equity loan – can be made more attractive.

“We will continue to review and enhance our schemes to uplift the incomes and wealth of the more disadvantaged groups, and close our income and wealth gaps over time,” said Wong.

One key focus is ITE graduates, whose starting salaries have increasingly diverged from those of polytechnic and university graduates. The government aims to reduce this wage gap, encourage diverse pathways and “instil dignity and respect for every job, every vocation and every skill”.

Finally, Singapore must remain socially mobile, with a focus on children from disadvantaged backgrounds.

Beyond financial transfers, this often requires intensive engagement by case workers. This can be improved with additional support, tied to action plans for which families take responsibility, he added.

Turning to the better-off, Wong intends to strengthen a culture of giving and philanthropy: “Perhaps we should look at family in a wider context – not just our children and grandchildren, or even our relatives, but people in the wider community, who all belong to our Singapore family.”

He hoped those who have done well will set aside more of their wealth for this “larger Singapore family”.

Taking questions from the audience, Wong was asked what new sources of growth Singapore has to fund these plans to benefit all segments of the population.

He replied that while Singapore is not a cheap place to do business, it remains competitive in key areas such as advanced manufacturing, precision engineering, aerospace and biomedical science.

While growth rates may slow compared to the past 20 years, as the economy is more developed, Wong said that he is confident Singapore will grow at about 3 per cent for the next few years.