November 2015 Pulse

In his speech during the 2011 Presidential Address Debate, Prime Minister Lee Hsien Loong alluded to the rising income inequality in Singapore when he said: ‘the most successful Singaporeans will continue to do very well. The average Singaporeans will be able to make improvements in their lives and are much better off than people in most other countries. But at the lower end, incomes have risen slowly, especially in real terms.’

Scholars have been tracking the rising income inequality in Singapore for more than ten years, taking their cue from the Gini co-efficient and other income inequality metrics like the Palma or Hoover indices. Although this trend is a matter of concern for some, what is perhaps even more worrying is that it is accompanied by wage stagnations and slowing social mobility.

This phenomenon is, of course, not unique to Singapore. The United States and many countries in the European Union are experiencing rise in inequality, as are developed Asian countries like Japan and South Korea.

But as some scholars have pointed out, ‘What makes Singapore’s inequality picture stand out is the speed at which it has increased as well as the level which it has increased to.’

In responding to this issue, it is crucial to see that not all forms of inequality are unnatural or unjust. While all human beings created in the image and likeness of God are equally loved and valued by their Creator, each is given unique talents and abilities. And in this life, these talents and abilities carry unequal rewards, one of which is income.

Income inequality is therefore a fact of economic life. It should be pointed out that far from being unjust, some income inequality is actually the sign of fair distribution of income based on factors such as abilities, experience, productivity and work ethic. Thus, a society that ignores these factors and pays everyone equally may be said to be unjust.

This means that income inequality per se is not the problem. Neither can it be regarded as an indication of the economic health of a country.

The Gini co-efficient, which is often used to measure income inequality, does not present a reliable picture of the economic flourishing of a country. For instance, it tells us nothing about its living standards.

Take, for example, Bangladesh and the Netherlands, two very different countries that had the same Gini index of 0.31 in 2010. While these two countries had the same level of income inequality, their per capita incomes were vastly different: US$1,693 in Bangladesh and US$42,183 in the Netherlands.

If inequality is not the problem, what is? The simple answer is poverty.

Armatya Sen defines poverty as a condition of having less than what is required to function. Notice that poverty is not defined as a condition of having less than others. Sen’s definition underscores the important distinction between income inequality and poverty: there can be income inequality without poverty.

Is there poverty in Singapore?

Singapore does not have an official poverty line. But in a 2011 study, which used household income of S$1,250 to S$1,500 per month as the poverty line, it was estimated that 10 to 12 per cent or 110,000 to 140,000 Singapore resident households fall below the mark. A 2008 study, which set the poverty line at S$1,500 per month, arrived at the same ballpark figure of 130,000 to 150,000 Singapore resident households.

Although income inequality alone is not an issue, extreme inequality mixed with poverty makes for a lethal cocktail for any country.

This is precisely the challenge that Singapore is currently facing.

As the report on domestic poverty published by The Lien Centre for Social Innovation and SMU School of Social Sciences states: ‘Rising inequality does not necessarily denote the existence of poverty. However, rising inequality combined with evidence of poverty indicates that the poor are left behind, and this appears to be what is happening in Singapore.’

In addition, extreme inequality plus poverty can arouse an amorphous but real sense of antipathy towards prevailing economic and political policies, which in turn can threaten social stability.

Singapore must therefore focus on helping the poor.

The Bible has much to say about God’s preferential option for the poor. The people of God are enjoined to take care of the poor, the vulnerable and the unprotected (Deut 16:11-12; Exodus 22:21-27, Isa 1:16-17). There is a profound sense in which the justice of a society is tested by the way it treats the disadvantaged.

Justice to the poor is not about eradicating income inequality (even if that were possible) but about ensuring that they are not forgotten, that their conditions are improved.

The Singapore Government has always understood this. Its fiscal policies are designed in such a way that lower income citizens receive most of the benefits while higher income earners pay most of the tax revenues.

But helping the poor does not only have to do with the distribution of resources. The question that must also be asked is: Do the people at the bottom of the economic ladder have opportunities to move up that ladder? Or are they hopelessly trapped, no matter what they do?

The Government is well aware of the importance of social mobility. It has put numerous measures in place, such as education, home ownership and skills upgrading, to ensure that mobility is not thwarted.

As a result, in Singapore 14 per cent of young adults from families in the poorest one-fifth of income earners have moved into the top one-fifth of income earners compared to 7.5 per cent in the US and 9 per cent in the UK. The Government understands that meritocracy requires a society in which fair equality of opportunity is satisfied.

However, due to a confluence of factors sustaining such fluidity in the future would be more and more challenging.

Singapore is well placed to meet these challenges. Thanks to the leadership of its late founding prime minister, Lee Kuan Yew and his exceptional colleagues, Singapore has established a social compact that has served the country well.

And although this compact needs to be tweaked and enhanced, the principles upon which it was established – individual responsibility, self-reliance, economic growth, jobs for all and a security system based on savings and home ownership – continue to be sound.

But helping the poor and addressing the discrimination and stratification that inequality can engender is the responsibility of every member of society.

As Deputy Prime Minister Tharman Shanmugaratnam has put it, ‘we must preserve a sense of compact among Singaporeans, a sense of obligation on the part of those who are doing well to help others in their own society. We cannot build an inclusive society without the spirit of inclusiveness. It is not just a matter of getting the right policies.’

SG50 should not only be an occasion for celebrating past and present successes. It should also be an occasion for Singaporeans from all walks of life to renew their resolve to stand in solidarity and to work together for the common good and build a better future for all.


Dr Roland Chia


Dr Roland Chia is Chew Hock Hin Professor of Christian Doctrine at Trinity Theological College and Theological and Research Advisor of the Ethos Institute for Public Christianity.
This article was first published in the August 2015 issue of the Trumpet.