7 Dec 2005

Singapore: A tale of two cities

By Fabio Scarpello of Asia Times.

SINGAPORE - To the world, Singapore is a remarkable success story: a former fishing port, the city-state in just 40 years has turned itself into Asia's second-richest country in terms of per capita income. Yet, underneath there's another reality that speaks of a widening wealth gap, with most forced to work long hours to make a living.

"There is a growing gap," said Sinapan Samydoray, chairman of Think Centre, a Singapore-based organization that deals with social issues. "The bottom 20% of the population earns less than

10 years ago in real terms. Almost 87% of the people are staying in government houses. Sixty percent of the people do not pay tax because they earn too little."

Singapore's social divide increased during the economic crisis that hit East Asia in 1997. While the average income of Singaporeans fell by 2.7% in that period, that of the poorest families fell by a staggering 49%, according to a paper by Professor Mukhopadhaya Pundarik of Singapore's National University. However, it seems the problem is inherent in the country's past and present political economy (the production, distribution and consumption of goods and services and their management).

Singapore's success story has been mainly based on attracting foreign investment. To do so, the country offered top-class infrastructure, a corruption-free environment, tax incentives and - crucially - low-cost labor. The policy has borne fruit. Multinationals poured in, and the country's economy ballooned from S$8.9 billion in 1965 to the current S$180.5 billion (US$109 billion).

In the last few years, competition from countries such as China, India, Thailand and Malaysia has meant that, to remain competitive, Singapore's workers have been asked to tighten their belts further. In addition, the new global climate spurned a soul-searching among Singapore's political elite, who decided to shift the country's economy to higher-value added activities.

The tougher competition and the shift in economic policy have not affected the country's well-educated and the rich. In fact, the number of millionaires in Singapore is increasing faster than any other country, according to the Merrill Lynch/Capgemini World Wealth Report in 2004. Those with assets of more than US$1 million now number 48,500, an astounding 22.2% more from the previous year.

At the same time, the bottom 60% of the city-state's 4 million inhabitants - who are not as well educated or skilled - face an increased chance of unemployment as well as daily hardship to make ends meet. Singapore's official unemployment rate stands at 3.3%. But, according to a recent Ministry of Manpower labor market report, 66.7% of those still looking for a job six months after having been laid off are people with no more than a secondary education. "Those who are 40 to 50 years old are really struggling. They have no education to handle the new technology," Samydoray said.

And things do not look too promising. The country's gross domestic product growth has slumped to about 4% from last year's 8%, and Prime Minister Lee Hsien Loong is on record as saying that "the jobless rate may rise to about 5% in the coming years, as Singapore loses jobs to China and other countries where labor costs are lower."

To make matters worse, as explained by Samydoray, there is no minimum wage in Singapore, and the influx of temporary foreign labor has driven wages down for locals. "Every employee has [his/her] own contract," he said. "There is no minimum wage and it all depends on how good you are at bargaining. Migrant workers are not wrong but they keep labor costs very low and locals are stuck. Singaporeans are forced to find two jobs just to survive."

However, long working hours are often not enough for low-paid Singaporeans to earn the S$1,500 a month, deemed the minimum necessary to get by. For these people, the city's perks are out of reach. Fil Low, a 20-year-old shop assistant at I Nuovi Cosmetics, averages two hours overtime a day but still only makes S$ 900 a month. "We do not really enjoy our life because of our schedule," she said. "We can only really go out about two or three times a month. It is not an enjoyable life. Professionals have a good life. For us, it is just making a living."

Lion, 52, drives his taxi a minimum of 12 hours a day, seven days a week. He never goes to a cinema, bar or to see friends. "I am just too tired and not in the right mood. I work all the time but I still cannot support my family properly," he said, without disclosing his monthly earnings.

Razman, 30, works as a security guard at a Carrefour supermarket during the day and as a personal trainer in a gym three nights a week. He averages 14 working hours a day, which pocket him about S$1,400 a month. "I never go out," he said. "I sometimes see my friends in the evening for a couple of hours when I am not working at the gym, but no more than that. I am usually tired ... I am used to this. Maybe it is in my genes; my father also worked very hard. Whatever other people do in other countries, we have to do twice as much. It is Singapore's lifestyle."

Fabio Scarpello is an AKI-ADN Kronos International Southeast Asia correspondent. He can be reached via www.fabioscarpello.com.


Anonymous said...

Does the bottom 20% matter in Singapore? Not at all who cares if these people can elevate themselves due to govt policy, these people can blame themselves - they are not born smart enough, rich enough or lucky enough. Singapore cannot be held back but these folks. If they are not good enough we simple hire foreigner to replace them. Foreigners who are cheap and younger.

These people are powerless anyway. They have no unions, no political backbone - nothing. They allowed themselves to become powerless. So nothing should be done for them.

Anonymous said...

I can think of one good reason for the Singapore government to address that bottom 20%.


Throughout history, governments that have ignored the problem have had that 20% grow slowly to 21%, then 22%, then 23% and so on.

Eventually something breaks.

And the results are usually tragic.