4 May 2006

Straits under strain: why inequality is centre stage in Singapore's election



Yet another excellent and well written article from the Financial Times. If you want to know what is actually happening on the ground you have to turn to a foreign business focused newspaper. I just realised that you need to subscribe to the paper to get the article in its full form.

By John Burton in Singapore
Published: May 4 2006 03:00 Last updated: May 4 2006 03:00


Singapore prides itself on a predictability born of efficiency. Elections are no exception. The long-ruling People's Action party, which holds all but two of the 84 parliamentary seats, will be returned with another thumping majority when the city-state goes to the polls on Saturday.

But there will be tension in the outcome nevertheless. The near-certainty of PAP victories has turned general elections into something more akin to plebiscites gauging the public mood - and, this time, there is a new starkness to several social fault-lines that cleave Singaporean society.

Much of the PAP's success rests on five decades of economic achievement, which have made Singapore a model for aspiring Asian countries, not least China. But the current election campaign demonstrates that the island, which embraced free trade principles from its founding in 1819 by the East India Company, is grappling with the consequences of globalisation.

Although the economy is expected to grow by a vigorous 6 per cent this year, the gap is widening visibly between rich and poor. The nation's youth express either apathy or cynicism about a political system that is founded on rigid social control but is increasingly breached by technology: much unofficial public discourse now takes place via internet news groups and chatrooms.

Sensing chinks in the PAP armour, the three main opposition parties are contesting more seats than they have in nearly 20 years. They are fielding candidates in more than half the constituencies, up from barely one-third last time.

"There is a wind of change across Singapore that makes the PAP's margin of win unpredictable. It is coming from an emerging number of voters who are not impressed, and may even be resentful, of the way Singapore is being run," says Seah Chiang Nee, a former newspaper editor.

[...]

To continue reading the article:
http://news.ft.com/cms/s/cde29cb0-db09-11da-aa09-0000779e2340,s01=1.html



SOME STARTLING STATISTICS FROM THE ARTICLE

-Although unemployment is low at 3.4%, the rate is nearly double for those over 40 with little education.
-A recent government survey showed that the income of the poorest 20% fell nearly 15% in nominal terms between 1998 and 2003 to an average of US$505 per month.

-Although Singaporeans have one of the world's highest rates of home ownership, at more than 90%, house prices have fallen by 30% since the mid-90s, meaning many are sitting on paper losses.

-Households in the top 20% earned about 21 times as much as those in the lowest 20% in 2000, a government survey shows.

-In 2004 Singapore had the world's sharpest rise in the number of millionaires at 22%, according to the latest World Health report by Merrill Lynch & CapGemini.

-Days before the elections, the PAP distributed S$2.6bn in cash as "Progress Package" payments with a focus on the needs.



3 comments:

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By JOHN BURTON
4 May 2006
Financial Times

Singapore prides itself on a predictability born of efficiency. Elections are no exception. The long-ruling People's Action party, which holds all but two of the 84 parliamentary seats, will be returned with another thumping majority when the city-state goes to the polls on Saturday.

But there will be tension in the outcome nevertheless. The near-certainty of PAP victories has turned general elections into something more akin to plebiscites gauging the public mood - and, this time, there is a new starkness to several social fault-lines that cleave Singaporean society.

Much of the PAP's success rests on five decades of economic achievement, which have made Singapore a model for aspiring Asian countries, not least China. But the current election campaign demonstrates that the island, which embraced free trade principles from its founding in 1819 by the East India Company, is grappling with the consequences of globalisation.

Although the economy is expected to grow by a vigorous 6 per cent this year, the gap is widening visibly between rich and poor. The nation's youth express either apathy or cynicism about a political system that is founded on rigid social control but is increasingly breached by technology: much unofficial public discourse now takes place via internet news groups and chatrooms.

Sensing chinks in the PAP armour, the three main opposition parties are contesting more seats than they have in nearly 20 years. They are fielding candidates in more than half the constituencies, up from barely one-third last time.

"There is a wind of change across Singapore that makes the PAP's margin of win unpredictable. It is coming from an emerging number of voters who are not impressed, and may even be resentful, of the way Singapore is being run," says Seah Chiang Nee, a former newspaper editor.

Although unemployment is low at 3.4 per cent of the 3.6m citizenry, the rate is nearly double for those aged over 40 with little education. A recent government survey showed that the income of the poorest 20 per cent of households fell nearly 15 per cent in nominal terms between 1998 and 2003 to an average SDollars 795 (USDollars 505, Pounds 275, Euros 400) a month.

The government has traditionally been sceptical about welfare spending. The Central Provident Fund, the mandatory savings programme it adopted from British rule and to which workers contribute one-fifth of their wages, is used to cover retirement, healthcare and mortgages. But the CPF has proved to have weaknesses.

Many Singaporeans are asset-rich but cash-poor, since much of their CPF savings are tied up in housing. Although Singaporeans have one of the world's highest home ownership rates, at more than 90 per cent, house prices have fallen by 30 per cent since the mid-1990s, meaning many are sitting on paper losses. And as those now elderly were paid low salaries when they contributed in the 1960s and 1970s, their CPF payments have failed to keep up with the cost of living.

Grandmothers rather then teenagers are a common sight staffing the counters at fast-food outlets. "Our elderly continue to have to work cleaning tables, washing toilets and selling tissue paper until they die," says Chee Siok Chin, of the opposition Singapore Democratic party.

Income inequality has become a dominant issue. Households in the top 20 per cent earned about 21 times as much as those in the lowest 20 per cent in 2000, a government survey shows. In 2004 Singapore had the world's sharpest rise in the number of millionaires at 22 per cent, according to the latest World Wealth Report by Merrill Lynch and CapGemini.

The PAP is clearly worried. In recent weeks, the government has announced programmes to help the poor, including offering cheaper healthcare. Days before the polls, it distributed SDollars 2.6bn in special "Progress Package" cash payments to Singaporeans, with a focus on the needy.

Lee Kuan Yew, who as prime minister in 1959-90 eradicated large pockets of poverty and developed the economy by attracting foreign manufacturers at a time when they were less welcome elsewhere in Asia, points out that Hong Kong and the US, which per capita are richer than Singapore, have wider income disparities. But he acknowledges that the income gap "is a very serious challenge to us", adding that the country has to "find a solution that doesn't go the European way" in terms of lavish social security.

Singapore could not afford to do so because it was a "price taker, not a price maker" in the global economy, says Mr Lee, 82, who is still highly influential in his cabinet post as "minister mentor". "If we can find a balance between not too divisive a society because of the disparity, but still stay competitive and not too highly taxed, and people keep trying to accumulate wealth and create jobs, then I think we'll be all right. If we can't strike a compromise between those two conflicting forces, we would be in trouble."

The rise of China and India threatens Singapore's competitive advantages. The island's businessmen meanwhile complain that the economy is ever more dominated by multinationals and state enterprises that marginalise smaller private-sector ventures, hindering efforts to develop an entrepreneurial culture and innovation. The city-state is focusing on high-value manufacturing including semiconductors, pharmaceuticals, oil rigs and, lately, biotechnology. But officials acknowledge that Singapore remains too dependent on foreign investment for growth and they want to develop innovative domestic industries.

The next goal is to transform Singapore into a global city that "will have the buzz of New York or London", Lee Hsien Loong, Mr Lee's eldest son and prime minister since 2004, said in his national day speech last year. It plans to achieve this by marrying culture with mammon. It recently constructed a big arts centre, called The Esplanade, and a casino-based "integrated resort" will open nearby in 2009.

But there is scepticism over whether Singapore can shake off its nanny-state image. The authorities are prudish and culturally conservative. Critics say too much government coddling has created an environment that discourages alternative ideas and personal initiative.

Officials complain that the young have become too complacent and apathetic. That is an unintended consequence of policies the elder Mr Lee set down in the 1960s to create a "rugged society" that would encourage Singaporeans to push themselves to greater heights. A believer in social discipline and national cohesion, Mr Lee dismantled much of Singapore's civil society. "The government began with the trade unions and media and later moved on to non-governmental organisations and religious groups," says Cherian George, a lecturer at Singapore's Nanyang Technological University.

But there are signs of growing activism and dissent. A ban on political comments on podcasts and blogs in the current campaign has not gone down well and internet chatrooms are filled with angry postings about the government and the Lee family.

The PAP's hardball election tactics threaten to alienate young voters, who are known as "the post-65 generation" for having been born after Singapore's 1965 independence. Many are well-educated and grew up in relative affluence.

Extensive criticism by the state-guided media of the opposition's young candidates does not appear to have blunted the appeal of the Workers' party, seen as the strongest opposition group. Led by Sylvia Lim, 40, a former police officer turned university lecturer, the party has attracted large crowds at its rallies. While newspapers have largely ignored their size, pictures of the crowds have been circulated on the internet to drum up support.
Opposition parties say they face many obstacles, from limited media access to a gerrymandering of election districts and threats of defamation suits. Perhaps the biggest remains Singapore's first-past-the-post electoral system: opposition parties have attracted 25-40 per cent of the votes in the last 25 years, indicating more public disenchantment than the allocation of parliamentary seats suggests.

In a rare televised confrontation, a group of young journalists recently told the elder Mr Lee that the PAP had become "arrogant" and "power-crazy". Mr Lee, who graduated with a law degree from Cambridge University, dismissed them as "English-educated radicals", meaning they were imbued with liberal democratic values rather than Confucian ones. "They don't represent more than 20 or 30 per cent of our youth," he insisted.

Other young professionals seem to have grown tired of the government's exhortations to work hard instead of enjoying the good life. Surveys have found that local white-collar workers are unhappy and stressed. That has been cited as a main reason for Singapore's falling birth rate - among the world's lowest.

Such complaints are unlikely to translate into political opposition. "The middle class has done well out of the status quo," says Garry Rohan, head of the Asia Research Centre at Australia's Murdoch University, who has written extensively on Singapore politics. But he adds: "The opposition has done well when questions of rising costs and income disparity have dominated election campaigns."

The government has tried to create a perpetual sense of crisis, pointing to economic competition from China and India, to motivate the nation's youth. But they appear reluctant to take risks. Most would prefer to find secure, well-paid jobs in the public sector or with multinationals. There are few entrepreneurs because "Singaporeans are very spoiled" and "are not hungry enough", says Olivia Lum, whose water treatment company, Hyflux, is one of the few successful start-ups.

Instead, Singapore's most dynamic companies are those owned by Temasek Holdings, the state investment agency, which is aggressively investing overseas under the stewardship of Ho Ching, chief executive and wife of the prime minister.

The elder Mr Lee, who started his political career as a Fabian socialist, long ago abandoned ideas of social egalitarianism. An examinations-based meritocracy came to be adopted in its place. Singapore's elite may claim income inequalityprovides incentives for economic renewal.

But in a small, multi-ethnic country it also carries risks of social tensions. The PAP may still win the election easily - but that triumph may not be enough to hide the widening cracks in the Singapore model.

soci said...

Even though I was emailed the article in full, I really wished that in order to not enfringe copyright that we might wait until it comes on line in full at the FT site.

It is up now so...

Anonymous said...

Haha I don't think John Burton or the FT would sue for that..