Department of Social Work and Social Administration UNIVERSITY OF HONG KONG Poverty Reduction Strategy – Singapore M Ramesh

Introduction Singapore’s welfare system has been described as a “full employment” model Chew, 2006) and as a “capital investment state” (Tang, 2000) L Singapore government firmly believes that economic growth is the best (only?) way to address the problem of poverty The strategy has largely worked Singapore has had one of the highest economic growth rates in the world over the last four decades Widespread abject poverty does not exit (though no data available!) GDP Growth, %, Annual Average High income OECD Singapore

Introduction The problems with this strategy are Growth has been low in some years Some people have not benefited from growth, and their numbers is increasing. Wages for low-income earners have declined in real terms in recent years Recent inflation has hit the poor hardest Income inequality is high and rising: gini rose from in 2000 to in 2007 (an under-estimate!) The focus of my discussion is: What is the government of Singapore doing about the problem of poverty? How well is it doing it? The answers are discouraging.

The Thinking underlying social policy in Singapore The government subscribes to an essentially Liberal conception of state’s role in social protection Individuals should fend for themselves Family should look after those who cannot fend for themselves State should be the last resort because public social protection Undermines work incentive incentives Distorts labour markets Weakens public finances Undermines family and community The Minister for Community Development described the government’s strategy as one of “assistance, not welfare; mutual obligation, not entitlement” (Balakrishnan, 2005).

The Thinking underlying social policy in Singapore State to provide assistance only To only those with “good” reason for being poor and no family to turn to And only to a minimal degree: not meant to cover all essential costs Assistance programs in Singapore are therefore stringent, provide small benefits, and of short duration.

Public Assitance Available to Singapore citizens who: “Are unable to work owing to old age, illness or unfavourable family circumstances; and Have no means of subsistence and little or no family support.” To receive benefit, one’s income needs to be below S$400 a month or 9% of per capita GDP PA rate is S$330 a month for elderly individuals, $1,020 for a family of two adults and two children, and $1,100 for family of five or more members. S$330 is equivalent to 7 % of per capita GDP Compared to OECD average of 25% of per capita GDP

ComCare It provides short term-assistance It is funded from a government-established endowment fund of S$1 billion only the earnings are used to pay benefits ComCare programmes include: (1) ComCare Enable, targeted at those who are unable to work and have no other means of support; (2) ComCare Grow, for children from low-income families and (3) ComCare SelfReliance, which is focused on assisting individuals and families in financial difficulty due to unemployment and the like to regain independence Small programs overall: only 2,754 cases in 2007

Workfare Income Supplement (WIS) scheme Benefit for low-wage older workers to incentivise them to remain in the workforce Subject to means test: <S41,500/month earning And employment in previous 6 months To improve empoyability of such workers, contribution to Central Provident Fund (CPF) for both employer and employee is reduced. The maximum payout per year is between S$900 for those aged and S$1200 for above 45 75% of the benefit amount is channeled to CPF Main purpose seems to be to address the shortcomings of CPF rather than supplement wages Total Expenditures: ??

Other programs Poor also have access to Nearly full primary and secondary education for entire population Means tested free health care Subsidized housing Subsidized utilities “Growth dividends” whereby government ‘shares’ budget surplus with population on ad hoc basis Available to everyone (S$100) but poor get more (S$400)

Social Protection Expenditures Many small programs for the poor Makes the total expenditure directed at the poor hard to calculate Social protection expenditure is projected to be S$168 million in 2008 – equivalent to 0.07% of GDP The government estimates that a single elderly can expect to receive S$1000 in cash by the end of the 2008, excluding benefits received from charities (MCYS Media Release, 11 April, 2008) Detailed breakdown not provided

Conclusion Programs for the poor Apply stringent means test Require family to support Aim to maintain labor market incentives or shore up provident fund that does not work for the poor Offer small benefits for short period of time Fragmented Lack transparency What exists now is vast improvement over what existed only a few years ago Government realizes that it cannot count on economic growth alone to address the problem of poverty. But limited by its ideology.

Average Monthly Household Income from Work Among Employed Households by Decile Deciles* Average Monthly Household Income from Work ($) st – 10 th th – 20 th st – 30 th st – 40 th st – 50 th st – 60 th st – 70 th st – 80 th st – 90 th st – 100 th Source: Singapore, Department of Statistics, Key Household Income Trends 2007, February 2007, Table A2