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More than just money needed to help poor

This is TOC writer Leong Sze Hian’s letter to The New Paper which was published on the 14th of July, 2007.

I refer to the article 'Would you work 2 shifts over 14 hours for $4.90 an hour?' (The New Paper, 6 Jul) and the recent launch of the Centre for Social Development (Asia) at NUS.

Helping the poor is not so much about giving money or assistance to them. The most important areas that the poor need help in are, in order of priority:

1. Reduce the risk of losing their HDB flat and lifetime CPF savings, in the event of foreclosure by the HDB or banks.

Lower-income Singaporeans have a much higher probability of defaulting on the typical 30-year mortgage.

2. Restrain the rise in prices of basic necessities like utilities, transport, HDB rental and Service and Conservancy Charges (S&CC).

For example, water, gas and electricity rose by 8.6, 4.2 and 2.8 per cent per annum from 1995 to 2005. Transport fares have risen almost every year, in recent years. All these increases were much higher than the 1 per cent rate of inflation.

3. Review the way subsidies for the poor really work for them.

For example, the $20 transport voucher for the lower-income is a one-time offset against fare increases for just one year only. So, to truly offset the increases occurring almost every year over the last 5 years or so, transport vouchers should be increasing at, say, $20 a year too.

4. Level the playing field between foreigners and Singaporeans in lower-income jobs.

Employers save 13% by not having to contribute to CPF for non-residents; lower-wage non-residents have reduced turnover problems because they are stuck with the same employer for 3 years.

On the other hand, male residents have to go for reservist training, and residents have less disposable income because they have to contribute to CPF.

It may thus be harder for residents to accept lower-wage jobs to be able to provide for their families.

Unless the above are addressed comprehensively, the trend of declining real income and relative higher inflation rates for the lower-income group may continue to widen the income and wealth gap.

That is because they are chasing after a standard of living target that keeps running further away from them.

Visit Sze Hian's website here.