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Singapore spends the least (relatively) on social spending?

By Leong Sze Hian

I refer to the article “Asia spending too little on poor: Report” (Straits Times, Jul 12).

Table from report by Asian Development Bank
Table from report by Asian Development Bank

Only 3.5% of GDP social spending?

It states that “Singapore spent 3.5 per cent of GDP on social protection, which includes the Central Providend Fund (CPF)

This was far below the 19.2 per cent by Japan and 8 per cent spent by South Korea, the only other high-income countries in the study.

If exclude CPF, even lower spending?

Comment: As CPF is not spending by the Government, but essentially the people’s own savings – Singapore’s social spending may actually be even much lower than that cited in the subject report.

Surpluses, Reserves at the expense of the poor?

Our Reserves which is estimated to be about $900 billion and Budget surplus last year of $3.9 billion ($36 billion using IMF standards), puzzles many as to why we continue to spend so little on social spending.

Malaysia spent 3.7 per cent of GDP on social protection … The report, titled Social Protection Index: Assessing the results in Asia and the Pacific, said while the CPF system had given Singapore one of the highest savings rates in the world, it “has been criticised for not being designed to address the need of vulnerable and poor groups or of a growing number of self-employed and low-wage workers”.”

How many have enough to retire?

Comment: Singapore has the highest pension (CPF) savings rate in the world, but many studies have indicated that Singaporeans have one of the lowest adequacy for retirement.

“The report also warned of a “missing middle” group of people who are falling through the gaps.

Those in this category are not in a position to benefit from social insurance schemes because they are not employed in the public sector or large private sector firms. But they are also ineligible for handouts as they are not deemed poor enough.”

Comment: I estimate that only about 1 in 8 Singaporeans who reach the age of 55 are able to meet the CPF Minimum Sum (currently $148,000) in their CPF (without pledging property).

Even with the property pledge, I estimate that only about 1 in 4 are able to meet the Minimum Sum.

Self-reliance is not working well for all?

“But the Republic faces challenges in terms of wage stagnation and a rapidly aging population, he added. This means Singapore’s motto of “self reliance” when it comes to tackling inequality needs to be fine-tuned.”

Almost 0 or very low wage growth?

Comment: I estimate that real wage growth per annum for the 20th percentile of all Singaporean workers (full-time and part-time)  by income (excluding employer CPF contribution), was close to zero for the last 16 years or so. Even for the median income, it is estimated to be around just 1 per cent per annum.

“If people work hard and save, yet still do not have adequate means to support themselves and their families … then they will require a safety net to catch them.”

Easier to touch Toto than to qualify for PA?

Comment: The Public Assistance (PA) scheme’s criteria is so strict that the number of recipients on the scheme has remained at around only 3,000 for many years.

“Mr Edes told the Straits Times, “There are limits to how self-reliant elderly widows can be if they have an insufficient pension to sustain them through their golden years. SKILLS TRAINING WILL NOT BE OF MUCH USE TO THEM IF THEY ARE FRAIL OR DISABLED.”

How many needy families?

Comment: ComCare which has helped about 200,000 needy Singaporean families over the years, gives typically temporary assistance, which may be a continuing hardship for those who are “frail or disabled”.

In this regard, since 1 million face masks were supposed to be distributed free to 200,000 needy families at the peak of the haze recently – does it mean that we currently have 200,000 needy families? (I wonder how many of the 1 million masks actually reached these needy families during the haze peak on 20 and 21 June?)

Thailand, Malaysia and Vietnam spent more on social protection (as % of GDP) than Singapore, at 2.6, 3.7 and 4.7 % respectively.

Doing the “right” things?

So, instead of spending so much time and effort talking about the “right” politics, reading the “right news”, the “right” and wrongs of cleaning 2 hawker centres and waiving the “right” of Parliamentary priviledge, perhaps we should be focusing more on spending more on social spending to help the poor and low-wage Singaporeans.


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