Singapore’s Social Compact Trilemma – The Dynamics of a Critically Uncertain National Future

Singapore’s Social Compact Trilemma – The Dynamics of a Critically Uncertain National Future

yeoh lam kheong Singapore Dreaming
Mr Yeoh Lam Keong at Singapore Dreaming Conference 2015


By Yeoh Lam Keong

“The political problem of mankind is to combine three things: economic efficiency, social justice and individual liberty.” John Maynard Keynes

The last 50 years of nation building has firmly established Singapore as a globally competitive, highly successful economy and city state with strong fundamental foundations of prosperity and potential undreamt of by its frugal and visionary founders with one of the highest per capita incomes in the world.

The next 50 years will determine how much of his hard-earned, miraculous potential is actually realized for her people and whether the shining city state that she now is can also become a nation state ; a “true home” where all citizens live securely and free of want, with the well being, sense of community, participation and opportunity that would make them proud to be Singaporean and happy that their children remain so.

As a pragmatic economic and social analyst schooled in studying global long term trends, I am optimistic we can get there. But a happy ending is by no means certain. Globalization and technological innovation have generated a distressingly extreme income and wealth inequality in the developed world economy of which now we are an inextricable part, an inequality also often marked by stagnation and increased economic uncertainty for the majority. This makes the new globalized inequality both a political as well as an economic problem; a crisis of the social compact, not just socio-economic policy.

In Singapore these distressing trends have been exacerbated by a misguided labour-intensive growth model over the last two decades, which has raised the population from 3 to 5.5 mln, depressed wages and productivity and led to a potentially acute overcrowding problem that is already damaging to citizen well being and the social fabric. Key social services like public housing, healthcare, transportation, education and social security have also lagged behind the social dislocation caused by globalization, poor policy and demographic ageing. This has markedly strained our social compact and trust in public policy.

Without a healthy and stable social compact, the social cohesion needed for national identity and belonging is precarious. Political legitimacy and it’s vital twin, trust in governance institutions and policy, likewise tends to become weak and dysfunctional. A healthy social compact is therefor fundamentally necessary if we are to make a successful transition from being merely a successful city state to a viable, resilient and cohesive nation.

In the long term, there are three key requirements for a stable and successful social compact – market competitiveness, adequate social protection and sufficient democratic development. A study of long-term trends suggest these are three unavoidable and irresistible social demands for both political legitimacy legitimacy and stable governance. They constitute an essential foundational trinity for a healthy economy, polity and society. Governments that can provide these three requirements in balance will tend to have a relatively healthy social compact, those that fall short will tend to have their social compacts undermined by the very area they fail to develop.

The demand for social protection is inherently driven by the need for market competitiveness in a globalized economy. Globalization and the inevitable competition with the huge cheap workforces of the emerging world plus the exponential rise of labour displacing and outsourcing info-comms based technologies mean the middle and working classes is the developed world will face increasingly poor income and employment prospects generated by global free markets without sufficient social protection. This is exacerbated by demographics and the need for adequate social security for rapidly ageing populations. Providing the social protection that insulates citizens from the worst risks and stresses of an unavoidable engagement with globalization is one of the major tasks of good government.

The demand for democratic development is driven by an increasingly large proportion of politically active, well educated younger cohorts, informed and connected by social networking technology as never before in history. This is immeasurably strengthening and qualitatively transforming the very nature of democratic accountability. It enables an increasingly activist public to intervene, check, make accountable and influence both major and minor policies on an almost real-time basis. The main message of the recent book pulping drama at NLB is not just the need for an improved, more inclusive and transparent process of book classification ; it also means that policy making at a micro level and by extension politics at a macro level will never be free from an unprecedented level of public scrutiny and influence again.

Lest you think that having a good balance of market competitiveness, social protection and democratic governance is Utopian, many Northern European and Nordic states as well as some Anglo Saxon states provide all three requirements quite well and are as a result among the stablest, most cohesive and happiest nations in the new globalized world. Even our developed Asian neighbours eg Japan, Korea, or Taiwan seem to have achieved a better balance between these three requirements – and as a result have less fundamental social compact problems stemming from inadequate social protection or democratic development that Singapore seems to chronically suffer.

Singapore’s essential social compact trilemma is a highly developed economic competitiveness but underdeveloped social protection and relatively undeveloped democratic development. Our polity therefor tends towards social compact crisis centered around social protection and democratic development issues. The most likely political expression of this is a gradual loss of political legitimacy and policy credibility, a cumulative loss of social cohesion and social capital as well as creeping policy paralysis, populism and a politics of petty recrimination rather than constructive debate.

The only stable positive long term solution to breaking out of this vicious circle is to broaden governance priorities to seriously develop both adequate social protection and working democratic institutions.

Adequate social protection in Singapore needs major social policy reform in 6 key areas: social security, healthcare, public housing, education, public transport and population / immigration policy.

To be fair, the government has woken up to the importance of social protection in “inclusive growth”. There have been major recent reforms including moving towards universal healthcare in hospitalization. The price of new public housing has been delinked from market determined resale prices and a serious effort has been made to make first time flats more affordable. A pioneer generation package has been introduced mainly to reduce the medical expenses of the elderly and major reforms in non graduate education and training are planned.

This is commendable and is moving social protection policy significantly in the right direction.
However legitimate concerns remain that such efforts are piecemeal and insufficiently bold and transformative. Public rental housing is still not sufficiently available as an option to meet low income housing needs. Long term chronic primary care and long term care are still sadly inadequate for middle and low income citizens. Both the working poor and the unemployed and elderly poor are not getting the full state help they can or need to get and which the government can well afford to give. Retirement adequacy for the poor is still lacking. The education system remains far too reliant on unnecessary streaming and mass testing, hampering social mobility owing to the better access of the better-off to the massive shadow education system of private tuition. Public transport in a country where few can afford cars still markedly lags public transport systems in Hongkong or Taipei. While excessive immigration has been significantly lessened, we could still easily be on trajectory for a terminal population much above, not significantly below 6.9 million by 2065. All this represents outstanding unreformed social protection policy that is still undermining vital policy credibility and ultimately political legitimacy.

Democratic reforms in Singapore will be even more difficult, requiring the development of a wider range of democratic institutions and practices from even lower starting levels. This requires major political reform in 5 key areas: free media and speech, guaranteed access to public information, stronger rights of association and organization in civic society, a non-partisan civil service and stronger and more supportive government- civic society links.

In my view over next two decades the good news for Singapore is that we could well look back on an unprecedented period of reform in these 2 major currently underdeveloped and undeveloped areas – social protection and democratic development. And well before 2065 it is quite likely we will have much fuller range of both social policy and political reform driven by the irresistible demands for social protection and democratic development demanded by an increasingly informed and organized electorate. Lest this seems implausible, keep in mind that this means we would merely be converging towards developed country political and social policy norms from a highly exceptional and probably unsustainable current position. However, this could also happily result, as it did following the political liberalizations in Japan, Korea and Taiwan, in a much more mature and vibrant society, as well as a level of social and cultural well being and richness well beyond our current norms or imagination.

The critical uncertainty is how smooth and successful or fractious, disruptive and contentious this journey will be. The more the current government leads genuine, transformative reform in both these areas, the smoother and more successful this process will be. The more the government resists or only carries out merely piecemeal reforms, the more potentially disruptive the process, with greater public loss of trust, less social capital, greater policy paralysis and more suboptimal populist policy outcomes that could be difficult to reverse. Our national identity itself may be the ultimate casualty.

Government in Singapore is institutionally strong partly because of the civil service’s excellent policy formulation and execution capability, but this is not enough. While it needs to be responsive to elected political direction, the civil service also needs to be above and independent of partisan politics for the long term public good. Key areas of social policy like healthcare, education or immigration policy for example, need to be planned and executed over a decade or longer. Political parties have shorter term, sometimes populist horizons that may or may not coincide with the common long term good. This means that top civil service appointments need to be independent of partisan political influence.

Government also needs go to beyond its traditional role as director, producer and regulator and move towards roles as facilitator, coordinator and co-creator. To do this effectively it needs open and supportive partnerships with strong, well- researched and responsible civic society groups which share and can help anchor and guide its long term social vision for the common good, insulating long term policy from the finicky ebb and often unsound flow of populist political dynamics.

The current government has seen the need to strengthen safety nets and social protection and are moving in the right direction, arguably in too piecemeal a fashion. Can they continue to do so transformatively, coherently and boldly enough? As importantly, does a deeply held elite governance philosophy prevent government from adequately leading political reform and development of democratic institutions? If so, this could pose difficult times for Singapore’s successful future development from city state to nation as Singapore’s key social compact trilemma remains painfully unresolved.

Mr Yeoh is an adjunct professor in the Lee Kuan Yew School of Public Policy and the Vice President Economic Society of Singapore.

This was first presented at the Singapore Dreaming Workshop and Conference organised by Asian Urban Lab ( on 27 Sept 2014 and 6 Feb 2015 respectively). TOC thanks Mr Yeoh for the permission to reproduce his write up.

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