Middle class woes in Singapore: Are they missing out on the slice of the pie?

By SY, Offbeat Perspectives

During my internship last summer, a lady called in to ask about subsidies. She raised a point about middle-income families not being able afford tuition programs and not being able to qualify for subsidy schemes as well. This, later I realized she was referring to the sandwiched class – “… this group of Singaporeans do not qualify for the support schemes meant for low-income households. Yet, they often experience middle-class anxiety: Worried about present needs and what the future holds for the next generation [Source]”.

The poor are cushioned by the great deal of assistance made available to them by the government and non-profit organizations. No doubt the rich would have plenty of capital to invest in themselves. What about the middle-class?

That didn’t dawn on me earlier until I read another section of Hard Choices today. I was a little skeptical at the time when she’d implied that middle-income families weren’t having it good in Singapore. Today, getting out of poverty mean more than just being able to feed oneself and having a bed space to rest in. What matters now is the pace you’re moving along with the rest in the given society.

For a society to survive, perhaps meeting the basic needs of people would suffice. For it to progress, every unit needs to keep up at the rate compatible with its entirety.

Hypothetical consequences of inequality

Inequality leads to a breakdown of social cohesion which will, in turn, threatens the ideal of democracy and that’d mean the downfall of the state. As groups in the society become more polarized, they grow to become more distrustful of each other and the government as well. But it’s unimaginable to think of this “tension” as an overt demonstration in society in the near future/present time. Surely the tension is felt among us but the motivation to act upon it is as much as what we see in newspapers and documentaries. So we’d just talk about it and forget it the next day.

Raising taxes to address inequality in a Robin Hood-style of taxing the rich and distributing it to the poor, would be slightly problematic as the inequality becomes complicated when our society comprises up of many tiers of upper, lower/upper middle working class and low-income class. As the income range for the middle tier is much uncertain and perhaps broader in comparison to the other two extremes, such taxation might prove to cause more damage than it is to address income inequality in the society.

Exclusion of the middle class

Hard Choices hold the hypothesis that if we give everybody a slice of the cake, they’d feel more willing to pay for it. When people trust the system and know that it’s fair in its distribution, they would ungrudgingly pay out from their pockets to make it work. Then they become more involved in State’s affairs when they’re not excluded from the social safety nets. That is not to say they’re gonna need to pay more to have their cake.

The readings also discussed about Singapore’s mean-testing approach to providing public assistance, versus the universal approach. The text mentioned that the problem with mean-testing approach is “deadweight” funding. That people would choose to save less or to earn less in order to qualify for these schemes.

Instead of the current means-tested subsidies, the book suggests that there should be a basic-tier benefits for all that a particular social welfare scheme is set to target and also an enhanced scheme for those who has lesser means. By pursuing a more inclusive approach to social spending, norms of fairness can be strengthened.

A middle-income household still paying off  the installments for their 4/5-room flat; bills and children’s education, which is not or minimally subsidized, may need assistance as much as a low-income family staying in a 1/2-room public rental flat who is entitled to subsidized transportation, children’s education, bills, meals.

Social spending, the one-size-fits-all solution to curb income inequality?

Now and then, we question whether it is possible for us to become a welfare state. The transition is a leap but nobody says we’d have to be a full-fledged giving state.

It is clear that the inequality gap doesn’t simply close up with increased social spending. As we look at the welfare model adopted by all the countries with the least income inequality [Source], it appears at first to be an effective way to alleviate this situation. However, as statistics have shown as well, income inequality across nations (including welfare states) have been increasing as their economies flourish. Every one of those nations have also

However, as statistics have shown as well, income inequality across nations (including welfare states) have been increasing as their economies flourish. Every one of those nations have also tweaked several aspects of the welfare model over time to make it sustainable and fair.

Also, these states have generally conservative immigration policies, which does have an significant impact on inequality. Including all the other policies like those concerning their SMEs, MNCs, labor and wages, policies across sectors, etc.

Social spending is one of these policies which contribute to income inequality in general. It seems to be the most tangible thing for the government to do as it appears to be directly targeting the root of the problem: income on its own in the short-term. Monetary assistance does address part of the unequal capital the poor has so that the disadvantaged individual is on a level-playing field with the rest.

As a recipient of financial assistance since primary school, I’m in no position to say that Singapore has spent enough or not on social spending (it being a developed nation who spends relatively low in social and financial assistance). Perhaps it has been enough for me as I haven’t been on the flipside situation where there are some others who actually need it more than I do. It could be either that such assistance is not known to them or that, they fall through the cracks in this case as the sandwiched class whose household criteria didn’t qualify for the assistance.

Is increasing social spending really the way to go? Or is it that, we have enough and it’s about utilizing it more efficiently, effectively and most importantly, fair* for all?

*Fairness isn’t the same as equality (resources being distributed equally among members in the society)

This article is an edited version of that originally published in Offbeat Perspectives, which also has a Facebook page.