(Photo - Terry Xu)

Data on inequality is skewed because it excludes 40% of the Singapore population

by Chris Kuan

Inequality, inclusiveness, social mobility are the rage in Parliament. Just because the President said so? Not really, the President takes the cue from the Prime Minister and he and his cabinet colleagues had been talking about it recently. The only question is since these are laudable objectives, why only now? Why not 10, 20 years ago?

The issue is principally a belief that strong economic growth solves most or all problems of inequality, inclusiveness and social mobility even if the main ingredients that elevate growth, e.g. low paid foreign workers and low rates of returns on savings, are what drives those problems.

As said before, it is alright for the government to do all these things to achieve higher rates of growth but to solve the problems of inequality etc it requires serious government intervention, not depending on growth alone to solve it when that growth actually contributed to the problem in the first place.

If this focus on growth alone is myopia, then the eyesight is made worse by skewed data that paints too rosy a picture. For example, contrary to the experience elsewhere, inequality data in Singapore has fallen in periods of growth. But the data is skewed because it excludes 40% of the population, the foreign worker population of nearly 1.4m of which 70% are on work permits.

In essence, the government takes the laurels of Gross Domestic Product (GDP) growth contributed by the entire population but inequality data excludes 40% of the population of which 70% are the poorest segment of the economy. Any country that does that and has a similar foreign worker population would also have lower inequality data.

Singaporeans may not care about foreigners much. But that is also myopic. The skewed data paints a picture that inequality is slowly improving, it is not far from our advanced economy peers and that it is driven by growth. It also can be advertised to Singaporeans that the government it has done enough and much more is not needed. Hence the talk about dignity and self reliance instead.

The government’s policy making abilities may appear to exceed the global norms but they do not. Much of that comes from ignoring the poverty of the poorest 1m of the population but taking their contributions to the GDP. The improvements in the skewed inequality data should not blind us to the need for lots of state intervention to deal with problems of inequality, inclusiveness and social mobility. Rivers do not flow uphill in Singapore after all.