Last Thursday (18 Oct), the 2018 Global Wealth Report published by Credit Suisse Research Institute (CSRI) ranked Singapore 9th in the world in terms of household wealth per adult, giving it the highest rank in Asia.
Average wealth is at a high level in Singapore – USD283,120 per adult in mid-2018, compared to USD114,720 in 2000. The rise was mostly caused by high savings, asset price increases, and a rising exchange rate from 2005 to 2012, the report added.
CSRI also reported that the number of millionaires in Singapore increased by 11.2% to 183,737. It further forecast that this figure will grow by 5.5% per annum in the next five years, reaching about 239,640 in 2023.
And as at mid-2018, CSRI also estimated that there were approximately 1,000 ultra-high net worth (UHNW) individuals in Singapore with more than US$50 million in wealth. It's not known if any of the million-dollar salaried Singaporean ministers are classified under the UHNW or the "crazy rich" category.
Growing class divide in Singapore
Amidst the "feel good" report from CSRI highlighting how rich Singaporeans have become, interviews with experts carried out by SCMP showed otherwise.
Singaporeans have now been confronted with discomfiting evidence of a growing social stratification in the society, reported SCMP.
According to Sociologist Tan Ern Ser from NUS, interviewed by SCMP, class origin or background now had a greater influence on opportunity and social mobility in Singapore.
Singapore’s Gini coefficient, a measurement of income inequality from zero to one – with zero being most equal – has fluctuated above 0.40 since 1980 before adjusting for taxes and transfers. It was 0.417 last year.
Prof Tan said that inequality in itself may not be worrying. But in Singapore’s case, it has allowed households with accumulated wealth and connections over past generations to pass on advantages to their offspring, helping them to shine, while those without the same social capital and safety nets are forced to toil harder to do the same.
In a paper published by IPS last year, Prof Tan also noted that there is low interaction between students who attended elite and regular schools, and between Singaporeans living in private and public housing.
NTU sociologist Teo You Yenn in his book, "This is What Inequality Looks Like", also highlighted the experiences of the low-income group, and the systemic issues keeping them poor.
Donald Low, associate partner at Centennial Asia Advisors and the former associate dean at LKY School of Public Policy, said Singapore’s meritocratic and universal education system for the past 50 years led to a great deal of social mobility initially, but society would “settle” after a few decades. “All this class consciousness and implicit bias is a function of our systems and policies,” he added.
SMU law professor, Eugene Tan, thinks “there may well be two Singapores in our midst”.
To move forward, Prof Tan Ern Ser said structural changes through policies would be critical. “It can’t be just about telling people to be nice and respectful toward one another.”
And Prof Eugene Tan said there must be a sense that a class divide is harmful for everyone, especially among those who have thrived under the current system. “A class divide could threaten Singapore’s existence because it would pit Singaporeans against Singaporeans. The divide would render Singapore to be rife with populism and to be consumed by sub-national identities,” he said.
Minuscule social spending from Singapore government
Experts have in the last decade proposed ways in which Singapore can mitigate income inequality, ranging from policy changes in the areas of wages, taxes on wealth, social spending, housing and education.
The government has responded by increasing its social spending like supplementing the incomes and retirement savings of older lower-wage Singaporean workers, and providing funding support for their training through Workfare.
But its social spending is still lower than Nordic countries and personal income taxes remain low for high income earners, leading developmental charity Oxfam and non-profit research group Development Finance International to condemn the Singapore government for “harmful tax practices”, low public social spending, no equal pay or non-discrimination laws for women, and lack of a minimum wage.
They ranked Singapore in the bottom 10 of 157 governments (at 149th place) in terms of the country's commitment to tackle the growing gap between rich and poor.
The government staunchly disagreed with the report, with Minister for Social and Family Development Desmond Lee saying Singapore’s outcomes in health care, education and housing were better than most countries despite spending less.
But of course, in the case of health care, Minister Lee did not mention that the government only pays a minority portion of the total health care costs, unlike the governments of OECD countries. It is Singaporeans who would foot the majority of the total health care costs in Singapore, in order to achieve the "better than most countries" health outcomes.
In any case, a widening gap between rich and poor in Singapore would inevitably lead Singaporeans to question whether their home is really the land of opportunity they once thought or has it become the land for the "connected".