Last Sat (22 Jun), ST Forum reader Isaac Neo Yi Chong wrote that even as Singapore’s economy has been consistently growing, the rise in income inequality has been accompanied by “middle-class incomes stagnating, and even real wage declines for the lower class”.
He also noted that inter-generational income elasticity (the disparity between incomes among generations) is heavily correlated with social mobility, with countries that have lower inter-generational income elasticity, such as Denmark and Norway, having higher social mobility rates.
“If income levels remain stagnant, social mobility increasingly depends on the income level that one starts with, and if income inequality worsens over time, this affects the next generation’s chances of social mobility,” he said.
And even though the education system is one way by which lower-income families can achieve social mobility, “higher-income families can invest heavily in their children by enrolling them in enrichment classes to give them a head start”, he added.
“This is a privilege that lower-income families cannot afford, and if their incomes stagnate, the result is that children from more affluent families will have greater access to educational opportunities.”
Mr Neo asserted that there is a need to recognise that a “rising tide does not lift all boats and to dispel the notion that a growing pie means bigger slices for all”.
He said, “Inequality, even as it might lead to overall growth, does have pernicious effects on access to opportunities for the poor.”
“Hence, we should always strive to ensure that efforts to reduce inequality are aimed at ensuring greater social mobility and a more egalitarian society,” he concluded.
Govt refutes Mr Neo’s assertion
Today (26 Jun), Sandra Lim, Deputy Director (Income and Expenditure Division) from the Department of Statistics, and Ang Boon Heng, Director (Manpower Research and Statistics Department) of Ministry of Manpower, jointly wrote to ST Forum to refute Mr Neo’s assertion.
“Forum contributor Isaac Neo Yi Chong was mistaken in asserting middle-class incomes had stagnated in Singapore and that the real wages of the lower income had declined,” they wrote.
“Income growth in Singapore has been broad-based for several years, including the last decade.”
Writing on behalf of the govt, they said that real incomes in the bottom 20 per cent of resident employed households grew by 3.1 per cent per annum on average over the last 10 years (2008 to 2018), on a per household member basis.
For households in the middle quintile, income growth per member was 3 per cent per annum on average, they added.
“In both cases, incomes grew a little faster than the income growth of the top 20 per cent (2.5 per cent per annum),” they claimed.
They further showed statistics to say that real median incomes from work of full-time employed residents grew by 2.7 per cent per annum over the last 10 years and real income growth for the 20th percentile was 2.9 per cent per annum over the same period.
“The data on these trends is published regularly,” they said.
They also proclaimed that Singapore has achieved broad-based income growth to date while economic growth has not necessarily translated into income growth for the lower-and middle-income groups in other advanced economies.
“The Government in implementing polices to support a competitive economy and in designing effective programmes to help citizens; employers in transforming jobs and investing in their people; unions supporting workers in upgrading their skills; and individuals and families themselves,” they wrote.