DPM Tharman Shanmugaratnam on social mobility and inequality in Singapore

I would like to begin the dialogue by looking at poverty in the midst of prosperity and the challenge of inequality in Singapore I believe you like to make some remarks sure Thank You Tommy and it's always a pleasure to the in dialog with Tommy this is our third time or you suspect can everyone hear me by the way because I have my mic in the pocket here can I be heard at the back it's kill okay so let me just say a few things to start the dialogue inequality is important social mobility is even more important it's social mobility is at the heart and soul of our ambition not just in government but it must be at the heart and soul of our mission as a society it's part of our identity it has been part of identity it is part of our identity and has has to be at the heart and soul of our ambition for the future but I'll make three points about this challenge of sustaining social mobility and managing inequality making sure that inequalities don't become too wide the first point I want to make is that it is critical that we sustain a system where everyone is moving up in other words before we think about the issue of relativities which is what inequality is about we have to think about the issue of how can we make sure that everyone moves up including those in the broad middle of our society the middle class because once that escalator stops once that escalator that carries everyone on stops the problems of inequality and all the problems of me against you this group against that group become much sharper and this is exactly what has happened in a whole range of advanced economies once you get stagnation in the middle of society over a long period of time which is what's happened in the US it's happened in a range of other advanced countries inequality becomes a much sharper issue much more brittle and the politics of inequality acquires a momentum of its own which makes it harder to solve the problem of a broken escalator on stairs colita stops just imagine if we're all moving up on an escalator once that escalator stops then it becomes very salient issue who's ahead of me who's behind me and not just who's ahead of me and moving further away from me but who's behind me and catching up with me and this too is what we see in a range of advanced countries that pervasive anxiety or people in the middle as someone is catching up with them and someone is moving away from them so keep the escalator moving second reason why we got to keep that escalator moving for everyone is that it makes it much easier to have social mobility with a moving escalator there are more opportunities there are new skills to be learned new jobs to be obtained it becomes much easier to achieve the relative mobility when you have an absolute mobility what I get is not just at the expense of someone else I can move up without someone else moving down if the escalator is moving up so that's the first point I want to make and singapore's done relatively well but that measures so far because our median wages the wages of those in the bottom 20% have been moving up unlike many other societies the second point I want to make Tommy has to do with social mobility itself which as I say has been part of our identity and must be at the heart and soul of our ambition it will get more difficult it is already more difficult and it will get more difficult precisely because we have succeeded in the past because we've had waves of mobility from a population that largely started off poor like many in this audience by ESM the exemplar of that Singapore story start off poor dick well in education work hard do well in life we've had waves of mobility so those who were poor are those whose grandparents were poor and parents were not so full and they themselves now are no longer poor in fact quite well-off and they invest in their children as much as they can so that their children can do well so it's in the it's in the nature of a meritocracy is in the nature of succeeding and mobility that it gets more difficult over time because those who succeed try to help their children and those who haven't succeeded find that the odds increase against them to involve in life and it simply means and also in Singapore than elsewhere that we have to work harder at keeping mobility grain by starting earlier in life in fact I would say starting in fact even in the prenatal months before a child is born starting very early in life and continuing through life to intervene to help people to do well for themselves intervened to help people to do well for themselves it requires a consistent effort in early childhood through the school years and in work life investing in people at regular intervals and taking very seriously the idea that everyone can grow that growth mindset has to be what defines us it doesn't matter where you start you can grow and you can improve and you can master your job so this is a major challenge very few countries are succeeding I just came back earlier this week Finland as in Denmark and Finland both relatively egalitarian societies culturally and in their education systems but they've seen social mobility far short of what they desire in fact the persistence of social class in even the Nordic societies his visa has been remarkable over the decades and they are the most egalitarian of the Advanta of the Western societies we too will face these challenges we're doing better than most societies for now in terms of mobility but we're going to face more of a challenge and we have to focus on mind something the third point I want to make when we think about inequality is we have to remember that a good part of inequality in Singapore is actually generational inequality think about it and are not even talking about the pioneer generation even if you talk about those in the 50s today say age 55 and above although Singaporeans aged 55 and above the majority in fact world over 60% had no more than secondary school education these are people who are still in the workforce they're not all mature workers in the workforce well over 60% had no more than secondary school education but we succeeded in transforming education and transforming opportunities for subsequent generations those born later and that has led to a generational inequality those who started earlier with limited education by and large it's simple jobs worked hard their pay has gone up over time in real terms is much better than it was in the old days but they are now at the lower end of the escalator they're at the lower end of escalator and subsequent generations have moved on that will success into success in transforming societies but it has led to generational inequality and we have to focus our minds on how we can help older Singaporeans and I say older not meaning the the true elderly but you know mature Singaporeans who still have 40 years ahead of them those in their mid fifties those of the mid 60s and they will have 40 years ahead with them to work for as long as they wish to work with dignity to earn a decent pay with the support of the employers with the support of the government and with the support of the public to be treated with dignity I spy the way I just just before I came up I had to go to the loo and I met a gentleman there yes best very holding himself with some pride with his uniform he was the attendant in in the in the jetties and we had a chat now struck by how good his English was so it turns out his employer he started working here eight years ago bouton job all the benefits started off a thousand - now earning well above 2,000 employer sent him for training including English language training with Kaplan even had to sit for tests he told me on the computer he holds this is working as an attendant he was very pleased to be of help I didn't need help in the toilet but you know he was very pleased to be to be to keep me company and to have a chat but you know he was doing his job with dignity and earning a decent pay with pay that goes up overtime employer takes him seriously and invests in him together with his teammates and that's what it takes but the important question is not whether he behaves with dignity but whether people who enter the level Knevel tree absolutely sure respect absolument treat him with dignity herbs and I would say in Singapore the elite does not show respect for people who work as cleaners gardeners at Ross station attendant security personnel you know so one of the problem in Singapore is these low-wage workers are treated as invisible people you are one of the few gentlemen who greets him and talk with him but how many of you did I'm sure well the ESM did hankie you can be the men's toilet so so so may I ask you the first question so you finish your fight I think Tommy is right that ageism is still a issue in our society and ordinary blue-collar workers also deserve a lot more respect and regard I don't think this is only a problem for the elite I think it's part of our social culture we inherited a combination of a set of British institutions and a East Asian culture both of which were quite hierarchical both of which tended to look down on ordinary manual labor and we've got to we've got to move past that yeah and it means everyone it means customers it means ordinary members of the public it means employers critically employers play a critical role and with the support of the government thank you thank you for those three very important points my first question is about inequality and I would challenge your premise that inequality is a generational problem you know that and that as the Oh people I need face away face speed away from the scene the problem of disappear it will not Singapore had become increasingly stratified we are unequal Neronian wealth in income occupation housing type the school you went to the way you speak as Janu pituitary's the documentary shorter we live in a very class conscious xiety but I want to draw three things your attention one the UN Development Programme has a very well respected index called the Human Development Index the Human Development Index describes Singapore as a second most unequal at high-income economy after Hong Kong and within the space of two days we had two different reports about Singapore on the 9th of October Oxfam publishes annual report on commitment to reducing inequality and Oxfam was very critical Singapore demoted us from 69 240 something put us in the bottom 10 countries of the world I think it's a very unfair report but two days later the World Bank published its first human capital index and the World Bank ranked Singapore number one for the development of human capital so my question to you is how do you reconcile the UNDP index say Singapore the second most unequal advanced economy Oxfam report on earth and the World Bank very salutary reported Singapore well first you're asking someone who's there spend some time looking at these surveys and the data actually like data I eat data for breakfast they tell with a little bit more detail and you can juice it as well this is also quite healthy let me start by saying that I disagree with Tommy that we are one of the more class conscious societies around in fact I'd say we are one of the if you talk about our social culture we are much less class conscious than many other societies are familiar with partly because we are younger we are at risk of becoming more class conscious and we must resist every tendency in that direction so I just wanted to mention that point second I would say I myself didn't take the Oxfam survey very seriously not because of his conclusions or anything like that it's just it wasn't very good it was very weak method logically and I'm someone who takes data and methodology very seriously it was not a good survey so I don't want to spend time criticizing it either but we do have a very interesting question of whether we should be concerned about the fact that by most conventional measures the most conventional one is named after an Italian statistical institutions called genie I don't know where he lived but but he's become famous everyone knows genie because of the Gini coefficient and by Gini coefficients before you talk about government actions taxes subsidies transfers and so on Singapore does not have an unusually high level of inequality in fact quite apart from the US which has a high rate of inequality in quite apart from the developing world I mean China and so on have much higher levels of inequality even amongst the European countries several including the Nordic countries have a higher rate of inequality by Gini coefficients before taxes and transfers and then what they do is they have very high taxes for the ordinary person typical ordinary person would be something like 30% income tax and about 25 percent v.a.t.s many of you would know and because they don't have too much savings the VAD of 25% is actually a 25% income tax because you're consuming most of your income so it's roughly a 50% tax on the ordinary person in our case virtually no income taxes for the person right in the middle and you pay GST 7% and moving up by 2% in a few years time and then if you own a car which the average person doesn't but you know some do because they need it you pay a significant Co EE and Dino's AR F and so on so forth but our taxes are far far lower on the ordinary person during the middle class and the lower income group then any other advanced country only Hong Kong isn't the same Li but Hong Kong believe me is living on borrowed time Hong Kong is living on borrowed time the property market is doing well for now but Hong Kong is going to be an aging society like all of us and they're going to need revenue just like we need revenue so we are a low tax Society and as a result we have to think very hard about how we use those tax revenues and what we do is to use it very progressively in other words target our subsidies in our benefits on the poorest in society on those who need it the most and if you are a statistician and if you know how the Gini coefficient is computed because we're not adding we're not taxing the middle class a lot and they're not throwing it back across the Gini curve or throwing it back in the middle we're just focusing it on the bottom the impact on the Gini coefficient is not as large but that's a technical explanation never mind the technical explanation the point is we have a low tax regime that is highly progressive in terms of where the benefits go so if you're a someone in the bottom 20% of incomes for every dollar of tax you pay which is mainly GST you get back about four dollars of benefits which is a very progressive scheme more progressive than many other societies but at a lower level of tax so that's our system and where does it end up after taxes and transfers our Gini coefficient is something like 0.36 for those who are familiar with this which is not at the top end of the advanced economies it certainly in the top third but not at the very top end but critically I come back to my first point what matters is not just the relativity's but are people doing better over time it's no point being better off than someone else if in fact everyone is stuck in the same place and we are fortunately avoided a situation where you have middle-class stagnation and where the lower income group is also stuck everyone it has has been moving up the escalator is still moving and we've got to keep it moving which is why economic policy is fundamental to social objectives it's not just social policy it's not just redistribution and transfers and so on economic policy itself is central to our social objectives how do we reconstruct Singapore for a disrupted world as ESM put it in a speech it's fundamentally economic policy and if we can do that well we keep the escalator moving for everyone upward mobility continue to be strong in Singapore it's a good point and I agree with it inequality and poverty are related but they are not the same so do you mind if I ask you a question about poverty p.m. if you take per capita income I think we are one of those five richest countries in the world but there are many poor people in Singapore there are two kinds of poverty households and live in absolute poverty meaning that they lacked the means to pay for basic human needs and family they live in relative poverty the concept of relative poverty derived from taking 50% of the median income as a yardstick household whose income is below 50% and medium income is considered relatively poor from the research I've done I found that there are between a hundred thousand two hundred forty thousand household living in absolute poverty and there are according to econ 15 percent but from my research it looks like between twenty to thirty five percent of our household living in relative poverty so my question to you is what what are the facts that you have about poverty in Singapore and what can we do to reduce the poverty in Singapore and make sure that people are able to live in dignity you know and material sufficiency I share the aspiration that Tommy has laid out you got to make sure that everyone can live with the indignity live a dignified life at work as well as in the community and see their lives improve over time there are poor people in Singapore there's some people who are who are trapped or in poverty and our challenge is to help them escape that situation be themselves their children and with the support of the community and the government and this is this is a task it's not an ideological task it's a practical task we got to find every way possible to help them to escape poverty and ensure that you do not get a persistence of poverty across generations and there's a risk of that happening there's a risk of it becoming entrenched and passing on from one generation to the next so if we could have worked very hard of it and it's not an easy task because I know of no society that's actually succeeded there been many attempts particularly in the last 60 years since the 1960's in the US and the UK in Europe if it's merely a question of redistribution it improves your Gini coefficients but it doesn't get people out of poverty so how do you get people out of poverty how do you shape social culture for the better how do you raise aspirations amongst the young even if their parents or their uncles and aunts or don't imbue it in them it's it's a task it involves teachers empathetic principals it involves peers getting in to a positive cycle of aspirations rather than a negative cycle amongst themselves it involves all of us so we have to work harder at this task and prevent poverty from being in tradition the numbers who live in absolute poverty are much smaller in Singapore compared to elsewhere because our whole society has moved up and you only have to remember what it was like in the old days I'm not I not as senior in uses as Tommy is but you know I grew up in the 60s and early 70s I actually remember very vividly but it was like even the into these if you took our today's wages and today's prices right at today's prices the pea of an average person when we became independent in 1965 was about 550 dollars it was actually much lower than that but I've been treated it for today's prices okay five hundred and fifty dollars for a lower income person in those days it was a couple of hundred dollars hundred fifty two hundred dollars and the newly income person then compared to the lower income person today was in the bottom 20 percent the increase in standard of living adjusted for cost of living increases has been about five times five times better off so there are people who are struggling today but think of where we came from think of where we came from it has been a dramatic transformation and a dramatic transformation in the middle of society so we have progressed but we still have problems and the problems that will always be with us are the relative problems because by definition depending on how you define relativity you will always have a proportion who are less well-off than the others and I would not say that's irrelevant it is relevant we don't want relativity's to get too too wild because it just affects the tone of our society the questions of the Audion may I briefly mentioned another challenge we have the challenge of inequality challenge of poverty there's a new challenge in Singapore this is the challenge of growing in tolerance a mutual friend of ours was recently invited by one of our religious organization to speak at a conference on a secular topic he accepted prepared paper and then he was disinvited and why was he disinvited because it's signed a petition to repeal 377 a you know we can disagree but there's no need to demonize each other and I would also make a plea to the government to show greater tolerance I hope that going forward the government will no longer been movies withdraw book grants that has been big-hearted we reach that stage of political and cultural maturity when we could accommodate you know different points of view it's a plea no one should feel denies in Singapore very diverse society via to respect each other and make sure that whatever our views on specific topics there's a solid core of shared aspirations and beliefs that holds us together so let's take questions from you who would like to add the first question IPS colleagues please help me yes right at the end of the room - comment thank you very much for the presentation it's an echo yeah can you hear me thanks so Colton bio from the medical school you know I'm not an economist so I can't talk about the economics in in such an articulate way but to me inequality in Singapore as a healthcare professional is actually a matter of life and death and I think you may be aware of the data from the Singapore's registration or birth and death from two zero one seven where if you use ethnic group as a surrogate for income the average age of death for Chinese Singaporeans is seventy eight point zero years compared with 70 point six years for Malay Singaporeans now this is a gap of seven point four years which is greater than the gap between Caucasian Americans and African Americans it's also greater than the gap in the UK between minority groups and the white British field population can you frame your question please so my question is in a setting in which Singapore has got such great inequalities where people from lower-income died eight seven point four years before people from high-income don't you think that there's something that we need to do about the structural factors which are contributing to this life and death problem of inequality thank you good useful question will first whether speaking as an economist or those in the medical field who are APD Milan epidemiologists I think you should be very very of single factor correlations so I don't think it is income per see that leads to a lower lifespan but the whole set of other factors that may be associated with income and of course here you are talking about ethnicity it is well known beat in the medical literature on the economic and social literature there's a whole complex of factors that are bound up together and I'm not talking about the specific example or if in asti or talking about but everyone knows that lifestyle diet habits exercise the job you do all of these matter people who do tough manual jobs have more problems with health care and they're elderly age and those who do white collar jobs those who worked in the coal mines in Britain suffered from numerous more chronic problems in older age compared to those who've worked in offices in in in the city of London all these factors matter but it isn't just income so we've got to address the different factors that contribute to poorer health outcomes in in your latter years and address them in the most practical way if you ask me we have a real issue with diabetes and when we say that it means we have a real issue with diets and habits that are formed early in life and persist through life and we have to take that extremely seriously so these are practical issues in public health that we have to be concerned about regardless of income and félicité there are real issues that we have to be concerned about and when it comes to social factors and family factors it becomes a bit tougher because you actually have to intrude in lifestyle issues and that's why it's so difficult but we have to I think we have to as government and community help persuade people and incentivize people and nudge people towards healthier lifestyles but you know Singapore fortune II doesn't have a situation of you know very dangerous vocations or life or a jobs because we are a very urban environment and it's it's generally not one that puts people at risk so it's really largely a matter of upbringing and lifestyle and we have to work much harder at it other people another question from someone else yes Julian Thank You chairman good evening DPM my question is this it has to do with what more we can do for the low-wage low-skill workers we have a system a progressive wage model instead of a minimum wage strategy and that progressive wage model is a wage ladder that is paired to skills which the government has invested in heavily as well my question is this so what is your assessment of the progress that we've made using a progressive wage model I suspect that there will be a lot of discussion tomorrow about whether we should consider a minimum wage model if we just cannot see a lifting up of the people at the bottom - absolute progress and relative progress as well so just your assessment and the broader question is this I think in the room there'll be people who say let's invest more in the equality of opportunities quality of opportunities but on the other hand there'll be others who say if the report card is no good then let us do more in terms of establishing the quality of outcomes and think about right now sexy ideas like universal basic income so over to you the PM your assessment thank you practical issue it's not an ideological issue for us it's a practical issue and in fact the progressive wage model is in the same league as the minimum wage we basically focused on the most vulnerable those who jobs those jobs are renewed by contract and these are those in the in contracts that are India in an industry that is largely out sourced where they are outsourcing contracts cleaning security and what I call landscape workers you know those who look after their states and so on has it worked if you take our cleaners five years ago the average wage of a cleaner and this is quite a large group of workers the average wage was a little over $900 and today it is over $1,200 so more than a third increase and increased by more than a third in five years quite significant for security guards the increase has been in fact even larger more like 36 percent something like that so very significant increases within a short space of time but very importantly as you've highlighted it's not just setting a floor but it's it's designing a ladder of wage increases based on skills and experience and it's working quite well so far and we'll have to see whether we need to apply it to more jobs in future but focus it on the vulnerable and make sure we know who we are trying to help the trouble with a minimum wage I say this is a practical issue it's not a political debate in my mind at all as a practical issue in the US and elsewhere is that a lot of people who benefit from the minimum wage are not people from poorer families they may be youngsters or spouses or anyone who happens to be doing a job at the lower end but a very significant proportion of them come from middle-income families or even better off so it's not very well targeted by focusing on cleaners security guards and landscape technicians we know who we're trying to help and by the way this is a group that is especially populated by our older workers our older workers especially are disproportionately present in those three jobs especially cleaners and security and security guards so it's one of the ways in which we try to help our cleaners are our our older folk who are in the workforce but the most important strategy and I have to emphasize this when we think about all these issues whether it's minimum wage or progressive wage model our most important strategy has to be to keep the escalator going and it means staying competitive developing capabilities in our economy that will hold us role in future competition and very importantly keeping the labour market tight keeping the labor market tight there's far more that any social policies will do that's what leads to wages going up over time and keeping it tight for every category of workers not so tight that employers simply can't find workers at all because then the demand for workers goes down in Singapore in Suffern but keep the market tight that's the strategy that ultimately is going to lead to wage growth productivity growth and that escalator keeps moving minimum wage but I will I do under debate you tonight we're running out of time with five minutes left so could you in about three minutes sum up what is your most important takeaway for our friends I think what's you know the nice thing about these debates and the and the questions we had all the questions is it shows that we are concerned about these issues we are concerned about inequality we are concerned about social mobility we are concerned about every aspect of it the health care aspects income aspects whether we take the trouble to interact with people from all walks of life and that's not a bad starting point that you're all concerned about this the government is concerned the NGOs are concerned that academics and think tankers are concerned and the public is concerned Singapore is by and large are by nature not very class conscious as they'd like to make sure that the no one is doing too badly and that we can all do well together and I think it's very important that we preserve them and I say this not just because it's a good thing in its own right it's a good thing in its own right that we should all take an interest in each other and want everyone to do well but I also say it because it is one of the ways in which social mobility is sustained the culture of our interactions the ease with which we interact and the way we treat each other whether we treat each other as equals as we grow up and as we go through life also shape social mobility because it spreads aspirations aspirations just be the province of a the habit of the upper middle class or the wealthy aspirations spread through interaction and by having a common culture and the social mixing is something that also enriches those who start off from better reforms that social mixing enriches all of us and that's the beauty of social mixing it enriches all of us so let's keep that in our Singapore culture because it's a good thing in its own right but it also helps us to keep aspirations moving up for everyone and each person taking an interest of the other in the same classroom because we are sharing a desk beside each other in the same basketball team or in the same team at work taking an interest in each other is what helps the whole team to move on keep the escalator moving up because this is the best way you can get social mobility on the escalator itself thank you DPM you were recently in Bali for the annual meeting of the World Bank and IMF and I noticed that at a meeting that you chat you summed up by quoting a famous economist Elvis Presley so I want to I want to conclude this evening by drawing inspiration from your example so I want to close this evening by quoting from a famous philosopher whose name is Bob Dylan in an important essay that Bob Dylan wrote called the working man's blues he wrote and I read there's an evening haze settling over the town starlight by the edge of the creek the buying power of the proletariat has gone money is getting shallow and weak the place a love pass is a sweet memory it is a new part that we trot they say low wages are reality if we want to compete abroad but you please join me in thanking DPN talent [Applause]

Channel: CNA

Views: 55,865

Rating: 4.6641793 out of 5

Keywords: Singapore, Social mobility, Inequality, Tharman Shanmugaratnam

Id: iqHAN9eVP1Y

Length: 42min 3sec (2523 seconds)

Published: Thu Oct 25 2018