Minister for Social and Family Development Chan Chun Sing had said that the government doesn’t want to define a poverty line in Singapore.
- But what exactly is the poverty rate in Singapore?
- How has it grown over the past 10 years and how will it continue to grow?
- Also, how does Singapore compare to the other high-income countries, and the lower-income countries in the Southeast Asian regions?
According to a new study by the National University of Singapore’s (NUS) Social Work Department, “the working poor in Singapore … is defined as someone earning less than half of the average monthly income of a Singaporean, which now stands at S$3,000.” This is similar to what the World Bank had defined as the poverty line, which “could be set at 50 percent of the country’s mean income or consumption“. ”As such, the poverty line in Singapore would be someone who earns less than S$1,500 every month.
If you look at the CPF Annual Report in 2011, where the distribution of the monthly wages of Singaporeans were last available (the government omitted this information from 2012), 458,257 Singaporeans were earning less than S$1,500 every month. This represents 26% of the Singaporean and PR population (Chart 1).
As such, it can said that 26% of Singaporeans are living in poverty in Singapore.
Chart 1: CPF Annual Report 2011
But how has Singapore’s poverty rate changed over the past 10 years? Has it always been so high?
I looked at the statistics from 2002 (the earliest that comparable data can be found). In 2002, the median income is S$2,083, which means that the poverty line was $1,000 in 2002.
In 2002, there was 16% of Singaporeans who earned below $1,000. As such, you can see that the poverty has grown from 16% in 2002 to 26% in 2011 (Chart 2).
Chart 2: CPF Annual Report 2002, CPF Annual Report 2011
From 2002 to 2011, the poverty rate increased by 1 percentage point, on average every year. Fast forward to 2013, does it mean that 28% of Singaporeans are living in poverty today (Chart 3)?
Chart 3: CPF Annual Report 2002
I wanted to look at how the other income classes had also changed.
In 2011, the Singaporeans lived in poverty had earned below $1,500. The middle class would be Singaporeans who earned between $1,500 and $5,000. And the high-income Singaporeans would be those who earn above $5,000.
In 2002, since the Singaporeans who were living in poverty had earned below $1,000, this would be $500 less than in 2011. Working backwards, the Singaporeans who could be classified as being in the middle class in 2002 would have earned between $1,000 to $4,500 and the Singaporeans in the high-income would earn above $4,500.
Chart 4 shows the overview of the income classes in 2002 and 2011.
Chart 4
If you look at Chart 5, you can see the distribution of the income classes in 2002 and 2011. You can see not only has the Singaporeans living in poverty grown, the proportion of the high-income has also grown. However, the middle class has shrunk tremendously.
Chart 5: CPF Annual Report 2002, CPF Annual Report 2011
Again, you can see that in 10 years, from 2002 to 2011, the proportion of those in the high-income category had grown by 10 percentage points. Fast forward to 2013, does it mean that the proportion of Singaporeans living in poverty is 28%, and those in the high-income group has grown to 27% (Chart 6).
Chart 6
At the rate poverty is growing in Singapore, will we see a situation in 2025 were there would be 40% of Singaporeans who would then be living in poverty, and 39% in the high-income group? By then, would there only be 21% of Singaporeans in the middle class (Chart 7)? When this happens, does that mean that nearly 40% of Singaporeans would be living in servitude to the rest of Singapore, and the government?
Chart 7
Already, two-thirds of Singaporeans “felt they would not be able to pay for that little extra in life” and “close to two-thirds also said that they would not be able to a big-ticket purchase like a car, appliance, furniture or major home repair” (Chart 8). If the income disparity continues in Singapore, how much worse would things become in Singapore?
Chart 8: The Straits Times Middle-income Singaporeans feel the squeeeze, survey finds
What if we compare Singapore to the other high-income countries, measured by the GDP per capita. You can see that even though Singapore is the richest country in the world, we actually have the highest poverty rate among the high-income countries (Chart 9)!
Chart 9: Income Distribution and Poverty: Poverty rate (50% median income), percentage
And what if we compare Singapore to the other regional East and Southeast Asian countries? You can see that Singapore has one of the highest poverty rate among them (Chart 10)! Not only that, even though Singapore is a high-income country and the richest country in the world, our poverty rate is as high as one of the poorest countries in the world, and significantly higher than other middle-income countries like China, Thailand and Vietnam!
Chart 10: What Do National Poverty Lines Tell Us About Global Poverty?, Poverty line set for HK
It’s terrible, isn’t it? Singapore is the richest country in the world, our government has one of the highest national reserves and surpluses in the world, and we have the highest national reserves per capita in the world, but we have the highest proportion of poor among the developed countries and the countries in our region!
One key reason is also because our government spends the least public spending for Singaporeans, as compared to the other developed countries (Chart 11).
Chart 11: 2013 Index of Economic Freedom
Which also explains why we have the highest income inequality among the developed countries among the developed countries, and one of the highest in the world (Chart 12).
Chart 12: OECD StatExtracts, Key Household Income Trends 2012 report
So, what do you think? Do you think more needs to be done? Do you think it’s right that even though we are the richest country in the world, but there are 28% of Singaporeans living in poverty in 2013? Do you think the government needs to do more? Or actually, do you think this government would be willing to do more?
In fact, Prime Minister Lee Hsien Loong had said that, “if I can get another 10 billionaires to move to Singapore and set up their base here, my Gini coefficient will get worse but I think Singaporeans will be better off, because they will bring in business, bring in opportunities, open new doors and create new jobs, and I think that is the attitude with which we must approach this problem.”
Do you think that this is the right approach to the problem, when not only has our income inequality risen, the proportion of poor Singaporeans and Singaporeans who can barely afford to have a basic standard of living has increased?
Roy Ngerng
*The author blogs at www.TheHeartTruths.com