Sunday, February 14, 2010

In Singapore, Being Poor Is Your Own Fault

Sources: The Stingy Nanny Singapore's Expat Surge Fuels Economic Fears

In Singapore, citizens, not the government, are responsible for saving for the future. They rely on their families rather than the handouts from the government. The government provides some benefits, but does so rarely -- currently, only 3,000 qualify for public assistance. When people lose their jobs, they do not automatically receive benefits. Instead, applicants need to do community work and learn new skills in order to receive benefits. Being skeptical of the European-style welfare systems, the Singaporean government wants the benefit schemes to be a "springboard" to self-reliance. According to the government, getting people back to work is more important than providing temporary reliefs.

Such a thin safety net is based on the widely-held belief that public welfare would undermine work ethics, create disincentives to work, and burden taxpayers. A recent recession due to the global financial crisis has not changed such belief. Last September, the unemployment rate rose up to 4.1% (high level in Singapore). In response, the government assisted companies in retaining employees by providing grants rather than providing the dole for the unemployed. As for laid-off workers, they could participate in a government training program.

However, as the Singaporean society is rapidly aging and the number of migrant workers increases, Singapore may need to reconsider its policy and build a more robust safety net, according to the Economic Society of Singapore (ESS). The Ministry of Community Development, Youth and Sports estimates that 20% of Singaporeans will be over 65 by 2030. Currently, 35% of the workforce (3 million) is migrant workers, and native Singaporeans resentment is growing as they compete with foreigners for scarce jobs. In order to promote social stability and gain public support for its "open-door migration" policies, the government needs to introduce measures, starting with unemployment insurance, argued the ESS in a proposal to the government committee. The ESS also emphasized that "while self-reliance is a good principle in general, it may neither be efficient nor just if taken to extremes."

Discussion Questions:
1. Singapore is the third richest country in the world in terms of GDP per head at purchasing-power parity as of 2008, according to the World Bank. In Singapore, severe poverty is hard to spot and public housing is in good shape. The unemployment rate remains relatively low (3% as of December 2009). Do you agree that Singapore needs to reconsider its policy and build a robust safety net? If so, how can the government properly design the public welfare measures without undermining work ethics and creating disincentives to work?
2. How would you compare the Singaporean approach with the European-style welfare systems?
3. Lee Kuan Yew, Singapore's founding father, said in an interview with National Geographic in July 2009, that if native Singaporeans lag behind "hungry" foreigners because "the spurs are not stuck on their hinds," that is not state's problem to solve. Do you agree?

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