Tweak policies to decrease inequality

I agree with Opinion editor Chua Mui Hoong that policies and politics matter a great deal while an unbalanced sociopolitical system has exacerbated natural social divisions (Tackling the class divide: We, the people, also matter; Oct 7).

The political system and policies could have created systemic inequality during the period of rapid economic restructuring, where wealth distributions skewed towards the educated and foreign talents.

The high-wage policy aggravated the situation from the 1980s, when Singapore adopted a market economic model and new policies.

While the annual salary of chief executives shot up to multimillion dollars, the wage structure of domestic workers was allowed to remain in the doldrums for decades.

For example, despite the salary disparity, the same rate of Central Provident Fund (CPF) deductions for those who earn $12,000 and those who make $1,200 greatly reduces the disposable cash for low-income households.

In a vibrant society with a big income gap, the class-divide phenomenon is unavoidable.

There is no basis to elevate the respect of workers in low-income sectors like cleaners, gardeners, waiters and security guards. Countries with a similar gross domestic product as Singapore, like the United States, Denmark, Australia and Sweden, are paying people in such professions 2.5 to 4 times more than those who hold similar jobs here.

Perhaps the measurement used to gauge inequality will serve to illustrate the scope of the problem.

Using the ratio of the top quintile earnings to the lowest quintile earnings, countries such as Denmark and Sweden stand at 4.3 and 4.0 respectively, while Singapore's score for last year was 11.8, a marked increase from 9.7 in 1998.

Perhaps Singapore would not need the Workfare Income Supplement scheme to help workers to tide over their difficulties if the workers in the lower quintile were paid 2.5 times more.

To improve inequality and social divide, political will is needed to tweak policies.

Paul Chan Poh Hoi

A version of this article appeared in the print edition of The Straits Times on October 22, 2018, with the headline 'Tweak policies to decrease inequality'. Print Edition | Subscribe