SINGAPORE - Income inequality alone is not a meaningful indicator of social and national well-being. But it raises important issues of inequality of opportunity, and how interventionist government responses should be, such as through universal digital access and nationalising pre-schools.
This was the key theme of a webinar organised by the Economic Society of Singapore on Friday (Jan 22) on the topic "Income Inequality, Unpacking the Challenge".
Moderated by Lee Kuan Yew School of Public Policy dean Danny Quah, the discussion covered the importance of early education for children from lower-income families, the need to bridge the digital divide, and trade-offs between greater equity and the fiscal burden, among others.
Here are four key takeaways from the webinar.
1. Income inequality alone is not meaningful
For the first time in five years, Singapore's Gini coefficient - a measure of income inequality - dipped below 0.4 in 2019. A Gini coefficient above 0.4 usually signals a large income gap.
But University of Melbourne senior economics lecturer Swee Eik Leong pointed out that poverty is multidimensional, and more research is needed to examine the interconnections between factors such as the health and education of children, home ownership, and broadband access.
"Without an official poverty line and a national database of vulnerable households (in Singapore), it is difficult to gauge the impact of the pandemic or of the policy responses on livelihoods," Dr Swee said.
Professor Lim Sun Sun, a communication and technology expert from the Singapore University of Technology and Design, said other forms of inequality, such as skills inequality, also matter in a climate of rapid technological change.
Associate Professor Ho Kong Weng, an economist at the Singapore Management University, said: "What we should care about is not just income inequality, but any problem of social inequality... the intergenerational transmission of social capital, values and attitudes, whether minority groups face discrimination, and so on."
He added that there may be differences between perceived and actual upward mobility that are tied to subjective measures, such as the quality of one's relationships and volunteerism.
2. If you can't beat them, join them
Since upward mobility is still very much a function of educational qualifications, the Government should take the radical step of nationalising all pre-schools so as to level the playing field early in life and encourage social mixing, said Dr William Wan, general secretary of the Singapore Kindness Movement.
In tuition-obsessed Singapore, where more well-off parents can afford to give their children a head start, "if you can't beat them, join them", he said.
"Let's have high-standard tutorial centres for underprivileged kids so that they will not be deprived of help when they need it. In a tuition-based system - which is what we are, let's not try to pretend otherwise - the underprivileged need more tuition, not less."
He also encouraged policymakers to consider giving lower-income mothers childcare and digital literacy classes, and help those living in one-room flats to upgrade to bigger units so that their children have more space to study.
3. More widespread digital access
The move to home-based learning during the pandemic exposed fissures in society, as lower-income families faced space constraints at home and did not have enough digital devices, said Prof Lim.
"Digital access should be seen as a utility rather than a luxury," she said, noting that an Internet connection and Wi-Fi routers are not a given in rental flats. The temporary loan of devices to students during the circuit breaker, she added, was a stop-gap measure.
Then there is the deeper issue of "invisible illiteracies", where even if lower-income persons have devices, their quality of use of such devices is not high.
For example, she said, their use of smartphones is app-centric or mainly for entertainment, and they do not have a full conceptualisation of what the Internet can offer in terms of information and upskilling.
"Which is why the push for universal digital access, whether it's through devices, internet connections or skills is so vital, because each one leads to the other," she said.
"Once you don't have one of these components, you're just going to forever be catching up."
4. Trade-off between equity and fiscal burden
It is important to consider whether lower-income inequality is optimal from a wider social standpoint, said Prof Ho.
"Do we want to have lower inequality, if after redistribution the tax burden could be much higher?"
He noted that a 2015 study by the Finance Ministry showed that 14 per cent of Singaporean children born to parents in the bottom 20 per cent of incomes, managed to reach the top 20 per cent among their own cohorts.
Singapore residents who are employed full-time have also seen incomes rise 3.8 per cent per year over the past five years, with those in the bottom 20 per cent rising faster than at the median.
Ultimately, a more caring society beginning with the family is crucial, he added.
"If there is altruism, either from the individual or through intervention from the Government and community, we would have a high level of national well-being.
"What we need is not just equity, but also justice and responsibility."