COR160 Income Inequality in Singapore for Social Issue

Income equality is the distribution of income or household on a different manner across the various participants in an economy. The idea of income inequality is related to the fair division of income as some people consider it as unfair and unequal (Corak, 2013). Singapore is one of the country where the people of the nation feel the income inequality unfair since there are people who have not only basic necessity but also luxuries of life without even working for a day in life (Solt, 2016). This essay focuses on income inequality in Singapore, emphasizing the causes of income inequality. The essay also focuses on m

Income inequality has consistently increased in Singapore, and the factors that have contributed to it have been from the aspects including economic, social, political and educational (Pickett & Wilkinson, 2015). The globalisation and the impact it has on the design of growth in Singapore. The trend changing from the mass transformation of economies to knowledge-based economies have contributed to it. This will cause demographic misbalance. The skilled workers are capable and have successfully been capable of exploiting the career and business opportunities in the globalised world that eventually gave them income at a fast pace. This resulted in a massive gap in wealth between the rich and poor (Chai & Baudelaire, 2015). The problem got worse for Singapore as the unique pattern of growth facilitated quick segregation of wages. The policy of meritocracy has an active role that influences the income inequality in Singapore. Singapore upholds meritocracy strongly and provides education and opportunity only to the citizens assumed deserving. This results in an imbalance future where individual economic well-being is wholly depended on the person’s capability and hard work with government’s limited or no support. This particular principle of meritocracy has affected Singapore’s societal dynamics. The income inequality of Singapore also has become increasingly depended on the labours from foreign countries. The policy toward these foreign workers has impacted the nation’s economy and its income policies. The foreign labours are allowed in the country for work on two policies judged on their skills. The skilled professionals are paid expatriate salaries, and the semi-skilled or no-skilled labours are given meagre wage, this has kept the wages low for this particular segment. The individual tax system in Singapore is another cause for the inequality of income as the citizens with low income are exempt from any tax at the same time receives subsidised government services and citizens with a higher income pay progressively higher amount of tax.

The wealth gap between rich and poor is widening, and in a country, like Singapore, it has become a cause for concern. According to data, the Singapore government have already initiated the programs and strategies that would help at reducing income inequality from the year 2007. These initiatives are known as special transfers and aim at narrowing the income gap. The governments have introduced utility rebates for Singaporean housing development board (HDB) households (Gatsi, Gadzo & Kportorgbi, 2013). According to this policy people living in two-bedroom HDB enjoy rebates much higher. There are cash vouchers that have been introduced for the lower income families that will help in coping with the healthcare, education and public transport expenditure (Huat, 2015). The government has policies that are for keeping the growth of foreign workers in check. These are explicitly surrounding the low skilled and semi-skilled labour. Recently the government has also come up with the Wage Credit scheme, which promises to increase the Singaporean employee’s wage-earning below gross monthly wage of 4000 dollars by 40 per cent (Teo, 2015). The workfare income scheme and progressive tax system are also contributing policies.

All the measures taken by Singapore’s government have proved to be helpful for the Singaporean. However, there is a need for several more policies in the government sectors. The plans have been beneficial for the low-income families, and the policies have helped in reducing the wealth gap. There are other sectors as well that needs to be discussed for decreasing the income inequality. Singapore’s ageing demographic and other socio-economic challenges need the attention while addressing inequality issues as it may grow important.

Reference:

Chai, K. H., & Baudelaire, C. (2015). Understanding the energy efficiency gap in Singapore: a Motivation, Opportunity, and Ability perspective. Journal of Cleaner Production, 100, 224-234.

Corak, M. (2013). Income inequality, equality of opportunity, and intergenerational mobility. Journal of Economic Perspectives, 27(3), 79-102.

Gatsi, J. G., Gadzo, S. G., & Kportorgbi, H. K. (2013). The effect of corporate income tax on financial performance of listed manufacturing firms in Ghana. Research Journal of Finance and Accounting, 4(15), 118-124.

Huat, C. B. (2015). Singapore: Growing Wealth, Poverty Avoidance and Management. In Developmental Pathways to Poverty Reduction (pp. 201-229). Palgrave Macmillan, London.

Pickett, K. E., & Wilkinson, R. G. (2015). Income inequality and health: a causal review. Social science & medicine, 128, 316-326.

Teo, Y. (2015). Interrogating the limits of welfare reforms in Singapore. Development and Change, 46(1), 95-120.