Singapore has second highest income gap among advanced economies
From our Correspondent
According to a report by Business Week based on the U.N. Development Program, Singapore has the second highest income gap with a Gini score of 42.5 among developed economies after Hong Kong.
With zero marking absolute equality and 100 absolute inequality, the Gini score is a measurement of the income gap between the poor and the rich in any country.
Singapore’s ratio of income or expenditure of the top 10% to the lowest 10% is 17.7, only slightly less than Hong Kong’ 17.8
Hong Kong’s Gini score may be skewed by the higher number of billionaires. It has 19 billionaires compared to only 2 in Singapore as of March 2009 (Forbes, 2009)
The leaders of Hong Kong are paid comparatively less compared to their Singapore counterparts.
Hong Kong’s Chief Executive Mr Donald Tsang draws an annual salary of only S$700,000 compared to the S$ 3 million dollar salary of Singapore’s Prime Minister Lee Hsien Loong.
In fact, Mr Tsang’s salary is only less than half of what a Singapore minister will receive.
During a ministerial dialogue at NUS two days ago, Minister Mentor Lee Kuan Yew described the widening income gap “inevitable” in a globalized world due to “depression of wages at the bottom and boosting of wages at the top.”
Indeed, the salaries of the lowest 20 per cent income group in Singapore have remained stagnant for the last ten years while that of ministers have sky-rocketed by more than 80 per cent.
MM Lee’s claims, however, were rebutted by a researcher from the Lee Kuan Yew School of Public Policy in a paper published in 2008 who wrote that Singapore’s widening income gap is a result of “adherence to Social Darwinism and desire to perpetuate socio-political control.”
Though the income gap has widened considerably over the past few years, the government has shown little inclination to address the inequality.
On the contrary, it appears to exacerbate the problem with some ill-conceived policies such as the liberal immigration policy to increase Singapore’s population via migration.
The relentless influx of immigrants has helped to depress the wages of middle and lower income workers while contributing to the inflation of housing prices.
Despite rising resentment and disgruntlement on the ground, Singaporeans have little chance of voting the incumbent out of government because of the lack of a credible alternative waiting in the wings to replace them.
Since assuming office in 1959, the ruling party has introduced a series of draconian laws to curb the political and civil liberties of citizens.
Opposition parties face a daunting task recruiting credible candidates to join them, let alone able to mount a formidable challenge to the ruling party during the elections.
A series of defamation lawsuits bankrupting opposition leaders over the years have deterred aspiring Singaporeans from joining politics.
With the ruling party remain firmly in power, Singapore’s income gap is likely to worsen in the coming years.
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Old Guy on Wed, 21st Oct 2009 4:56 pm
The older you get,
the more your pay becomes Younger and less in numbers..
indexer on Wed, 21st Oct 2009 7:26 pm
This article’s logic is suspect.
First, is it logical to compare Singapore as a “developed” country with Western European economies? Look at the social indicators and economic history of Singapore. They are very different from the “developed economies” that the author tries to compare Singapore with. Singapore is not even in the same geographical neighbourhood.
Next, is it really appropriate to compare Singapore, a city-state, with large countries? It may be more appropriate to compare it with other cities. See http://www.unhabitat.org/pmss/getPage.asp?page=bookView&book=2562
The fifth paragraph onwards develops a different argument that does not quite follow. Even the two quotes are not really accurate, nor given in context. See http://www.pmo.gov.sg/News/Transcripts/Minister+Mentor/MM+Lee+Social+divide+inevitable.htm and http://www.mrbiao.com/blog/there-is-no-poverty-in-singapore.html
Anonymous on Wed, 21st Oct 2009 9:50 pm
@ indexer on Wed, 21st Oct 2009 7:26 pm
You have shifted the substance of your argument to deny the logic of the article. The comparison of Singapore to other western major developed economies is NOTHING NEW in MSM here nor the political apex in Government.
Yet, it does not stop you from shifting focus to compare Singapore to cities which if you had any international experience would have known it is complete irrelevant. I give you two examples, Melbourne and Sydney were competing to be the financial and business centre of Australia. Perth would not exists to this state of bomming economy without the mining hinterland and its economy is built upon. Do you compare Singapore with Perth, Melbourne or Sydney? Your logic is ridiculously flawed. Do Singapore have a gold mine or a pyrite mine in your backyard for comparison to Perth??
And your last two reference failed to see the rethorical dimension as distinguished from reality. You don’t see beggars does NOT mean no poverty. If there is no beggars, how come corporate and citizens have been asked to provide donation for school kid’s tuckshop food?
The article is about income DISPARITY AND THE CONTRIBUTING FACTORS AND POLITICAL RIGIDITES OBSTRUCTING CHANGE and is correct of perspective and facts. It is just too hard to elaborate in one small literary piece like this.
You know it
indexer on Wed, 21st Oct 2009 11:20 pm
@Anonymous,
Your argument on Perth/Sydney/Melbourne only further highlights the importance of comparing apples to apples. Does it make more sense to compare Singapore and Sydney or Melbourne, or Singapore and the whole of Australia, including the gold mines feeding Perth? No comparison is perfect. Context is important.
The links are not provided for the rhetoric, but for the direct quotes of what was written by the author of the academic article.
A short article should not try to make too many points.
Anonymous on Thu, 22nd Oct 2009 12:07 am
@ indexer on Wed, 21st Oct 2009 11:20 pm
Your comment..”No comparison is perfect. Context is important.” invite my rejoinder
You are using broad statement like No comparison is perfect…context is important but YOU PRETEND THAT IT IS VALID COMPARISON OF CITIES TO CITIES AND NOT CITIES TO COUNTRY. It is your res gestae of your false assertions of invalid comparisons.
In other words, you deliberately employ generality to conceal validity of the article comparison of Singapore to western first world society which MSM and political leaders here acclaim.
Why don’t you assert that MSM and the political leadership is false of pretense like you??
I brought in Perth as a good example because IT IS INVALID TO COMPARE CITIES TO CITIES BECAUSE CITIES EXISTS TO SUPPORT SPECIFIC HINTERLAND ECONOMIES AND EACH OF THEM ARE UNIQUE FOR THAT REASON ALONE.
Beijing is administrative capital without much industry or financial institutions. Shanghai is different and opposite to Beijing. Singapore is different – which is why I asked you if you can find a gold mine or pyrite mine in your backyard.
I BET MY LAST DOLLAR THAT YOU DID NOT COMPREHEND THE SUBTLETIES OF THAT PRECEDING DECLARATION of gold and pyrite analogy OF MIND PROVOCATION TO LET YOU THINK.
To add on, read this
http://www.theaustralian.news.com.au/business/story/0,28124,26242916-643,00.html
Nearly half of Chinese mining investment and exploration projects are in Western Australia. Ask yourself how could Singapore compared to the boom in Australia especially Perth now when we are in the midst of a recession. There is NO RECESSION BUT A BOOM IN PERTH and will continue as long as falling US dollars support a very strong mining sector in Western Australia. The same falling dollar will kill this Singapore economy – see the contradiction????.
You are comparing durian (Perth) with rotten apple (Singapore now) when the valid comparison is global factor affect all major economies i.e. Singapore compared to major developed countries and NOT specific niche economy, niche sector like mining and niche city like Perth as you implied falsely as correct of validity.
So you are arguing like a circus ( not a circle) of falsehood mixed with half truth and generality to conceal validity or invalidity as you choose.
And for the links, I challenged is YOUR INTERPRETATION. If you had recognise the rethoric of political platitudes therein, you would know the correct relevance of this author in this article. Period.
You chose to ignore practical reality to advance false premises of your own and THAT IS WHY YOUR ARGUMENT IS FLAWED and failed to impress.
indexer on Thu, 22nd Oct 2009 8:20 am
@Anonymous,
Your first argument seems to be: other people compare Singapore to Western first world societies, therefore this comparison is valid. This is a lousy argument. You need to look at the specific comparison to assess validity. Here, it is Gini coefficient. You have failed to address my primary point: Singapore has a very different economic history and social make-up than Western developed nations. As a newly developed economy, it would be more appropriate to compare ourselves with other newly developed economies, than with mature developed economies. However, this has its issues too.
I also argued that it may not be appropriate to compare Singapore with large countries. In every country except China, the Gini coefficient in urban areas is higher than in rural areas. Major developed countries have a significant rural population. Singapore, being fully urban, has a higher Gini coefficient than other countries. However, it has a comparable Gini coefficient with other cities.
Major economies have a range of economic activities, including primary industry. Singapore is not a major economy as you assert, but based on niche areas such as finance, petrochemicals, pharmaceuticals and technology manufacturing.
You say that it is invalid to compare cities with cities. One than wonders what one should compare cities with.
Anonymous on Thu, 22nd Oct 2009 10:38 am
@ indexer on Thu, 22nd Oct 2009 8:20 am
Your argument..”other people compare Singapore to Western first world societies, therefore this comparison is valid…” offer me no clue why that SAME BENCHMARK tendered is INVALID. I noted your careful almost obviously disingenous reference to “other people” as if they are insignificant entities.
THEY ARE EXACTLY THE OPPOSITE – very significant entities indeed. You see Ministers here and MSM boasted of achievements here benchmarked to major western advanced economies – why are they INVALID??? You studiously avoided any explanation by resorting to threatics – calling the same benchmark used by the author and agreeable to me as “lousy” argument.
Your post offered no hint or explanations as to why it is lousy. Was it because these benchmarks muched preferred by very significant entities tribal, empty rethorics intended for public consumption, based on naivety, uninformed speculation or simply accidentally or deliberately misleading the public?? We are all clueless why it is valid in most PUBLICLY ASSESSED AND PUBLICLY REACHED PLATFORMS but not in this instance. My own thoughts are that it is probably your pedantic random attempt to create doubt in this author’s writing by your unsupported bluffs, threatics and distraction of delusions. You can prove me wrong with your explanations why the contradictions of your stances has strong compelling grounds.
You then proposed the following conceding statement which I find illuminating of your slippery slope posturing of weakness of your thoughts. Let me quote you here
..”As a newly developed economy, it would be more appropriate to compare ourselves with other newly developed economies, than with mature developed economies. However, this has its issues too….”I BET MY LAST DOLLAR THAT YOU DID NOT COMPREHEND THE SUBTLETIES OF THAT PRECEDING DECLARATION of gold and pyrite analogy OF MIND PROVOCATION TO LET YOU THINK.
If comparing ourselves with other developing economies has “its other issues too”. Why did you proposed another alternative and yet question its validity AFTER YOU CLAIM IT IS INVALID TO COMPARED AGAINST MATURE ECONOMIES. What other alternatives do you have??? Comparing against third world countries like Zimbabwe or Burkina Faso where they are UNIFORMLY POOR??
And the above comment which I quote you came after this statement in your opening paragraph..
“Singapore has a very different economic history and social make-up than Western developed nations.” Name me which country has got THE SAME IDENTICAL ECONOMIC HISTORY AND SOCIAL MARKET EVEN AMONG WESTERN DEVELOPED NATIONS”??? Every country is UNIQUE but does that invalidate comparison? Then why is UN bodies use comparative statistics to analyse economic, social development and even political metric to compared human rights issues??
Come on, you are talking in “circus” ( not circle). My analogy is correct, you failed to see the difference in my gold and pyrite analogy. This author use the “gold” benchmark often used by significant entities here and the United Nations. You used the “pyrite” benchmark which nobody else used in UN or significant entities here.
And you proved again the substance of my point I BET MY LAST DOLLAR THAT YOU DID NOT COMPREHEND THE SUBTLETIES OF THAT PRECEDING DECLARATION of gold and pyrite analogy OF MIND PROVOCATION TO LET YOU THINK.
Gold is different from pyrite. Pyrite (if you googled) is Fool’s gold – pyrite appears the same as gold but deceptively false in substance, physical attributes and value. Pyrite has zero value and gold is US$1045 per oz today.
Likewise your argument to compare cities with cities is patently false and appear golden of validity. I have explained the reason of different economic hinterland with example. You cannot compared two cities on Gini because each city has its wealthy people and poor and in many Chinese big cities plenty of rural vagrants to add.
To sum up, the author has the choice of his benchmark. You are not the author in this piece and if you dispute the benchmark, the COMPELLING ONUS IS FOR YOU TO PROOF THIS BENCHMARK UNREASONABLE, INCORRECT, INAPPROPRIATE, TRIBAL OR OTHERWISE WRONG.
You have done NONE of that to prove either the author is wrong or the significant entities are all wrong in congruent agreement.!!
VACHTUNG on Thu, 22nd Oct 2009 10:42 am
I’m disappointed.We should be first.
Tim on Thu, 22nd Oct 2009 11:05 am
@ Indexer: In that case, by your standards, we should compare ourselves economically with other city states like Monaco, and the Vatican then.
In all seriousness, because Singapore is both a city and also a state, Singapore is a country, not a city in the world index. Therefore Singapore will be compared on a state-to-state basis, not city to city. Singapore has no other city beyond its own self- and therefore unlike Perth, it doesn’t have a hinterland.
And because of this, its only right we compare Australia to Singapore, for example, because its on a state-to-state basis. The only time a city can be compared to a city or cities, is when people compare the economical indicators between Hong Kong, part of the People’s Republic China, and New York, an American city, and Frankfurt, a German city.
Singapore is not gonna be compared on a city-to-city basis simply because Singapore is also an independent state, unlike New York City, which is part of the United States federal republic set-up. So to say we should compare city to city just because Singapore is a city is flawed- because Singapore is also independent as a state as well. The rest like HK, New York City, LA, San Francisco, Sydney, Perth, Melbourne, and Shanghai are cities within a nation-state, and therefore not independent stand-alones.
anon on Thu, 22nd Oct 2009 6:07 pm
http://www.huffingtonpost.com/philip-slater/money-doesnt-attract-tale_b_171839.html
When the banking and auto industries claimed they needed their exorbitant executive salaries to attract ‘talent’, we all laughed to think the ‘best and brightest’ were needed destroy the global economy. What actually did the job was greed, which is, after all, what money attracts.
Whereas the average ratio of CEO to worker salaries is about 20 to 1 in the rest of the industrial world — and was about that in America only a few decades ago — it has ballooned to 400 to 1 in recent times. Does this mean American corporate and banking executives are not only 20 times smarter than those abroad, but also 20 times smarter than the American executives who ran our economy before 1980?
Not very likely. But they’re certainly 20 times greedier.
James Surowiecki points out that these overpaid executives were notable for making mergers, two-thirds of which ended up destroying shareholder value. Eighty percent of the new products they introduced lasted less than a year. As he points out, “the business landscape of the last decade is littered with CEOs who went from being acclaimed as geniuses to being dismissed as fools”.
If American executives were willing for a century or more to work for reasonable salaries, what other than an obsessive greed makes it necessary to overpay them today?
Bach never got rich, Mozart died in a pauper’s grave. Money didn’t attract Cézanne, van Gogh, Rembrandt, Tolstoy, Dostoyevsky, etc., etc., the list is endless. You don’t have to starve to be great at what you do, but money doesn’t seem especially relevant. Nor is this lack of connection restricted to the arts. Einstein worked in the Swiss patent office to survive while he came up with his major contributions to science, and most of the authors of major inventions were poor before they made them. Small firms come up with 24 times more inventions than large ones with fat R and D budgets.
The truth is, money has nothing to do with talent in any field. The biologist Lewis Thomas once said that the need to feel useful, to make a contribution, is fundamental to human beings. People crave challenges, like to exercise their abilities. They also like to eat. But our culture — or at least the least evolved elements of it — have distorted this need by using money as the only criterion of worth, which has elevated some of the least valuable members of society to the most valued. Huge sums of money attract only the most neurotic members of society — those who feel empty, who have nothing to give, who are sick with greed. The decline of America in the world is due largely to this failing. We can only hope Obama will inspire a reversal of this pathological trend.
anon on Thu, 22nd Oct 2009 6:08 pm
A $2million/annum minister is earning 83 times more than a $2,000/mth graduate.
Are they really 83 times smarter?
anon on Thu, 22nd Oct 2009 6:42 pm
Simply tabling the below salaries gives you a rough figure of S$75 million. The figure is only for the top 30 listed figures, exclusive of pensions, MP allowance and such.
A person with a taxable income $40,000 will be paying $900 in income taxes.
Assuming a low figure of $100 million to pay our Ministers, you will need 111,111 person with a taxable income of $40,000 simply to support their pay alone.
But.. according to IRAS, 0.4% of resident taxpayers paid for 1/4 of income tax collected.
“THEY make up just 0.4 per cent of resident taxpayers – but account for a hefty one-quarter of net personal income tax payable.
In all, 3,799 residents, a surge from the 2,751 in the previous year, declared an annual income of above $1 million for Year of Assessment (YA) 2008.
Their net tax payable? $1.36 billion, or more than what’s payable by some 830,000 resident taxpayers who make $150,000 or less a year.
As for the biggest group of taxpayers, the 193,387 with declared income of $30,000 to $40,000, they were liable for net personal taxes of just $38 million, after tax credits and rebates.”
The peasants meagre earnings alone are not sufficient to pay them peanuts. They need the high networth corporations/elites/FT here.
1. Elected President SR Nathan – S$3.9 million.
2. Prime Minister Lee Hsien Loong – S$3.8 million.
3. Minister Mentor Lee Kuan Yew – S$3.5 million.
4. Senior Minister Goh Chok Thong – S$3.5 million.
5. Senior Minister Prof Jayakumar – S$3.2 million.
6. DPM & Home Affairs Minister Wong Kan Seng – S$2.9 million.
7. DPM & Defence Minister Teo Chee Hean – $2.9 million
8. Foreign Affairs Minister George Yeo – S$2.8 million.
9. National Development Minister Mah Bow Tan – S$2.7 million.
10. PMO Miniser Lim Boon Heng – S$2.7 million.
11. Trade and Industry Minister Lim Hng Kiang – S$2.7 million.
12. PMO Minister Lim Swee Say – S$2.6 million.
13. Environment Minister & Muslim Affairs Minister Dr Yaccob Ibrahim – S$2.6 million.
14. Health Minister Khaw Boon Wan – S$2.6 million.
15. Finance Minister S Tharman – S$2.6 million.
16. Education Minister & 2nd Minister for Defence Dr Ng Eng Hen – S$2.6 million.
17. Community Development Youth and Sports Minister – Dr Vivian Balakrishnan – S$2.5 million.
18. Transport Minister & 2nd Minister for Foreign Affairs Raymond Lim Siang Kiat – S$2.5 million.
19. Law Minister & 2nd Minister for Home Affairs K Shanmugam – S$2.4 million.
20. Manpower Minister Gan Kim Yong – S$2.2 million.
21. PMO Minister Lim Hwee Hwa – S$2.2 million.
22. Acting ICA Minister – Lui Tuck Yew – S$2.0 million.
23 to 30 = Senior Ministers of State and Ministers of State – each getting between S$1.8 million to S$1.5 million.
Note: 1. The above pay does not include MP allowances, pensions and other sources of income such as Directorship, Chairmnship, Advisory, Consultancy, etc to Gov-linked and gov-related organisations or foreign MNCs such as Citigroup (for Lee Kuan Yew), etc.
fair and square on Fri, 23rd Oct 2009 1:51 am
@Indexer,Anonymous Wednes 11.20 pm
I think ANONYMOUS make some valid points.Imust say I share his
views.
If INDEXER thinks it’s not fair to compare Singapore with
more developed Western Xs,may i ask him whether it is fair
to compare SinGAPORE with our friends in HongKong?
fair and square on Fri, 23rd Oct 2009 2:15 am
HONGKONG AND SINAGPORE both have no natural reosurces,notwithstanding that it is now a SAR of Greater China just recently.
Both inherit British Colonial legacies like the governmental and civil service bureacracies icluding legal,administrative,financial and a host of infrastrutural and technological hardwares and softwares.
My own observation is that HK is still run on a similar model
to that of Singapore except that it is now a SAR with some slight “hinterland” benefits of the Mainland.That’s all.
indexer on Fri, 23rd Oct 2009 10:57 pm
@fair and square,
Yes, that’s exactly it. Hong Kong and Singapore are very similar and can be compared. More information on Hong Kong’s Gini coefficient is at http://www.cop.gov.hk/eng/income_disparity.htm
It is well-established that it is not simple to conduct international or inter-city comparison of Gini coefficients. When comparing Singapore with other countries/cities, the differences that affect Gini coefficient should be noted. For example, Singapore’s figures are not skewed by rural-to-urban migration, as rightly pointed out by Tim. Singapore enjoys the advantage of being able to control migration. At the same time, Singapore has tried to be a global city and an open economy (including the free movement of labour), like other global cities such as Hong Kong, London, and New York, and so there is a greater tendency for professionals to enter the workforce in greater numbers.