SINGAPORE - The Government needs to rethink its social compact as the income gap widens and social mobility slows down, some prominent economists here have argued in a paper.

The Institute of Policy Studies (IPS) paper, Inequality and the Need for a New Social Compact, was written by six economists, including Mr Manu Bhaskaran, an adjunct senior research fellow at IPS, Mr Donald Low, a former senior civil servant at the Ministry of Finance, and Mr Yeoh Lam Keong, who was formerly a managing director and chief economist at the Government of Singapore Investment Corporation.

The paper, which was shared yesterday at IPS' annual Singapore Perspectives conference, noted that "the fruits of growth are distributed more unevenly than before".

The authors said that key policies - in the areas of social security, healthcare, housing, education and infrastructure - had been designed for a "youthful population and steady economic growth".

Against such a backdrop, emphasis was placed on several tenets, including individual responsibility, and public housing was seen as an instrument of redistribution - all of which had worked out well. "(But) this benign context is now changing profoundly," the authors said.

With a maturing economy, an ageing population and erratic economic growth, it has become more difficult for Singapore to achieve equitable growth, and gaps in accessing primary needs are emerging.

The current social compact would not be sufficient "in the face of the changes unleashed by globalisation, rapid technological change, and our own policies", said the study.

There is a need for a social compact that strikes a better balance between growth and equity and between individual responsibility and social insurance, which will also reflect changes in the domestic political landscape, said the authors.

Such a compact would "foster a more cohesive, less polarised society where citizens have an interest in pursuing the common good even if it means near-term sacrifices".

The previous economic crisis has resulted in the need for an "activist government" to correct market failures in key policies. This might mean questioning long-standing policy beliefs like whether stronger social safety nets would undermine competitiveness, and having a small government and low income taxes.

It would also require the Government to think creatively and pragmatically on its policy outcomes and processes. The authors recommended a national conversation between the Government and its citizens to decide how Singapore's social compact should evolve.

Pointing to the Scandinavian countries which have broader social programmes that have proven to be sustainable, the authors also noted that Singapore is in a much stronger economical position to invest in long-term measures to ensure more inclusive growth for Singaporeans.