Tackling inequality will always be work in progress and all Singaporeans have a part to play

Tackling inequality is not just a long term challenge for tomorrow, but a national priority today, said Education Minister Ong Ye Kung, as he cautioned that stratification risks becoming entrenched in Singapore. “Our policies will need to work against this trend, to actively bring Singaporeans of all backgrounds together,” he added in a parliamentary speech on Tuesday (May 15). Below is an edited transcript of his speech, in which he also spoke about Singapore's model of inclusive growth and making bold but wise changes in the education system.

Today, I would like to talk about the issue of inequality.

Singapore has wrestled with the problem of inequality since the birth of our nation, and it remains unfinished business today.

But each country’s situation is different.

We should unpack the issues carefully so that we better understand our situation, what we have been doing to tackle this problem, and what more we can do.

There are at least four dimensions to inequality.

First, an income gap in society – the difference between the top and bottom income segments;

Second, between the extremes, what is the distribution in the middle and whether we have a strong middle-income core;

Third, how dynamic or static is this distribution, and whether there is mobility, especially from the bottom upwards; and

Fourth, while accepting that there is inevitable income disparity in every society, do different groups interact well with one another?

To put it simply - gap, core, churn, and mix. I will go through each.

MODERATING THE IMPACT OF INCOME GAP

First, let us look at the gap between the top and bottom income groups.

One indicator is the ratio of incomes at the 90th percentile to the 10th percentile.

I use household income per household member here for Singapore. Compared to countries such as the United States, South Korea, United Kingdom, and Finland, our ratio is quite high. Last year, it was 5.8, second only to the US.

But we must take into account the fact that we are a city state.

If we compare against other major cities, we will not be out of kilter.

We have been moderating income disparity through policies, especially with a progressive tax system. The top 10 per cent of income earners contribute about 80 per cent of our personal income tax revenue.

These are in turn redistributed to lower-income Singaporeans through schemes such as the Workfare Income Supplement, GST vouchers, higher subsidies for the lower and middle-income households in education, housing, healthcare, etc.

As a result, low-income families (up to 20th percentile) in Singapore receive about S$4 in benefits for every dollar of tax that they pay.

Middle-income families (from 41st to 60th percentile) receive S$2 for every tax dollar.

This rate of redistribution is higher than the S$1.30-S$1.40 that middle-income households received for every tax dollar in UK, US and Finland. So our redistribution rate is actually higher.

What is equally important is that high income earners also give back to society through philanthropy.

Throughout our history, we have been blessed with successful businessmen and philanthropists such as Lim Nee Soon, Tan Kah Kee, Syed Mohamed Alsagoff and Govindasamy Pillai.

This giving spirit is still very much alive today, and we must continue to encourage it.

With the muscle of progressive taxation and redistribution, and the spirit of giving back, we can moderate the effects of an income gap.

A HEALTHIER CORE

Second is the core. What is more important, is the distribution of income between the top and bottom extremes, and whether we have a strong middle-income core.

The most well-known indicator of income distribution is the Gini coefficient, which ranges from zero to one.

The closer it is to zero, the more equal the society. Conversely, the closer it is to one, the more income is concentrated at the top, and the more unequal the society.

We did not compute Gini coefficient until 1980. But we know that in the 1960s, inequality was very high.

Then, many Singaporeans were poor, did not have proper roofs over their heads and had never attended school.

Yet there were many wealthy traders and estate owners. One study estimated in 1960, the Gini coefficient then to be close to 0.5.

To drive growth and create jobs, we opened up our economy, industrialised, and attracted foreign investments.

We built HDB flats and educated ourselves. Singaporeans saw their income and standard of living rose.

During that period, Gini coefficient trended downwards, right into the late 80s.

In 1997, Singapore was hard hit by the Asian Financial Crisis. In 2001, the burst of the US dot.com bubble affected us too.

In the aftermath of both events, we observed Gini coefficient spiking very steeply.

Fortunately, the global economy picked up over the last 10 years and we have seen inequality moderate over the same period.

There have been studies which showed that GDP growth exacerbates inequality.

However, our experience is that the fall in Gini coefficient coincided with periods of growth.

And the reason is because ours is a model of inclusive growth that benefitted the masses, where there is tripartite co-operation between workers, employers and Government to share the fruits of success.

We all eat from the same ricebowl, as a result, you find when we have growth, we actually moderate our Gini coefficient.

Today, after taking into account government transfers and taxes, our Gini coefficient is about 0.36, which is better than the US at 0.39 and about the same as the UK.

We are however higher than in other European countries and Japan, because of their comprehensive welfare systems - a topic that I will come back to later.

To measure the strength of our core we use median household income.

In Japan, the US, UK, Denmark, Finland and many countries, the real median household income either stagnated or experienced close to zero growth between 2006 and 2016.

In contrast, over the same period, there was healthy growth in median real household income in Singapore. And this is a result of income growth across the board, including the lower income segments in Singapore.

The strongest evidence of a healthy middle income group in Singapore is our changing lifestyles over time.

Birthday and festive celebrations in restaurants, living in bigger HDB flats and ECs, family vacations overseas – these are not enjoyed by an exclusive few, but the broad masses.

This is also not a natural occurrence, but a result of our model of inclusive growth.

The challenge ahead is that many middle income families hope to do better, and for their children to be better off than them.

But given the high base we are at, the climb is getting harder.

We will still improve, but it will be most likely be in steps and not in leaps.

We should also not define a better life purely in economic and material terms, but also other aspects of a holistic quality of life – from a more pleasant and greener environment, to a more cohesive and caring society, with a greater pride in being Singaporean.

IMPROVING SOCIAL MOBILITY

The third dimension of inequality is churn, or social mobility.

The Ministry of Finance has studied the incomes of young Singaporeans in their 30s, compared to their parents.

Fourteen per cent of those with parents who were in the lowest income quintile when they were growing up, managed to move up to the top quintile of income earners when they are adults in their early 30s.

This rate is much higher than the 7.5 per cent in the US, 9 per cent in the UK, and 11.7 per cent in Denmark.

This is an important part of the Singapore character, and one of our biggest national achievements – that Singaporeans are able to transform the lives of their families over a generation.

A major contributing factor is our belief in meritocracy. But public policies play a big role as well. A key one is education.

We ensured universal access to good general education, which uplifted the population.

We do what we can to remove barriers erected by financial difficulty. Education at all levels is heavily subsidised.

Additional support is provided for children from lower-income families.

Because of that, many students who would have dropped out of school, were able to continue to be engaged in their studies.

This explains why in PISA, our 15-year-old students from disadvantaged backgrounds performed much better than their peers of similar backgrounds in developed countries, not just in literacy and numeracy, but also in other critical soft skills such as collaborative problem solving.

Compared to other countries, Singapore has one of the smallest proportions of low performers in PISA.

In other words, we have one of the smallest education underclass in Singapore. And if we wish to equalise the education outcomes further, we can, and there are two ways.

More than half of the students who live in 1-, 2- or 3-room HDB flats, took up diploma or degree programmes.   TODAY file photo.

We can reduce academic rigour across the board so that everyone performs more or less the same. Or we can strive harder to help those at the bottom level up, as we have done all these years.

Our choice is clear. By nature, we are a hardworking people, and that is a virtue.

We will continue to work hard, We will do what is right for students, support as many of them as possible to do what they love, and be the best they can be.

We also provide broad access to tertiary education. Today, seven in 10 of each Primary One cohort progress to publicly-funded degree or diploma programmes.

Amongst students who live in 1-, 2- or 3-room HDB flats, more than half did move up to diploma or degree programmes.

Our home ownership policies played a major part in social mobility too.

HDB provides significant housing grants to help Singaporeans buy their homes – with the lower-income getting more help than the higher-income.

During home visits at the HDB Build-To-Order estates in my constituency, I have met many families who had moved out of rental housing into their first owned flats, often with the help of additional housing subsidies.

With new schemes such as Fresh Start and the Tenants’ Priority Scheme, I am sure more will follow the path of the 3,000 public rental households who have moved into their own homes in the last five years (2013 to 2017).

But the success of our policies have led to a new set of issues.

Families who did well are able to pass down the privileges to their children, through better coaching, enrichment classes, and exposure to the world. Their children have a head start.

For families who cannot move up despite the strong and better support that is available now, we find their circumstances more dire and challenging than poor families of the past.

Social stratification is starting to become entrenched.

IMPROVING SOCIAL MIXING

Let me now turn to the fourth dimension of inequality, which is mix.

Singaporeans have always been relatively blind – to race, income and family backgrounds.

I used to play football at Bukit Merah Secondary School, until my knees got busted.

Without fail, someone would book the field every week, and whoever wanted to play just joined. So there were always strangers amongst us.

We did ‘o-bay-som’ or ‘chut-ho-bay’ to divide the teams. No one is bothered who was from where and what background. That is the relaxed Singapore way of life.

This culture is organic but is also carefully nurtured and reinforced. At least three public policies play a part in doing so.

First, housing. Every precinct or community is planned with a range of housing types, so that every estate has a good mix of Singaporeans from different backgrounds.

We meet one another along neighbourhood coffee shops, hawker centres, community centres, etc.

We also see children play eagerly and mingle freely at playgrounds, with parents or grandparents in tow. But we do not stop at hardware.

People’s Association and other community organisations hold many activities to encourage communal interactions and forge bonds.

Second is National Service, or NS. It is a universal rite of passage for every Singaporean male.

Every one trains, eats, and sleeps together. NS is not just a security apparatus, but also an important national institution which fosters social mixing at different stages of our lives.

Third, the education system. The great majority of primary schools in Singapore have students from all socio-economic levels.

Over 80 per cent of our schools have a relatively balanced mix of students from top and bottom socio-economic quintiles, with at least 5 per cent of their students from each of these two quintiles.

And children being children, will play and learn together. But we can do better, and we should and we will.

There is a perceptible reduction in social mixing in recent years.

The study by the Institute of Policy Studies on a nascent class divide has often been cited.

Some schools, due to their history, culture or programme offerings, have large proportions of students from higher income groups.

That has raised concerns, and a few principals have pointed that out in their public comments and speeches over the years.

People are free to choose their friends and who they want to be with.

But when groups are predominantly formed along socio-economic status – whether one is rich or poor - it is the start of stratification and that will poison our society over time.

Our policies will need to work against this trend, to actively bring Singaporeans of all backgrounds together.

WHAT CAN WE DO?

Let me summarise.

In many developed countries, inequality had been characterised by stagnation – of wages and economic opportunities for the masses.

Median incomes stayed still. There is a growing underclass.

In Singapore, our median income is still rising. Low- and middle-income families continue to experience real income growth and social mobility.

Singaporeans have been enjoying a rising standard of living and are motivated to do well. This is both a result of our culture, who we are, as well as our public policies.

But transforming from third world to first has created new problems and new forms of inequalities.

First, a rising middle class which aspires to do even better, but material progress is getting increasingly difficult given our high base;

Second, some low-income families find it difficult to uplift themselves, and stratification risks becoming entrenched;

Third, some among the higher-income segment are becoming socially distant from the rest.

And these are our three inequality problems.

Some think that universal welfare can be a solution to all these problems.

This means making assistance broadly and easily accessible not just to the low-income but also the middle-income.

Proponents argued that with universal welfare, there will be no stigma associated with social assistance, and the dignity of the low-income will be preserved.

A few countries have implemented universal welfare. But make no mistake, no handout is actually free. Someone has to pay for it.

To support universal welfare, taxes need to go up.

For these countries, average income tax on a typical worker is about 30 per cent. GST is typically 20-25 per cent.

In Singapore, half of our population do not pay personal income taxes, and GST is still single digit.

If we want universal welfare, taxes on ordinary folks, including the middle-income, will have to be much higher.

But the greater concern is the impact on motivation. I noticed yesterday, Mr Pritam Singh also alluded to it and it is a concern that cannot be dismissed.

A few weeks ago, in a public dialogue, I called for views and suggestions on how we can better tackle inequality. I thank everyone who contributed.

Let me quote a comment left on my Facebook Page by a teacher, Chee Kian. His father was a taxi driver, his mother a cleaner. He said:

“I benefitted from the meritocratic system in Singapore…I worked hard through the education system to achieve what I am today…However, I notice that it is getting harder for poorer students to break through the system like the past as privileged kids garner (many) advantages since young...and stay ahead…(We need to) bridge the gap between the rich and the under privileged through education so that more Singaporeans are able to succeed through working hard.”

This is a young man who clearly empathises with the challenges of the low income. But his solution was for the system to enable people to help themselves, not welfare.

What’s the difference? We make help available to them, but we also preserve their motivation, so that they continue to strive, instead of being passive recipients of welfare.

Members of this House have worked with low-income families week in week out and you understand their plight.

But let’s not forget the ethnographies of those like Chee Kian, who worked hard and bounced back, thanks to the social trampoline.

The Government must continue to extend assistance to the disadvantaged, and it will.

But making handouts easy and unconditional is not dignity. Self-reliance is.

National service, along with the education system and housing policies, help to promote social mixing.   TODAY file photo.

BEING BOLD AND WISE

What can we do in the next phase, especially for education? How should we do it?

The phrase ‘bold changes’ in the President’s Address received a lot of attention.

While we should be bold, we should not be reckless – for this will undo what had worked and served students well in the past. Let’s not undermine that.

We must be bold and we must be wise. To do this we need put our ears close to the ground, and listen to the voices of all segments of Singaporeans.

And if we listen close enough, we will also realise that the “voice of the people” does not deliver a singular message – rather, it offers a diversity of views, conflicting and complex, even as they remain compelling.

Take for example the call for streaming to be abolished. The argument is that it will remove the label and the stigma of the Normal streams.

But we also need to put ourselves in the students’ shoes. We cannot assume the students all want to be in the Express stream.

Some prefer the pace of learning in the Normal streams.

Many students will tell you they prefer to be a big fish in a smaller pond, rather than a small fish in a bigger pond.

Many students in the Normal (Technical) course also like the more applied and hands-on curriculum, which they feel plays to their strengths.

We cannot ignore how these students feel. Remember, stigma is not an education policy, but a result of our own attitudes and biases.

There is also the call for the Primary School Leaving Examination to be abolished so that we take away the stress and the unfairness, because those from better family backgrounds can afford additional help and prepare their children better for the examinations.

But if you speak to enough parents you also realise that many support the PSLE system.

Because the PSLE experience teaches their children to work hard, and to demonstrate what they have learned throughout their primary school years.

Many parents are also not overly stressed by it, because they don’t see PSLE as an exercise to chase for high marks, but rather as an objective and transparent way to decide which secondary schools their children will go to.

And for many families from humble background, PSLE is their way for them to do well and go to a school of their choice.

The alternative, which is to go by residential location, is even more unfair.

From 2021, we will replace the PSLE T-score system with wider Achievement Levels.

With this change, we will not differentiate students so finely for Secondary 1 Posting.

If the scores are no longer so fine, how do we then allocate secondary school places?

For students with the same scores, we will use tie-breakers – citizenship, choice and finally, ballot.

I am confident that this will reduce the stress of students and help them enjoy learning more.

This is a big step change, and it is coming in three years’ time.

To tackle inequality, Singaporeans must once again pledge ourselves, as one people, no matter their personal circumstances, to create a more equal society.   TODAY file photo.

We also heard many considered views and arguments on how we can improve the education system, better help the disadvantaged, and we have acted on them. We will see results in the coming years.

One strong view over the years is that one of the best ways to help children from lower income families is through quality preschool education. These are their formative years, and will have lasting impact.

We have been growing the capacity and quality of the preschool sector, including introducing MOE Kindergartens, where one-third of the places are set aside for children from low-income families.

At MOE Kindergartens, children don’t mug, study and get trained academically.

Instead, they learn through play and conversations. And through these activities, they develop confidence, social skills, as well as a foundation in literacy and numeracy.

We heard the voices of people such as Ms Denise Phua, who has always championed a programme-based, rather than class-based approach, to cater to the different learning needs and interests of students.

And so we are ensuring more porosity between such classes and streams. For students in the Normal stream, we introduced subject-based banding where they can attend certain classes together with students in the Express stream.

We introduced the Polytechnic Foundation Programme where good performing students can articulate directly to Polytechnics.

I think more can be done in this area.

We received so much feedback about stress in the system and too much rote learning.

So over the years, our curriculum and pedagogies have continuously evolved and changed.

Non-essential curriculum was cut down drastically. Long gone are the days where children are expected to do well just by memorisation.

Today, primary school students face their first examinations only at the end of primary two.

We embedded 21st Century Skills, which are critical soft skills, into the curriculum.

The way higher education is being delivered in the Institute of Technical Education, Polytechnics and Universities, have also been drastically transformed. It is nothing like what parents remember them to be.

We have also put in place more help for the young from vulnerable families.

KidSTART builds all round support for these children.

The Ministry of Social and Family Development has roped in social workers, counsellors, nurses, pediatricians, and educators to provide holistic support to these children.

The target is to help 1,000 children over the three-year pilot programme.

In lower primary, we will continue our efforts, including through the Learning Support Programme.

Through the Programme, which is conducted in small groups of 8 to 10, we dedicate resources to help weaker students.

This is why even though our student to teacher ratio is at the levels of other developed countries, MOE has refrained from implementing a general reduction in form class sizes.

Smaller form classes across the board can be beneficial to students, but it will deprive weaker students of the more dedicated support that we are able to provide today.

So embedded in our class size practices is also our social compact.

After-school environments matter too. Students need a supervised and secure environment to complete their homework, study for tests, and seek counsel and guidance.

By 2020, there will be student care centres in every primary school.

Admission policies greatly affect diversity in our schools.

For Primary 1 registration, 40 places in each school are set aside for Phases 2B and 2C – which are for children who do not have prior direct connections to the school.

From next year, secondary schools with affiliated primary schools will have to ring-fence 20 per cent of the places for students without affiliation.

We also work with many community partners. The major education and assistance programmes are funded and run by the Government in an ethnically-neutral way.

Self-Help Groups complement the effort by reaching out to vulnerable members of their communities, and offer additional help.

Let me share two stories. First is Mdm Sharinna Tan, a single parent to four children.

They used to live in a one-room rental flat in Bukit Merah. Mdm Tan worked as a part-time clerk earning S$1,000 a month.

Various organisations – Government agencies, ST Pocket Money Fund, public hospitals - stepped in to assist her.

CDAC reached out to her, and her children benefitted from one-to-one tuition under the Supervised Homework Group Programme.

Today, Mdm Tan is working as a sales coordinator, earning more than S$2,000 a month. She is the proud owner of a two-room HDB flat.

Her eldest son just graduated from Ngee Ann Polytechnic and won an award for the most outstanding academic performance in his course.

The other three children are studying in Ngee Ann Polytechnic, in ITE and in a secondary school. All are coping well.

The second story is of Mr Hairul Hakkim Khuthibutheen. When he was 14, his father passed away.

The family downgraded their flat. The mother had to return to the workforce to support the family. She worked as a factory operator and a service staff in a fast food chain.

Mr Hairul received help from various schemes, including MENDAKI, SINDA and bursaries from the Muslim Trust Fund.

That helped him complete his studies.

He graduated as the top student of National University of Singapore Law Faculty in 2016. Today, he is a Justice Law Clerk at the Supreme Court.

These are two of many Singaporeans whom our system has helped.

Finally, one of the best counter against inequality is SkillsFuture. If meritocracy is confined to academic excellence; success is defined narrowly as being a university graduate holding a professional or managerial position; then pathways will be limited, possibilities reduced, and opportunities curtailed.

There is a pertinent question in Chinese: 为什么要千军万马过一个独木桥？ Why ask an entire army to cross a river using a single plank? Why can’t we have many pathways to success?

In Switzerland, 35 per cent of youths go to universities, while two thirds of youths enrol in upper-secondary vocational and apprenticeship training.

Children, together with their parents, make those choices at a fairly young age, based on their talents and interests, with little or no stigma associated with any of the choices. The society respects everyone.

Through SkillsFuture, we want to help everyone discover their strengths and talents, build the pathways to help them achieve skills mastery, through lifelong learning and honing of their craft.

We have made some progress.

Today, we can celebrate our children choosing to be a coder, cyber security expert, chef, event organiser, creative designer, hospitality professional, nurse, early childhood educator, film-maker or craftsman.

And they have to undergo the requisite training, not necessarily in a university. This is not the case 10 years ago.

But a lot more needs to be done. We will have to develop even more pathways and opportunities within our education and training system.

Employers’ hiring and human resource practices have yet to wake up to this new mindset. Some employers have and I applaud them. Societal mindset will take even longer to evolve and change.

We will continue to improve our policies and we will not stop at these measures. My invitation for ideas and suggestions remains open.

From the multitude of voices, we will discern that singularity of action, a choice that is right for Singapore, and one which we must explain well, persuade people and defend publicly.

So bold moves need not always be major changes. They can be change in a way of thinking, a spark to add to the Singapore flame.

This has to be supported by an entrepreneurial attitude towards tackling problems such as inequality. We will actively look out for fresh ideas, and try new solutions. If we come across an interesting and promising approach, we will be prepared to

consider it, develop it further, run a pilot programme and see how  it works.

I started this speech by committing ourselves to tackling the "unfinished business" of inequality. I do not mean that it will ever be finished.

It will always remain a work in progress.

Today, we may be in a better situation than many other developed countries. But tackling inequality requires ceaseless striving.

It was so for the first men and women who sat in this House when our country was mired in turbulence, violence and uncertainty.

Today, we live in an era of peace and prosperity. An era where much wealth has been created, but much inequality still exists.

To tackle this challenge, we must once again pledge ourselves, as one people, no matter the circumstances of our birth, no matter the luck of our draw, no matter the successes and failures that attend our lives – to create a more equal society.

And we must keep working at it. We must do so by appealing to the sense of unity among Singaporeans, never by pitting one group against each other, pandering to divisive forces in society.

Tackling inequality is not just a long term challenge for tomorrow, but a national priority today. Fixing this is not the responsibility of any one segment of society.

It demands something from all of us, because there is no more vital task than bringing Singapore and Singaporeans together.