"He had discovered a great law of human action, without knowing it - namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to obtain." - Mark Twain

How about a woman or girl?

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Singapore's policy responses to ageing, inequality and poverty: An assessment
Mukul G. Asher and Amarendu Nandy
LKY School of Public Policy, National University of Singapore

"Singapore represents an interesting case study as its strategy differs significantly from those of other high-income Asian countries such as Japan and the Republic of Korea; or Taiwan, China. They have had fairly low levels of in-migration, and have adopted conventional welfare state instruments involving significant social risk-pooling in financing retirement and healthcare...

[A] survey.. in early 2007 indicated that nearly 43 per cent of Singaporeans believed the government is more concerned about foreign talent than citizens; and doubted that high in-migration helps create jobs and fresh opportunities. Nearly nine out of ten respondents feared that foreign talent will take away their jobs (Bala, 2007). It is significant that these perceptions are held when currently Singapore is experiencing a favourable macroeconomic cycle. This suggests that political management will become even more difficult if employment growth slows substantially. This is relevant as the 6.5 million population target implies a much higher level of net in-migration...

Women as a group have lower exposure to the labour force, and on average earn less, than men do. But as they live longer, they require retirement financing for a longer period. The gender issue is particularly important in the mandatory savings schemes, as there are no survivor’s benefits or protection against longevity risk, i.e. the risk that retirement savingsmay be exhausted before a person dies. The inflation risk will be particularly burdensome for aged women...

the share of wages in GDP has declined from 47 per cent in 2001 to 41 per cent in 2006 (Singapore, 2007); while the share of capital has increased correspondingly... Public policies, particularly centring on a reduced tax burden on capital income and reduced mandatory contributions by employers to the CPF, have been partially responsible for the declining share of wages...

Resistance by currently employed citizens and permanent residents in all occupations to job losses and restructuring also increases in the absence of social risk-pooling in health and pensions...

High and increasing income inequalities are an outcome of the particular set of policies adopted by Singapore, and not due to the general effect of globalization alone.

Some analysts have explicitly raised the issue of whether pursuit of high growth is worthwhile if it is leading to such high inequalities, and to uneven distribution of gains between citizens and non-citizens...

The share of private provision of healthcare in Singapore is around three-fourths, with one-fourth coming from the government budget (Asher and Nandy, 2006a). The respective shares are reversed in the OECD countries. Yet the private-public composition of Singapore’s healthcare expenditure in 1980 resembled the current OECD composition. So public policies have contributed to a lopsided share for private provision in healthcare. The share of third-party payment through insurance and other risk-pooling instruments in Singapore’s national health expenditure is extremely low...

The practice of requiring the full cost of anticipated medical procedures as a deposit even when the patient has valid medical insurance is not uncommon, including in public hospitals in Singapore (Straits Times, 9 July 2007, p. H10).11 This defeats the purpose of having medical insurance, and unnecessarily increases anxiety and insecurity among patients and their family members...

Pension experts recommend a replacement ratio (i.e. post-retirement income as a percentage of preretirement income) of between 66 and 75 per cent, with requisite longevity and inflation risks protection, and survivors’ and disability benefits.

As the government does not want to release data for estimating replacement rates on the basis of actual CPF cash balances, the only technique available is simulation analysis... The replacement rate for most members will be substantially below the recommended rate...

In 2006, the average balance per member of $40,598 was less than the per capita GDP of $46,832. This is quite inadequate as an average person will require financing for at least two decades during retirement. The increase from 62 to 65 years in the age at which a member can withdraw the minimum sum in monthly instalments will not make additional resources available during retirement...

The proportion of contributions withdrawn during the pre-retirement period is very high, averaging 82.7 per cent during the 2001-06 period (CPF, 2006). The share of contributions devoted to retirement is therefore low...

Design and governance issues also act against the adequacy objective; and so does the tendency to use the CPF system as a short-termstabilization instrument...

The administered interest rate structure, and lack of transparency and accountability in the ultimate investments of CPF balances ($125.8 billion as of December 2006), have meant low real returns on these balances (Figure 2).16 As the returns are lower than their corresponding growth in GDP and real wages, the replacement rate is also likely to be low...

[If] the Government of Singapore Investment Corporation (GSIC)... obtains higher returns than those credited to the CPF members, the difference is a tax on CPF wealth. This is large, growing, and highly regressive as low-income households are likely to have a disproportionate share of their wealth in CPF balances.

It should be emphasized, even without the above design and governance features, that a single-tier retirement financing system involving only mandatory savings can never provide an adequate replacement rate; or address inflation and longevity risks; or provide survivor and disability benefits (Asher and Nandy, 2006b). A multi-tier system involving a mixture of defined benefit (DB) and defined contribution (DC) schemes, with varying degrees of risk-pooling or risk-sharing arrangements, is needed for a robust, adequate, and equitable social security system.

Recommendations by the Social Security Commission of Chile recognize this point. Chile was a pioneer in introducing mandatory savings accounts for social security in 1981. The recommendation to shift from a single-tier to amulti-tier social security system is of huge significance, suggesting a paradigm shift....

Case-by-case, stringent means-tested approaches, which by definition have high transaction costs, are preferred by the policymakers in Singapore. As the number of older people increases rapidly after 2010 (Table 2), and as the number of those relying on social assistance programmes increases, the transaction costs of such methods will increase relative to the benefits provided. Ad hoc social welfare schemes in Singapore are also inequitable...

Only 0.73 million persons, equivalent to 31 per cent of the labour force, paid income tax in 2005 (IRAS, 2006). So the income-tax-based arrangements are regressive, with most of the subsidies [from tax relief] going to upper-middle- and high-income groups...

Owing to the delayed nature of the actual WIS [Workfare] distribution, and its restricted nature given that most of the amount is deposited in the CPF account, the positive impact on work incentives is likely to be minor in static terms...

Most community agencies are partially funded by the State through subventions or matching donations; and they also have close connections with the ruling party. This is because the demarcation line between the public and private sectors in Singapore is not sharp (Hamilton-Hart, 2000). It is not surprising that genuinely private initiatives in the social sector are rare in Singapore...

Singapore represents an instructive case study in managing globalization and addressing ageing, inequality, and poverty challenges... The end result of these social policies has been to make individuals and their families bear disproportionate risks of old age and of low incomes, with grossly inadequate social risk-pooling...

Singapore has the fiscal, institutional, and organizational capacities to shift towards more equitable, adequate, and efficient social safety nets, and mitigate inequalities and relative poverty... [The effect of keeping the current system] will be a much lower level of risk protection, a much higher correlation between poverty and old age, and much greater inequalities...

[In] Singapore... adherence to social Darwinism and desire to perpetuate socio-political control are additional factors preventing the development of a much-needed multi-tier social protection system"


From a presentation of this paper:

"Large net immigration is positive for growth, but raises subtle and profound issues for Singapore’s identity, political and social management. Data secrecy precludes more detailed analysis of net immigration trends...

Singapore’s revealed preference for single‐minded high growth has contributed significantly to the above outcomes...

Policymakers do not regard socio‐economic information as a public good but as a strategic resource to be used tactically.

This, along with heavily constrained environment for vigorous public policy debates, greatly hampers the analysis of the CPF system...

Singapore lacks tradition of undertaking publicly available data‐intensive rigorous analytical studies to assess the actual outcomes of these schemes...

Income tax based arrangements [to encourage childbirth] are regressive, with most of the subsidies going to upper‐middle and high income groups. But these are the individuals with greater choice, and lower fertility rates. This inherently limits the effectiveness of income‐tax incentives for increasing TFR."