9 Jul 2011: The New Social Compact in Singapore

I spoke at a public forum hosted by the Young Sikh Association http://www.ysas.org on 9 Jul 2011, alongside Zakir Hussain of the Straits Times, PAP MP Inderjit Singh and Dr Tan Chi Chiu, Chairman of the Lien Centre for Social Innovation, Singapore Management University on the new social compact in Singapore. It was yet another fascinating discussion where I found Dr Tan’s views particularly thoughtful and worthy of greater circulation. Specifically, he shared many insights on how the government could move forward together with civil society.

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Pritam Singh: YSA Speech 9 Jul 2011

Good afternoon ladies and gentlemen. Before I begin I would like to thank the Young Sikh Association for inviting me to share my thoughts with all of you.

From the outset, I would like to say that the public discourse on a new social compact is not something new. The questions that are being posed this afternoon were already being asked by Singaporeans 10 years ago, as the second generation of PAP leaders handed over the reins of the power to the third generation. Let me take you on a short journey, thanks to the mainstream media to make this point.

First, I present an article entitled, “Poor get more help in PM’s new deal” dated 21 August 2001 by then Straits Times journalist and current PAP MP Irene Ng. The article was a reference to then PM Goh Chok Tong’s 2001 National Day rally. The article outlined the new social contract as follows, and I quote, “The new contract continues the emphasis on self-reliance and family ties. But it goes on to say you must work or at least go for retraining, and if you do, the Government will give some support if you earn too little to support your family. And if you fall in the low-income group, you will get more. It is an approach that has been introduced into the system over the years in an ad-hoc and piecemeal fashion, with an announcement of a CPF top-up here, a HDB service and conservancy rebate and worker-upgrading programme there.”

In 2003, Paul Jacob of the Straits Times in a very appropriately titled article called, “Is the social compact changing?” commented (quote) “something has changed when ordinary members of the public take on new ministers and policies. (unquote)” So by 2003, the reality of a more questioning and critical population had been readily noted, and evidently, Singaporeans were no longer just pragmatic individuals.

In 2005, former Chairman of the PAP, Lim Boon Heng, openly noted:

“In the past, better education, better health care and better housing were clearly seen as key components of this social compact. Today, low-income Singaporeans may feel that they are shouldering a higher share of the costs than before.

‘Will this lead to social tension? Not if we can show the lower income that we care and play our part to help them.

‘So, how do we reshape the social compact, without destroying self-reliance and the incentive to work, and without loading the cost on to business?”

In 2006, in an article written by Daniel Buenas in the Business Times, current DPM Tharman Shanmugaratnam noted:

“Not only has income distribution become unequal, but lower-income groups, particularly unskilled workers, have experienced stagnation, or sometimes decline, in their standards of living.’

He added that, if left unchecked, these developments will lead to a breakdown of the social compact required for Singapore to continue to participate in a global economy and reap the benefits of globalisation for the majority of the population. ‘We have to address this,’ he said. ‘Through the CPF system, in particular, we have to continue to do that – saving for the future needs of the lower-income, including their medical needs and their other retirement needs, not just provide for the present.

‘It requires some political stamina. But, well, I think that is the most responsible thing to do.‘”

Now if you forgot what I have said so far, its ok, because now is the time to sit up and take notice of the most lucid and thoughtful analysis of the new social compact that Singaporeans were thinking about over the last decade. The next article I am going to refer to appeared in the Straits Times on 23 Nov 2007. It was written by a gentleman by the name of Yeoh Lam Keong. Today, he is the Managing Director and Chief Economist at the Economic Strategy Dept of the Government of Singapore Investment Corporation (GIC). The article was so profound that the Wall Street Journal and Newsweek found it appropriate to write a piece on the basis of his insights and revelations. And yes, no surprise, the title of Yeoh Lam Keong’s article was “A New Social Compact for Singapore”.

I tried to select appropriate excerpts to share with you, but there is so much of value in that piece towards our discussion today that I have decided to spend a few minutes reading out what he so presiently delivered 4 years ago in 2007:

“Since the late 1990s, a fundamental change has taken place. Median real wages are no longer rising with robust growth. Instead, they have been roughly stagnating since 1998. For the bottom 60 percent of workers, individual wages have, in fact, cumulatively declined by 7 to 15 per cent over the past five years up to last year, despite 5 to 7 per cent GDP growth.

The poorest and least skilled have been the hardest hit. Median monthly starting pay for cleaners and labourers has fallen by nearly one-third, from $860 to $600, between 1996 and (2006). While household incomes especially of the bottom 30 per cent rebounded last year, this is due to jobs being plentiful enough for more family members to work. Yet the poor have to run faster just to stand still. The bottom 30 percent have now experienced stagnating real household incomes for eight to 10 years.

In the long run, this malign combination of median wage stagnation and rising inequality is potentially poisonous for the social compact underpinning Singapore’s virtuous circle of strong governance.

If the median worker faces long-term wage stagnation, the credibility of tough policies – will be undermined. Many will feel their stake in the common enterprise of prosperity has been eroded. What remains may be the bitter, zero-sum politics of envy and dead-end populism.

Current net Workfare payments of around $80 to $100 per month are a long way from being able to bridge the poverty gap between bare subsistence and the small surplus needed to invest in human capital at the household level. Yet Workfare remains the fastest way to get there without compromising the work ethic.

The political will and policy framework to deal with wage stagnation may well be one of the biggest tests of compassion, pragmatism and policy innovation Singapore has faced. However, some subtle risks also arise from our traditional policy distrust of large-scale welfare, or direct social spending to address poverty.

The latter is perhaps more difficult to deal with, as it reflects a policy paradigm that may also need radical change. A stronger, direct social safety net may now need to be seen by both policymakers and the public as an institution that enables policy to take advantage of globalisation more quickly and boldly, rather than one that erodes the work ethic, drains the Budget or hamstrings economic reform.

Can we, policymakers as well as citizens, be bold, compassionate and creative enough to re-imagine and remake our social compact, one that includes a social safety net more suited to the current mega-trends of globalisation?”

The last government official to speak at length on the social compact was current Emiritus Senior Minister Goh Chok Tong at the Singapore-China forum in 2010. ESM Goh explained Singapore’s success through three key elements that defined our social compact. ESM Goh identified our education system, our multi-racialism, and the decision to pay public officials competitive wages as central to our social compact.

So there you have it – six articles sourced from the mainstream media, from 2001 to 2010, some very quite presciently premonitioning the drivers of a new social compact for Singapore. Without doubt, the new social compact did not become a reality after 7 May 2011. It has been in gestation for the last 10 years, under the PAP’s watch.

In the aftermath of the elections, we finally see the PAP responding. Why did it take them this long, that is not for me to say. But during our rally speeches, the Workers’ Party did allude to the reality that the PAP listens to the wishes of the electorate on polling day – your vote is indeed very powerful. In 1991, when 4 opposition members of parliament were elected, the PAP duly formed a cost review committee to address cost of living issues, which were raised by the opposition during those elections.

In the aftermath of the 2011 elections, we have already come to know that three central planks of Singapore’s social compact are being reviewed: HDB policy – any review of which has a direct impact on CPF, healthcare, and ministerial salaries. Lets be clear about it, the shape of the new social compact is in the PAP’s hands. The Workers’ Party, and I am sure many Singaporeans, certainly look forward their recommendations.

Ladies and gentlemen, so far, I have alluded to the hard aspects of the new social compact. Let me conclude, with a view to provoke more discussion later about the soft aspects of this new social compact. For the longest time, from the time of the first-generation of PAP leaders, the public discourse has not been about individuals, but about community.

At its height, this national ideology was framed with a view to reject individualism. But over the last few years, even concepts of community have been shaken with 1/3 of Singapore comprising of foreigners. Some well-meaning Singaporeans fear that we have become more xenophobic. However, this fear of xenophobia may not be a function more foreigners in Singapore, many of whom are not socialized to the no spitting and no littering campaigns of the Singapore many of us grew up in. On the contrary, it is also helpful to remember that we are the third or fourth most densely populated countries in the world today – many Singaporeans also feel a sense of dislocation, unfamiliarity and discomfort with the Singapore they grew up in. Let us not underestimate this emotion as we deliberate and consider what the new social compact will look like. It may well be timely to conceive of the new social compact not only in terms of community as the PAP has done for the longest time, but in terms of what individual Singaporeans like you and me, and I hazard even PAP supporters desire as well.

Thank you very much.