Good Morning,

Mr Liew Beng Keong, Organising Chairman
Student Leaders
Ladies and gentlemen

It is my pleasure to be here this morning to share on a topic that is close to my heart and constantly on my head - the rich-poor divide. In fact embedded in the CDC's three key roles of assisting the needy, bonding the people and connecting the community - or ABC for short - is the implicit charter to help bridge the income divide by motivating and rallying the more able in the community - be they individuals or organizations - to help the less abled. Hence, the rich-poor divide is an issue that we at the CDC have to constantly grapple with.

Relevance to Youths

It has been said that we do not bequeath our communities to our children, but rather, we borrow our communities from them. A profound statement. From this perspective, no group has a greater stake in building and nurturing sustainable communities in Singapore than our youth. While the economic pie might not be equally divided, each Singaporean must feel that he or she is involved in the task of building our nation, connecting our people and can therefore collectively aspire for a better future.

In our continued quest to make Singapore a great global city to live in and the best home for Singaporeans, the younger generation like you who are the pillars of our future, must play your part in conceptualising possible futures for our country, and ultimately bring about positive change in society.

Globalisation and Its Impacts

As a small open economy, we have benefited trememdously from globalization and free trade. But - and this is a big "but" - globalization has also brought with it issues like the widening income gap. This will continue to put pressure especially on the lower-skilled and less-educated workers. As economies become more inter-connected and inter-dependent, competition will also intensify.

During PM Lee's National Day Rally Speech in 2007, he reminded Singaporeans that the widening income gap is due to globalization, technology and cut-throat competition and that the winner of this fierce competition will reap all the benefits.

For example, the continuous race for lower production and labour costs results in outsourcing and brings about lower prices for the consumer, but it also has the adverse effect of reducing wages, or worse still, raising the redundancies of lower-skilled workers. It is obvious here that those who possess relevant skills and knowledge will thrive and those without will be marginalized. It's a "winner takes all" situation.

Income Inequality in Singapore

So, how bad is income inequality in Singapore now? Based on data from the Department of Statistics, the median household income for those living in smaller housing types (HDB 3-room or smaller flats) grew by 13-15% in 2008, while the median income of those living in larger flats grew by a smaller 9-12%. The disparity in household income from work per household member also dropped in 2008.

Economists have devised a more scientific measure of measuring the rich-poor divide. It's called the Gini coefficient index. The Gini coefficient measures the degree of inequality in the distribution of family income in a country. If income were distributed with perfect equality, the index will be zero. It also means that the lower the Gini index, the lower the income inequality in a country.

For 2008, the Gini coefficient index decreased from 0.489 in 2007 to 0.481 in 2008. This is actually the first decline in Singapore’s Gini coefficient since 1998. Taking into account government’s disbursement of surpluses in 2008, which is weighted in favour of the low income, the figure dipped further to 0.462. Hence, there seems to be some improvements in income disparity in recent times. Nonetheless, we still need to keep a watchful eye on it. If the income gap widens again, new fault-lines in society may emerge.

Bridging the Rich-Poor Divide

The issue of the rich-poor divide is not unique to Singapore and plagues most developed countries as well as rapidly developing countries such as China and India. In these countries the rich-poor divide is even more accentuated. Indeed, they often lead to social instability that is manifested in the form of demonstrations and riots. The Xinjiang unrest, for example, was not merely a face-off between Han Chinese and the Uighurs. It has been said that underlying the tension was also the disproportionate distribution of jobs and benefits between the two groups.

What can be done to address the issue of the rich-poor divide? What can young Singaporeans like you do? How can we deploy our limited resources to maximum effect and reduce the differences between the privileged and underprivileged segments in our society?

Let me share with you some key strategies the government has already put in place to address this issue.

Meritocracy

A key principle that the government has steadfastly adhered to since Independence in order to ensure that every strata of society has equal opportunity to move up the social ladder is “meritocracy”. Appointments to various government organizations, promotion through the ranks, admissions to higher institutions of learning and access to scholarships in the government sector are based on merit and not by patronage or lineage. It was revealed for instance that a sizeable 47% of the PSC scholarship recipients in 2008 lived in HDB flats, whilst 57% of the A Star scholarship recipients in the same year are heartlanders.

Our meritocractic system has allowed children from low income families to enter premier schools, become CEOs of organizations, top soldiers in the military service, accomplished professionals, and even cabinet Ministers, based squarely on their talent and achievements.

Indeed we need to jealously guard this core principle of governance in order to give hope and motivation to everyone to give of their best and excel in their organization, in society and to progress as a nation.

Redistributive Fiscal Policies

Many government measures such as GST credits, Economic Restructuring Shares, utility and service and conservancy charge subsidies etc are weighted in favour of low income households with higher amounts given to lower income households. This recognizes that low income households need more help to cope with their living expenses. It would also help to mitigate the rich-poor divide. Workfare Income Supplement for low wage earners also give a leg up to this group.

Other measures to assist the low income cope include many National ComCare schemes like kindergarten and child care subsidies, education bursaries and CPF housing grants with more to the lower income households to purchase HDB flats.

Education

Two years ago, at the National Day Rally, PM Lee shared that you can expect your wages to go up by 14% for every additional year you go to school. PM Lee’s insight highlighted that education is one strategy to level up our society. It does so by enhancing the quality of Singapore’s only resource, its people. The latest statistics reveal an improvement in the educational profile of Singapore residents, with a higher proportion of university graduates from 6.7% in 1990 to 41% in 2008.

The strong emphasis on compulsory and equal opportunity education has had a vital and positive correlation with social and economic development.

Skills Upgrading

The rich-poor divide is delineated not just between the educated and uneducated but also between the skilled and low-skilled, although there are obvious correlations between education and work skills.

The battle is now fought not only in the classroom but also in the workforce. In fact, the competition in the employment market is far fiercer than the fight for grades, because livelihood is at stake.

Of the 10,900 workers retrenched in Q1 2009, nearly three-quarters (8,000) are in manufacturing. This clearly reflects the uneven fate that low-skilled workers experience during the onslaught of the economic downturn. Hence, the Community Development Councils, together with our national counterparts at the Workforce Development Agency (WDA) and National Trade Union Congress (NTUC), provide holistic employment assistance to job seekers, specifically the low skilled, through intensive job profiling, customized mindset workshops, skills trainings and upgrading as well as job referrals.

SPUR (Skills Programme for Upgrading and Resilience) was also introduced this year to encourage companies to embrace training and skills upgrading of their workers so that they would be better equipped when the upturn comes.

This measure also helps the company to avoid retrenching workers even though they have idle capacity as a result of the downturn. To date, almost 125,000 workers have benefited from SPUR. Making continuous learning and skill upgrading available to workers at highly subsidized and affordable fees are key measures to help the less educated and skilled to remain employable and move up the value chain.

Based on South West CDC’s database, more than 40% of those seeking financial assistance have only primary school and below education, and a high 60% earn below $1000. Therefore, we know that the only long-term solution for these needy families, other than depending on the future of their children, is training and skills upgrading so that they can find better paying jobs.

Community Self Help

The greatness of a community lies in the actions of the individuals who make up the community. A warm and resilient community is built among others, on individuals displaying mutual care for others, of neighbours watching out for each other and of corporations looking after its workers and their environments. As individuals, we may have little direct control over the conditions that have created this rich-poor divide, but we can certainly make a difference through individual initiatives, such as volunteering in programmes to empower the disadvantaged, or contributing to charitable causes that seek to alleviate the economic and social conditions of the poor.

From the National Volunteer & Philanthropy Centre (NVPC)’s Individual Giving Survey 2008, we know that more Singaporeans are now volunteering (16.9% in 2008 compared to 15.5% in 2006). Individuals also gave $958 million in donations to nonprofit organizations and Institutions of Public Character (IPCs) in 2008 compared to $341 million in 2006. This is a positive sign of the maturity of our society.

At South West CDC, we support and promote volunteerism and philanthropy. Social causes are an integral part of our community projects and programmes. In many instances, our community bonding activities also involve community-conscious youths like all of you. Youth Hands On Day @ South West and Project Joy, for instance, mobilize the district’s youths to own their community by initiating community projects to improve the lives of the needy, such as volunteering at voluntary welfare organizations, bringing cheer to the elderly at rental blocks, and/or raising funds for charity.

Caring can also come from corporations, who are important stakeholders within any community. In 2008, the South West CDC’s corporate partners gave over $780,000 to uplift as well as empower the lives of needy families and residents in the South West district. Some of these programmes, such as the annual bursary for needy children that the CDC offers (in partnership with ExxonMobil), or a back-to-school pack (compliments of Koh Kock Leong Enterprise) comprising school necessities like school bag, shoes and stationery for school-going children, or heavily subsidized PCs cum IT boot camp for needy families (with donations from Lee Foundation), all seek to reduce the rich-poor divide by focusing on creating equal educational opportunities for children disadvantaged by poverty.

Another project, the South West Youth Camp, empowers disadvantaged youths with confidence, problem-solving skills and even seek to instill an entrepreneurial spirit. These upstream bridges are built on the firm belief mentioned earlier that education is the long term key to bridging the rich-poor divide.

Conclusion

The issue of the rich-poor divide will not go away soon and in fact have every tendency to exacerbate with globalization, rapid technological advances and ever growing emphasis on innovation and entrepreneurship. There will always be the lowest income strata that we will need to help to ensure that they progress along with the rest of the nation. It is important that we provide avenues for the low income to get out of the poverty trap through the principles I have described -- meritocracy, equal access to education, skills upgrading and helping them to level up until they become self reliant through various fiscal and other measures, and finally, community self-help.

As potential leaders of the future, you have inherited the responsibility and challenging task of shaping the future well-being of our country, and of fellow Singaporeans. We want to hear what really matters to you, how you feel and what you can do to alleviate the rich-poor divide issue facing nations in general today and Singapore in particular. Be an activist, have the courage to speak up to share what is on your mind and heart about the issue, and have the unction to go out there and do what it takes.

Let me end by commending the efforts of the five polytechnics and their strategic partners in bringing together student leaders from the respective institutions to exchange their views and discuss pertinent issues of common concern and for the betterment of Singapore.

I wish all of you an engaging and meaningful forum.

Thank you!