The Economist - Welfare in Singapore: The stingy nanny

I was browsing The Economist when I happen to come across an article on welfare in Singapore. An article like the below will never ever going to be published in local Singapore.

The stingy nanny

Feb 13th 2010 | SINGAPORE

From Economist.com

The city-state stays strict with the needy

FOND of having the last word, Singapore's government can nevertheless be flexible. Who would have thought it would be building casinos? But one policy that shows no sign of reversing is Singapore’s antipathy towards public welfare. The state’s attitude can be simply put: being poor here is your own fault. Citizens are obliged to save for the future, rely on their families and not expect any handouts from the government unless they hit rock bottom. The emphasis on family extends into old age: retired parents can sue children who fail to support them. In government circles “welfare” remains a dirty word, cousin to sloth and waste. Singapore may be a nanny state, but it is by no means an indulgent nanny.

The aftershock of a deep recession, which pushed unemployment among citizens up to 4.1% in September—high for Singapore—has not altered the popular belief that the dole is bad for society. The casinos, which open on February 14th, have already helped reduce unemployment, which by December had fallen back to 3%, seasonally adjusted.

The government does run a handful of schemes directed at some of the needy, from low-income students to the unassisted elderly. But these benefits are rigorously means-tested and granted only sparingly. The most destitute citizens’ families may apply for public assistance; only 3,000 currently qualify. Laid-off workers receive no automatic benefits. Instead they are sorted into “workfare” and training schemes.

Applicants complain that the process of seeking help is made tiresome and humiliating. Indeed that could be the point, supposing it deters free-riders. Officials take a dim view of European-style welfare systems, which are said to beget laziness. The Ministry of Community Development, Youth and Sports (MCYS), which administers the various schemes, says theirs are designed as a “springboard” to self-reliance. Getting people back to work takes priority over relieving any temporary drop in income. In a fiscal stimulus unveiled a year ago in response to the financial crisis, S$5.1 billion ($3.6 billion) was allocated for employment measures, including grants to companies to retain staff. Those who remain out of work can join a government training scheme; by December, 169,000 unemployed workers had done so.

Many Singaporeans are wedded to their jobs and look askance at idleness of any kind. The government is leery of generous handouts, fearing they might undercut the work ethic while burdening taxpayers. But the thinness of the safety net also reflects a widespread article of faith, recited and reinforced over the years. Even among the social workers who work in hard-hit communities there is surprisingly little frustration at the meagreness of the handouts on offer or at the lengthy application process. One explains that Singapore needs to weed out undeserving claimants and shakes his head at the potential cost of a comprehensive welfare service. Yet in his next breath he mentions a number of local families who have been forced to sleep rough since mortgage lenders foreclosed on their flats.

Nobody doubts that wealthy Singapore could be more generous. In 2008 the World Bank rated it the third richest country in the world, in terms of GDP per head at purchasing-power parity. And the idea that its Big-Brotherly government might be outfoxed by conniving welfare queens seems odd. When a visiting news crew filmed an elderly woman scavenging in Chinatown and bemoaning her homelessness, the government promptly identified her as a miserly flat-owner who did not need to beg. Indeed, acute poverty is hard to spot in Singapore. Public housing is in good shape; no slums are allowed to fester. Soup kitchens do exist, but foreign labourers are often first in line.

But Singapore still faces the challenge of rising inequality in a society that is also rapidly ageing. By 2030, says MCYS, one in five Singaporeans will be over 65 (UBS, whose largest shareholder is Singapore’s sovereign-wealth fund, has estimated the date at 2020). Incomes have stagnated or even fallen at the bottom of the spectrum, as the rich pull further ahead of the middle classes. Long-term unemployment among middle-aged professionals, who do not qualify for workfare, is on the rise, says Leong Sze Hian, a financial expert and blogger.

Native resentment is also growing against the influx of migrant workers: 35% of the workforce of 3m is now foreign. It is often cheaper for companies to import semi-skilled and unskilled workers—there were 680,000 at last count—than to hire locals, who require pension contributions. Official reassurances that migrants create growth do not convince those competing for scarce jobs. Lee Kuan Yew, Singapore’s founding father and still its "minister mentor" has maintained that ambitious migrants help to keep citizens on their toes. In an interview given to National Geographic last July he said that if native Singaporeans lag behind “hungry” foreigners because “the spurs are not stuck on [their] hinds”, that is not the state’s problem to solve.

This nascent backlash may eventually soften the anti-welfare tone set by Mr Lee. The Economic Society of Singapore (ESS)—not exactly a radical cell—recently proposed to a government committee that it should build a more robust safety net, starting with unemployment insurance. This would promote social stability and help muster public support for Singapore’s open-door migration policies, it argues. Properly designed, such measures would not create disincentives to work and thrift. “While self-reliance is a good principle in general, it may be neither efficient nor just if taken to extremes,” noted the ESS.