01 Aug 2018

Social Welfare: Are We Missing the Point?

In Singapore and Hong Kong, schemes that aim to bridge the social divide are regularly introduced. Are these mechanisms solving the problem, or obscuring the real path to progress?

One of the most enduring debates among policymakers is the relationship between welfare and work. Conservatives often argue against welfare, citing its tendency to disincentivise work and cultivate a dependency on government handouts.

As US Republican Congressman Paul Ryan once said: We don't want to turn the safety net into a hammock that lulls able-bodied people into lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.

That is an extreme policy approach that implies that the responsibility for helping the poor and needy should fall squarely in the hands of the people fellow citizens, corporations engaging in philanthropy, and charity organisations.

Meanwhile, those on the left such as former US National Security Advisor Susan Rice[i] and former Indian Prime Minister Manmohan Singh[ii] advocate the safety net approach of unconditional state support for the poor and needy. Their arguments are bolstered by the rising income inequality of developed nations, the increasing burden of ageing populations, and the failure of the trickle-down economic theory in a globalised world.

A Change in Tack?

The Singapore government, a staunch advocate of self-reliance [1]and broad familial and community responsibility with regard to social support[iii], has recognised that it needs to contribute more in light of the growing wealth gap in the city-state, observes Professor Alfred Muluan Wu of the Lee Kuan Yew School of Public Policy. In the span of a decade, spending on social development has increased nearly threefold: from about S$12.7 billion in financial year 2006 to an estimated S$32 billion in 2016[iv].

However, Singapore is still careful to avoid the safety net approach adopted by governments such as the Hong Kong SAR government, where the bottom 10 percent of the population receive official aid, according to Prof Alfred. It has instead introduced a range of workfare mechanisms that link aid to work, such as the Workfare Income Supplement (WIS) scheme in 2007 that tops up wages of the bottom 20 percent of workers every month[v] and the Wage Credit Scheme in 2013 to co-fund wage increases for local workers up to a gross monthly wage of S$4,000[vi].

It's not just about Introducing New Policies

Faced with increasing societal pressures, Singapore continues to expand its safety net, albeit again stopping short of adopting the universal welfare approach. In 2008, the city-state introduced the CPF Lifelong Income For the Elderly (LIFE) scheme as its first-ever national annuities scheme that has a lifelong monthly payout[vii]. In 2016, to further supplement the incomes of workers who are past the retirement age, the government launched the Silver Support Scheme. The latter targets the bottom 20 percent of citizens aged 65 and above who have had low incomes through life and who currently have little or no family support[viii].

It remains to be seen what other inventive schemes the Singapore government can propose and stack onto existing ones to help vulnerable demographics without straying to outright welfare. But rather than spending brainpower and potentially increasing administrative burden with more schemes, attention needs to be spent fine-tuning existing ones as they are not without their faults, argues Lee Kuan Yew School of Public Policy Adjunct Professor Yeoh Lam Keong, who has spoken out on the inadequacies of WIS and the Silver Support Scheme. He said in 2015 that the schemes, while great, need to be tripled in terms of payout amounts to really make a difference to the target demographic[ix].

More than two years on from Yeoh's comments, the Singapore government has made incremental increases to the schemes' payout amounts, but not to the extent that Yeoh a former chief economist at GIC said was necessary. Despite recent budget surpluses and high net government investment returns, Prof Alfred notes that there is still room for improvement in helping the poor and needy.

Not Just About Money

Although Singapore is making strides in providing greater welfare on its own terms, the government needs to bear in mind that the objective of social aid should go beyond providing economic assistance.

Nobel economics laureate Amartya Sen, an Indian economist and philosopher, puts the point across succinctly: poverty is not just about what people have, nor how they feel, but the limitations on what they can do or be[x]. As not all capabilities necessary for achieving a better standard of living are readily convertible from incomes, there is a need for mechanisms that provide opportunities to increase capabilities, on top of schemes that supplement income from work.

Initiatives to increase capabilities is what Singapore's former Finance Minister Tharman Shanmugaratnam terms the trampoline approach, contrasting it with the proverbial safety net. He told The Straits Times in January 2018, The trampoline doesn't mean you leave people on their own. It means that you don't just provide a safety net, but help people to bounce back up.[xi]

Accordingly, the Singapore government has launched schemes that aim to improve social mobility, such as SkillsFuture, which Tharman now Singapore's Deputy Prime Minister says can empower citizens throughout life via issued credit that can be used to pay for a wide range of educational courses. In a similar vein, with the KidSTART programme the government aims to give children from low-income families and vulnerable young children a good start in life, via initiatives such as regular home visits and weekly, community-based playgroup sessions. These mechanisms can be classified under the trampoline approach.

The Capability Gap

While some schemes may sound good on paper, implementing trampoline mechanisms alone is insufficient in addressing the capability woes faced by vulnerable segments of the population. Typically, these woes encompass social issues that need to be overcome via on-the-ground coordination and human-to-human understanding and interaction not just disbursements of cash, argues Lim Jingzhou, an active grassroots volunteer in the city-state.

Jingzhou is the co-founder of the Cassia Resettlement Team, a support group for mostly elderly residents re-located in 2016 and 2017 following the redevelopment of two housing districts in eastern Singapore, Dakota Crescent and Sims Drive respectively.

He told The Straits Times recently: One significant problem we've observed is the difficulties residents face in identifying help they can receive from various agencies, especially when they are required to navigate through layers of bureaucracy. As a long-time volunteer, Jingzhou observes that schemes and mechanisms sometimes do not have their intended outcomes. This is especially for the elderly residents who may be illiterate or unable to access information as easily as we do, he adds.

If left unaddressed, the capability gap is likely to worsen in the next decade as the sandwich generation a generation of people, currently in their 30s or 40s, who are responsible both for bringing up their own children and caring for their ageing parents become too old to shoulder that twin burden, warns Prof Alfred. Faced with this potentially disastrous tipping point for society-at-large, the need for aid with less strings attached becomes even more compelling.

No Excuses

Prof Alfred argues that, based on economic development status, the Singapore government does not lack the capacity to do more. So, the next inevitable question is why is it not doing as much? He goes further and says that the government must also look at providing greater financial resources for support to be rendered effectively on a personal level aimed at improving the capability of each vulnerable member of society.

The first step to achieve this, the professor believes, is more policies addressing poverty, income inequality and taking care of the vulnerable groups' interests. Currently, the policies for vulnerable groups of people in Singapore are not well developed. We lack the fundamental public support or advocates for them, he notes. In Singapore, the high trust in government is a double-edged sword wherein meritocracy must exist and the government will always make wise decisions. However, against a turbulent and changing world, much input from the grassroots is essential in sustaining meritocracy in any context. Therefore, it's important for change to start at the top and the bottom.

Jingzhou agrees. A part of me wonders if all of these social issues can be solved by policy, he says. When it comes down to implementation and when we look at humans as unique individuals with different contexts and personalised needs, perhaps we will always fall short and there will still be gaps. But we must never stop trying. We can do better, we have to do better, and we will do better.

As a policy academic, Prof Alfred feels that he and his colleagues can be involved in policy debate, which may result in positive change in the public sector. And, welfare should reflect the tenets of an inclusive society, and not be limited to certain segments of Singapore's population.

[1] The basic assumption is that the self' (individuals and family units) could take care of itself in many ways and extensively. This may not be true across social political-economic situations in the region, due to rising cost of living, changes in family expectations and structure etc.