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M Ramesh
S OCIAL P OLICIES
IN
S INGAPORE
Introduction
“The Government will subsidise investments like education and
infrastructure, it will not subsidize consumption expenditure. To
do so is to undermine the traditional virtues of thrift, personal
responsibility and the will to achieve, and to weaken our
economy” (President Of Singapore, Address to the Parliament. Straits Times, 7 January 1992)
Singapore has had a somewhat unique social policy strategy
Assumes that economic development is the best (only?) way
to promote social welfare
Further assumes that families can and should fill social needs
Emphasizes education and housing rather than health and,
especially, social welfare
Government committed to supporting “investment” rather than
“consumption”
Described as “capital investment state” (not welfare state)
Ramesh #2
Origins of Social Policy in Singapore
At the core of this somewhat unique welfare state lies a
combination of British colonial legacy and PAP government’s
policy outlook.
The colonial government’s social policy was mainly for the
colonial civil servants. Social policy for the general population
followed a residual, charity-like approach
No regular income support program
Provident fund for the aged established in the final years of
the colonial government
A few public and charity hospitals existed for the destitute
Church-run schools for the children of local elites
No housing policy of any note
Ramesh #3
Origins of Social Policy in Singapore
Following independence in 1965,
Lack of public assistance programs continued
Provident fund retained and expanded
Public hospital system expanded
Public schools systems expanded
Public housing system established and rapidly expanded
Although not fully understood at the time, the expansion of
public education and health programs contributed substantially
to human development
Public housing system contributed to enhanced savings and
strengthening political support for the government
The ill-effects of ignoring income support were negligible due
to rapid economic growth and rising income (and low
unemployment) and young population
Ramesh #4
Human Development Index. 2013
Massive improvements in
social indicators after the
1970s. This is reflected in
Singapore’s rank in the Human
Development Index
It performs better on the
economic than social indicators
Govt has begun to gradually
expand income support
programs in response to
political and demographic
pressures.
Norway
Australia
Switzerland
Netherlands
United States
Germany
New Zealand
Canada
Singapore
Denmark
Ireland
Sweden
Iceland
United Kingdom
Hong Kong
Korea, South
Japan
HDI Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
15
17
Ramesh #5
Income and Poverty
Singapore is the 3rd richest country in the world
Income gini high: ranked 144th in the world
Partly a result of lack of income support programs.
Significant absolute poverty: 10 - 12% of all residents earn less
than (US$1,000) and are “unable to meet basic needs”. [Lien
Centre]
High relative poverty: 20-22 % of the population have income
below 50% of median monthly income
Ramesh #6
Income and Poverty
Government has begun to recognize problems of poverty and
inequality and increased transfers to households:
In 2014, resident households on average received S$ 3,370 per
person from various Government schemes which was 25% higher
than in 2009
Income, Gini Coeffient
2004
2006
2008
2010
2012
2014
Before
Transfers
0.460
0.470
0.474
0.472
0.478
0.464
After
Transfers
0.419
0.418
0.424
0.425
0.432
0.412
Source: Singstat (2014). Key Household Income Trends, 2014
Ramesh #7
Income and Non-Income HDI, 2010
HDI Country
rank
1
2
3
4
5
10
11
12
13
14
15
26
Norway
Australia
Netherlands
United States
New Zealand
Sweden
Switzerland
Japan
Hong Kong,
Iceland
Korea, South
Singapore
HDI
0.943
0.929
0.910
0.910
0.908
0.904
0.903
0.901
0.898
0.898
0.897
0.866
Gross national GNI per
Non
income (GNI) capita rank income
per capita
minus HDI HDI
47,557
34,431
36,402
43,017
23,737
35,837
39,924
32,295
44,805
29,354
28,230
52,569
6
16
9
6
30
4
0
11
–4
11
12
–22
0.975
0.979
0.944
0.931
0.978
0.936
0.926
0.940
0.910
0.943
0.945
0.851
Ramesh #8
Introductory Conclusions
Key observations on social welfare programs in Singapore :
Public assistance is the only stable income support for the
poor. It is meagre and available only to destitutes with no
family support.
Other benefits for the poor are discretionary and
piecemeal
The aged have to save compulsorily for their retirement.
Extensive state provision of hospital care but everyone
except the very poor are expected to pay
Government provides housing to bulk of the population, but
everyone except the poor are expected to pay the full cost
Education is largely provided and funded by the government.
Ramesh #9
Introductory Conclusions
Emphasis on education and under-emphasis on social welfare is
consistent with and reflects
the “liberal” belief in equality of opportunity rather than
equality of outcome; Individual responsibility
Foreign investment-driven and export-oriented economic
development strategy
Financial sectors’ pivotal position in the economy
Lack of electoral competition
But the traditional social policy strategy undermined by
Demographic pressures
Slower economic growth
Enhanced electoral competition
Ramesh #10
Income Maintenance
Income Maintenance
Underlying assumptions
Individuals should fend for themselves
Family should look after those who cannot
State should be the last resort because public social welfare:
Undermines individual work incentives
Weakens public finances
Undermines family and community
The Minister for Community Development described the
government’s strategy as one of “assistance, not welfare;
mutual obligation, not entitlement” (Balakrishnan, 2005).
Ramesh #12
Social Welfare: Means tested Public Assistance
Public Assistance is for those in long-term need. Available only to:
To those with “good” reason for being poor and no family
support (children's’ household income <S41,700).
To a minimal degree: not meant to cover all essential costs
PA rate is S$450 a month for elderly individuals, S$1,180 for a
family of 4, and S$1,330 for larger families.
The PA benefit is around 10% of national per capita GDP,
compared to OECD average of 25%.
The aged and disabled are the largest group receiving public
assistance
Due to lack of adequate programs for them
Ramesh #13
Social Welfare: Other programs
Comcare established in 2005 to offer short-term benefits
Offers temporary cash and food aid, help in securing work,
and subsidies for childcare, kindergarten
Eligibility: income below S$ 650 per household member
Workfare established in 2007. Directed at those in low-wage
employment (earning <$1,900).
Benefits amount to S$ 933- 3,500 per year depending on age,
income, assets, etc.
40% of the benefit is in cash and the rest in CPF deposit
Poor also have access to
Nearly free primary and secondary education
Subsidized rental housing
Subsidized utilities
No program for the unemployed
Ramesh #14
Social Welfare for Aged: Central Provident Fund (CPF)
Established in 1955.
Participation is compulsory for all employed persons, except for
foreign workers and casual and part-time workers
Contribution rates have ranged 5 – 50% of wages.
Current combined contribution rate is 36% of wages.
Employee contributes 20% and the employer 16%.
Members’ accounts are divided into 3 sub-accounts,:
1. Ordinary: holds 33-63% of funds, depending on age.
• Can be withdrawn for housing. Such withdrawals form
>75% of all CPF withdrawals
2. Special: holds 5-26%. Share increases with age.
• May only be withdrawn at the age of 55 years.
3. Medisave: holds 5-26%. Share increases with age.
• Can only be used for approved medical expenses
Ramesh #15
Social Welfare: Central Provident Fund (CPF)
The average CPF balance per member was $61,500 in 2011.
CPF is estimated to provide average replacement income of
about 20% of the last pre-retirement income
(http://thehearttruths.com/2013/11/04/shocking-facts-about-our-cpf-in-singapore-part-1/
50% replacement is recommended
More than half the aged do not have sufficient funds in their
CPF account to meet the “minimum sum” requirement.
Low replacement is due to
Withdrawal of much of special account funds for housing
Low returns: annual average real return of 1.3% for ordinary
account and 3% for special account over 1999-2009. Lower
in earlier period.
Most importantly, there is no risk-pooling
Ramesh #16
Health
Ramesh #17
Health care in Singapore: achievements
Impressive health care achievements
Singapore’s health care system was ranked 6th overall among
192 countries in 2000
Infant mortality rate (IMR) of 2.1 per 1000 births in Singapore
is less than half the OECD average
Life expectancy of 80.6 years is higher than the OECD average
Singapore spends little on healthcare
Total health expenditures (THE) formed 4% of GDP,
compared to OECD average of 9%
Ramesh #18
Total Health Expenditures, % of GDP
,20
,18
,16
,14
,12
,10
,8
,6
,4
,2
,0
France
Japan
Singapore
UK
USA
Ramesh #19
Current Healthcare System in Singapore
Key features of the current healthcare system
Provision:
81 % of all hospital beds are in the public sector
55% of all physicians in the public sector
20 % of primary healthcare service providers are public
(in polyclinics patients generally pay 50% of the costs while the elderly and children pay 25%)
Provider Payment
Largely fixed payment for services at public hospitals
(which is vast majority)
Fee for Service (FSS) for outpatient care (mostly private)
Financing
Govt expenditure on health care forms 33% of THE
Almost all of private expenditures is from non-insurance
sources
Ramesh #20
Health Care Financing
Medisave
A compulsory savings scheme introduced in 1984.
Every employee contributes 7-9% (depending on age) of
monthly salary to a personal Medisave account.
Can only be used for personal or immediate family's
hospitalization, day surgery and certain outpatient expenses.
MediShield
A low cost catastrophic illness insurance scheme introduced
in 1990
It requires large co-payment and high deductible to reduce
moral hazard
Premium considerably lower than regular insurance
Renamed MediShield Life in 2013. Higher claim limits and lower
co-insurance payment for large bills. Age limit (90 years)
removed
Ramesh #21
Health Care Financing
Medifund
An endowment fund set in 1993 to help Singaporeans unable
to afford medical expenses.
Initial capital of S$200 million which rose to S$1.66 billion in
2008). Only the interest income is used for spending
Massive expansion of the scheme in 2013
(https://www.moh.gov.sg/content/dam/moh_web/PressRoom/Press%20releases/FY13%20Medifund%20Annual%20Repo
rt%20(with%20financial%20statements).pdf
Government Subsidy for public hospitals.
There are three classes of wards which offer different levels
of comfort.
Patients Class A wards pay the full cost whereas patients in
other ward classes enjoy subsidies ranging from 20% of the
cost for the 4-bedded rooms to 80% of the cost for the open
dormitories.
Ramesh #22
Share of Total Healthcare Expenditures
Medisave 8%
Medishield 2%
Govt subsidies 25%
Private Insurance 15%
2
3
4
5
6
Out of pocket 25%
Employer Benefits 35%
Health Policy Conclusion
The health care system in Singapore works effectively due to
Public ownership of hospitals
Active govt management of hospitals using strict controls
and some incentives
Capped payments for hospital services
But the large out of pocket payments (used to control costs and
improve accountability) have severe equity impacts
Medifund inadequate for the task
Expanded insurance unavoidable. Already occurring as
Medishield is being expanded
Ramesh #24
Housing
Housing Policy
Housing for all has been a policy goal of the PAP govt since 1959
It is seen as a key to “nation building”
Housing achievements are a major election platform for PAP
Singapore has probably the most comprehensive housing policy
in the world, covering and tied to:
Land supply
Land use and infrastructure planning
Building Construction
Housing Allocation
Housing Financing
Pension
Community development and ethnic relations
Stalin meets Friedman: and it works!
Ramesh #26
Housing Policy: History
1st Five Year Building Programme (1960 - 1965) emphasised
construction of one-room emergency flats for rent
Housing Development Board (HDB) established in 1960
2nd 5 year plan (1966 – 1970) emphasized “Home Ownership
for the People”
Allowed withdrawal of CPF funds for purchase of housing
After 1970, the emphasis was on neighbourhood planning and
accelerated public housing programme
The 1991 Revised Concept Plan called for “towards a tropical
city of excellence.
Shift from quantity to quality and balancing between public
and private housing
Ramesh #27
Housing Policy: Main Policy tools
Land Policy
The government owns more than 80% of total land, up from
40% in 1960.
Much of the land was acquired at below market prices under
Land Acquisition Act of 1966 which abolished eminent domain.
Between 1973 and 1987, the government acquired land at
1973 rates rather than market rates
Housing & Development Board (HDB) is the dominant property
developer in Singapore
HDB is a statutory board
As a large developer, it has economy of scale and enjoys
immense negotiating power
It is also subject to market competition
It plays a role in social engineering
Ramesh #28
Housing Policy: Main Policy tools
Complex system of housing finance to keep housing affordable
Ramesh #29
Housing Finance
Most people fund their housing purchase entirely from their CPF
http://www.mnd.gov.sg/reflections_housing/images/article6-02-big.jpg
Ramesh #30
Housing Policy: Main Policy tools
Public Housing
More than 82% of households in Singapore live in public
housing
Vast majority of public housing is privately owned
Conditions for HDB flats
Purchase
4-room or bigger flat . monthly household income under
th
$8,000. includes 3/4 of the population.
3-room flat . monthly household income under $3,000. For
low income families.
2-room flat. monthly household income under $2,000. for
poor families
Rental flats. Total gross household income under $1,500. for
very poor families
Ramesh #31
Public housing
Sale prices of 4+ room flats recover costs.
Still cheaper than market price due to cheap land
90 % of households own their own housing in Singapore
Even 87% of lowest income quintile own their own flats
More than 87% is public
Ramesh #32
Home Ownership Rate
Ramesh #34
Home Ownership Rates by Household Incomes in
Singapore
Ramesh #35
Price to Income Ratio
PIR (2010)
Homeownership
Rate
1 Hong Kong
22.72
52 %
2 Shanghai
20.68
80 %
3 Seoul
16.29
52 %
4 Bangkok
15.96
56 %
5 Singapore
14.35
89 %
6 Tokyo
11.64
45 %
7 Taipei
11.5
82 %
8 Kuala Lumpur
11.27
80 %
Ramesh #36
Price to income Ratio (typical upscale housing unit of 100 sqm)
http://www.globalpropertyguide.com/Asia/singapore/price-gdp-per-cap/b
Ramesh #37
Conclusions: Housing Policy
Housing for most people in Singapore is affordable due to
Government provision
Financing from CPF
Problems and Future Challenges
CPF Withdrawal for housing reduces amount available for
retirement
Declining birth rate will reduce asset prices in future, unless
offset by immigration.
Ramesh #38
Education
Education Policy
Education is a major priority for the government
One of the senior-most cabinet positions
2nd largest item in government budget
The education system is patterned after the British system
Pre-primary: 3 years
Primary: 6 years
Secondary: 4-5 years
Junior College: 2 years
Similar to reforms in many other countries,
Increased autonomy for Schools
Expansion of pre-primary education
Unlike reform trends elsewhere, emphasis on national testing
reduced, to promote creativity
Ramesh #40
Ramesh #41
Education Policy: Salient Features
Most primary and secondary schools and universities are entirely
owned and operated by the government
Private schools are mostly for foreigners
Nursery and kindergardens are mostly private
Small but increasing govt subsidy
Government almost entirely funds education at all levels
No tuition fees at government schools. Low fees at universities
All instruction in English, with supplementary teaching of the
students' "mother tongue“: Malay, Tamil, or Mandarin
“streaming” in secondary schools whereby students with weak
academic potential are diverted to vocational education
Goal is to reduce drop-out rate while increasing skills level
A small number of (best) schools have operational autonomy
Ramesh #42
Education Policy: Salient Features
 Nearly universal enrolment at primary and secondary levels
 94% of primary 1 cohorts goes on to post-secondary education
 Only 30% cohort go to university
 Teacher : student ratio(2009)
 Primary: 21.4
 Secondary: 17.9
Education formed 21% of total government expenditures in
2012
Singaporean students are one of the best performers in
international tests
Ramesh #44
PRIVATE Enrolment by Level of Education, %
http://www.quandl.com/education/singapore-all-education-indicators
Year
Pre-Primary
72.37%
1989
Primary
7.59%
2009
Secondary
6.37%
2009
Tertiary
65.31%
2012
45
Expenditure on Education, 2012
http://www.quandl.com/education/singapore-all-education-indicators
Public expenditure on education as % of GDP
3.3%
Public expenditure on education as % total Govt
expenditure
23%
Share of public educational expenditure, %
Primary
19%
Secondary
23%
Tertiary
40%
Total public educational expenditure per pupil as % of
GDP per capita
Primary
12%
Secondary
19%
Tertiary
27%
46
Recent Social Policy Trends in Singapore
The govt began to weaken its anti-welfare stance in 2010.
Expansion of welfare programs speeded following the 2011
election and particularly in 2015 as the election approaches
Benefits for the Aged. “Pioneer Generation Package” lunched in
2013. Offers healthcare and income benefits to those above 65
In 2014, the government set wage floors for cleaners and
security guards (the bulk of working poor) while remaining
opposed to minimum wages
In the 2015 budget speech, the government declared
commitment to “building a fair and inclusive society”
Announced a raft of health care, income maintenance, and
social services benefits
However, Government expenditure on social welfare programs
would remain under 8% of GDP in 2015 (6.2% in 2009). OECD
average of 20-25% (http://www.businesstimes.com.sg/opinion/singapore-budget-2015/moving- 47
Recent Social Policy Trends in Singapore
The recent expansion does not represent fundamental depature
from the past.
Government remains committed to maintaining individual
responsibility
Most benefits are discretionary: no entitlement
Compulsory savings remains the preferred policy tool
Aversion to risk-pooling
Benefits for the working poor through businesses rather than
directly to individuals
Marginalization of women in social programs: emphasis on
families looking after their own is premised on unpaid work
by women
48