THE STINGY NANNY

Feb 13th 2010

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.
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