Singapore ranked among priciest cities for expats as locals feel the pinchBy Zach Isaiah Chia Jul 16, 2014 12:40PM UTC
A recent Mercer survey has placed Singapore as the fourth most expensive city in the world for expatriates and the second in Asia after Hong Kong. The top placed cities were Luanda in Angola and N’Djamena in Chad. According to the Mercer report, “currency fluctuations and the impact of inflation on goods and services” were the main reasons behind the high cost of living. Rounding up the top 10 are Zurich, Geneva, Bern (all Switzerland), Tokyo (Japan), Shanghai (China) and Moscow (Russia).
The Mercer survey is designed to help governments and companies determine the compensation of their expatriate employees.
Mercer surveys highlighting Singapore’s cost of living tend not to go down well with the general public regardless of whether the rankings are for locals or foreigners. The high cost of living is seen as a sign that locals are being outpriced. The 2013 rankings similarly raised consternation, prompting government officials to stress its purpose to be a measure for foreign workers into the island state, but to little avail.
A comment by Allan Chua summed up frustrations on the ground, “4th in the world for expats…. 1st in the world for citizen”.
The cost of living in a globalised world is as heavily influenced by the vagaries of the international market as it is by local policies.
Transport Minister Lui Tuck Yew recently announced in parliament that transport prices had to rise to ensure the sustainability of a new bus contracting model. “There is surely no free lunch … regular fare adjustments are still necessary to ensure the overall financial sustainability of the public transport system,” he said.
Singapore’s position as a Republic that is also a global city makes cost of living issues more difficult to deal with. Singapore’s inflation rate has been on the rise in recent years, reaching a high of 5.3 % in 2011. Inflation in 2013 was 2.4%, according to World Bank statistics. While the absolute figures are comparable to many economies, the real wages of workers has not risen. Real wages refer to the wages that have been adjusted for inflation, and provide an absolute value that can be compared against a base year. In 2013, a Manpower Ministry report showed that real wages had fallen 0.4%.
One might speculate that much of the disaffection has stemmed from the fact that the cost of living increase has outstripped the real wage growth. Increases to the cost of living might not have as negative an impact if the real wages increased in tandem.
The hardest hit have been the poor.
Singapore’s GINI Coefficient stood at 0.463 in 2013. The GINI Coefficient measures income inequality in a society and becomes especially problematic when those at the wrong end of the economy cannot make ends meet.
A survey by a social scientist from the National University of Singapore in 2013 showed that the poorest in Singapore cannot make ends meet. More than 300,000 Singaporeans and permanent residents earn less than SGD1,500 (US$1,206) a month in take home pay despite working full time. The average monthly wage in Singapore is SGD3,000. In contrast, the number of millionaires in Singapore rose by 4.5% in 2013 to 105,000 according to the latest World Wealth Report from Capgemini and RBC Wealth Management. Forbes annual rich list 2013 recorded a haul of 21 billionaires in Singapore. Growth in real household incomes for the lowest 20% for 2007 – 2012, according to a government website was 4.4%, much lower than the median of 9.3%.
While the data suggests that real wages are on the increase, sentiment on the ground suggests that the data does not reflect perceived reality.
In fact, one could go as far to suggest that the surge in anti-foreigner sentiment and abuse against rich expatriates such as Anton Casey stem partly from problems of coping with the cost of living and the growing feelings of despair and anger.
For a country that prides itself on meritocracy, one of the major challenges in Singapore has been decreasing social mobility. In June, Nominated Member of Parliament Eugene Tan lamented that his former school the Raffles Institution (one of the most prestigious secondary and pre-tertiary institutions in Singapore) had a significantly lower proportion of children from poor families. He was echoing an earlier observation from Lee Kuan Yew that students from Raffles Institution (also his alma mater) came from a significantly higher percentage of graduate families. The school itself recognised this and started a fund to help poor students finance their studies.
Calls for a minimum wage have steadily gained traction in the city state over the years, with more public figures calling for it. Nominated Member of Parliament Laurence Lien in a forum at NUS in 2013 argued that, “efforts for increasing productivity have [not] borne much fruit today because companies do not have to do it. They do not have to train workers or invest in new systems but if you force them to pay a higher wage, they will have to.”
A group of Catholics under the aegis of Caritas Singapore launched a social programme entitled Singaporeans Against Poverty in 2013 to raise awareness about poverty in Singapore. The campaign is helmed by Lien.
Under the present Finance Minister and Deputy Prime Minister Tharman Shanmugaratnam the government’s policies on social support for the poor has softened somewhat. DPM Tharman admitted this in an interview with The Straits Times when he described the present cabinet as more left of centre. “If I compare our thinking in Cabinet, or the weight of thinking in Cabinet, to when I first entered politics about 11 years ago, I would say the weight of thinking was centrist but there were two flanks on either side of it… There were some who were a little right-of-centre, and there were some a little left-of-centre. Now I would say the weight of thinking is left-of-centre. You still get diversity of views in Cabinet, but the centre of gravity is left-of-centre.”
How the government handles this issue could affect the results of the next election, which must be held by 2016. Watch this space.