[stephenkhoo]

Article taken from Diary of a Singaporean Mind

The middle class squeeze...
Inflation rate is above 5% [Singapore's inflation rate holds above 5%]which gives us a real income growth of roughly of less than 0.3%. [Tighter labour market sees income go up to $2,633 from $2,500]. Things have improved by a little bit for some people. However, you should be note that the CPI used to measure inflation is just a snapshot based on a basket of goods with a composition that is probably not what your family consumes. Your family's expenditure inflation rate is different from the CPI. Also, given the wide income gap which leads to vastly different patterns of consumption inflation as measured by the CPI becomes less meaningful. Prices of different categories of goods are moving sharply in different directions - 42" LED TVs have halved in price from one year ago while the price of homes and COEs have surged. If you are shopping for an LED TV you will be happy shopper spoilt for choice but if you're middle income family looking for a car, the COE inflation took away your ability to buy one. Today's paper reported that luxury cars - BMWs, Porsches, Audis, Mercedes, Farraris -have 46% of our new car market.



A new 1 bed room condo at Lorong Chuan goes for upwards of $538K. A quick calculation shows the cheapest 1 bed room unit in the development is sold at a price that is 17 years of a median income worker's total income. If he uses his income fully to service his condo, he will take 17 years...nothing left for food, clothing, utilities etc. What is prudent for someone earning the median income is a small HDB flat which is shrinking over time[Shrinking HDB flats due to need to maximise land and to adapt] and public transport which is now so crowded it is like a cattle ferry. There is also the problem of healthcare which is rising at double digits and outstripping median income growth. If you look at the Singapore worker in the middle earning the median income wage, his quality of life is not equal to a middle income worker in a developed country. Its gets worse as we go down the wage scale. When we get close to the bottom which is quite far down since there is no minimum wage, we have 350,000 workers who work full time but cannot make ends meet and depend on workfare to survive[Older, low-wage workers get Workfare bonus ] - these workers will never accumulate enough savings to retire and have to work their whole lives.

The PAP govt likes to proclaim its greatest achievement taking Singapore from the 3rd world to the 1st. The truth is a large number are left behind and many are falling behind as the middle class weakens.

"At the national level, we fight the elections starting now, getting our policies working, getting our organisation in place, getting our outreach strengthened, getting our communications modernised and mobilised, so that we have five years to prepare for the next time" - PM Lee, at the recent PAP convention.[Link]

PM Lee spoke about the need for PAP leaders to connect with the people and that future elections will not be so easy. While communications and interaction is important, they are a means to an end and at the end of the day, people will vote based on whether their lives have improved and whether they believe their futures will be better. The key to winning back the hearts and minds of voters is to make sure prosperity is shared, the income gap is narrowed and the middle class thrives. Right now the PAP is not even on the right track and they won't be unless they can overcome their ideological approach to policy making. Their insistence on "self reliance" and resilience from workers to escape from greater financial responsibility puts the onus on those who have lost the ability to do so due to the inequalities that is now built into our system and many have fallen into financial hardship and poverty through no fault of their own.

"The Government seems very reluctant it to take on a larger financial
responsibility for caring for our senior citizens. Instead, it hides behind the mantras of self-reliance and filial piety to justify its relatively low expenditure on healthcare for the elderly." - WP's Gerald Giam in Parliament.[Link]

The PAP ideology just like the US Republican ideology can work if income gap is kept low and responsibility can be pushed down individuals. However, the rising income gap and declining middle class means the PAP has to break out of its ideological constraints to find solutions to the problems we face today. PM Lee in his first few years as PM, implemented tax cuts for the rich and corporations and regressive consumption tax increases (GST) that will burden the lower income groups. He was very eager to increase ministerial pay at a time when most people saw problems with excessive executive compensation and expected the govt to set a good example. Unless the PAP can make major changes to housing, healthcare , transport, narrow the income gap or mitigate the effects of the income gap, the next election will not be about winning back Aljunied but how not to lose more GRCs.

The Worker's Party and other opposition parties has cleverly occupied the middle ground as the PAP drifted further to the ideological right in recent years. The PAP enjoys support for some of its past accomplishments but this support will fade