Decline
The middle class
The institution which keeps the government in power is in decline, raising questions on Singapore's political future. By Seah Chiang Nee.
Apr 12, 2008

A SINGAPOREAN couple walked into a Lamborghini showroom and bought two units – his and hers – for US$650,000 each.

“It’s amazing; young kids coming in and spending S$2mil,” the manager told a journalist. “I don’t think they were even 30 years old.”

Last year, 29 of these crème de la crème models were sold countrywide, beating Ferrari (26 cars).

In 2007 a total of 320 luxury cars including Rolls Royce, Bentley, Lotus, Aston Martin and Maserati, were sold to Singapore’s new rich.

As the nouveau riche basks in their newfound glory, more Singaporeans from the poorer quarters are approaching the government for food aid.

A growing number of homeless can be seen sleeping in void decks of buildings and, pressed by high living costs, more elderly citizens are working as toilet cleaners or collecting used cans for recycling.

Singapore remains largely a middle class society. The high number of shopping plazas attests to it. But the group may be decreasing as a result of globalisation and runaway prices.

The city-state of 4.7 million people has two – perhaps three – faces. On the top 10% are the rich, who live in wealthy districts, own yachts and blow S$10,000 (RM23,209) on a single meal.

At the bottom 20% of the population are the languishers who have difficulties coping with a high cost structured life in an international city. The third is the large middle class.

Take the case of Carol John, 27. She doesn’t own a bed, sleeps every night on thin mattresses with her three children. Hers is a one-bedroom flat that reeks of urine smell from the common corridor outside.

“I can’t save anything, it’s so difficult for me,” John, who is unemployed, told a reporter. She relies on her husband’s S$600 (RM1,392) monthly salary and S$100 (RM232) government handout.

She is luckier than others who are homeless – elderly and even entire families - who sleep at void decks or the beach and bathe at public restrooms.

In perspective, Singapore is the second richest country in Asia next to Japan, with a per capita GDP of US$48,900.

Homeless cases are few, nowhere comparable in number to Osaka’s army of vagabonds or New York’s ‘bag ladies’.

In fact, nine out of 10 poor people in Singapore have their own home, and usually a phone and a refrigerator.

But in the local context, it is a potential minefield of unrest. The proportion of Singaporeans earning less than S$1,000 a month rose to 18% last year, from 16% in 2002, according to central bank data.

The bad part is that life is often worse for the unemployed – compared to other countries - because Singapore has no safety net and no rural hinterland to cushion their suffering.

Unlike in Malaysia or Thailand, a jobless person who cannot cope with the global market has no countryside to retreat to so that he can live off the land.

The problem will get worse. In other words, the rich will get richer and the poor, poorer with the middle class remaining more or less stagnant.

The state’s Gini coefficient, a measure of income inequality, has worsened from 42.5 in 1998 to 47.2 in 2006, which makes it in league with the Philippines (46.1) and Guatemala (48.3), and worse than China (44.7) according to the World Bank.

Other wealthy Asian nations such as Japan, Korea and Taiwan have more European-style Ginis of 24.9, 31.6 and 32.6 respectively.

This is one of the worst failures of the modern People’s Action Party, despite its ‘democratic socialism’ principles.

It was with these that its first generation leaders were able to turn a poor squalid society into a middle class success story.

Economists attribute the major blame to globalisation, which benefits the skilled citizens and the rich but makes it hard for the unskilled, the aged and the sick.

Even the highly educated are not spared.

The use of new instruments like company restructuring, relocation or out-sourcing of workers – unheard of before – is widening the gap and creating more income inequality.

For example, while the proportion of lower income rises, those who earn S$8,000 (RM18,570) or more increased from 4.7% to 6%.

This rising inequality could eventually undermine the bedrock of society - the broad middle class.

Some economists say that the feared erosion of Japan’s middle class, first enunciated by Japanese strategist Kenichi Ohmae, may already be happening here.

His country was emerging into a “M-shape” class distribution, in which a very few middle class people may climb up the ladder into the upper class, while the others gradually sank to the lower classes.

These people suffered a deterioration in living standard, faced the threat of unemployment, or their average salary was dropping, he said.

Gradually, they can only live a way the lower classes live: e.g. take buses instead of driving their own car, cut their budget for meals instead of dining at better restaurants, spend less in consumer goods.

And, Kenichi said, all this might take place while the economy enjoyed remarkable growth and overall wages rose.

However, the wealth increase may concentrate in the pockets of the very few rich people in the society.

The masses cannot benefit from the growth, and their living standard goes into decline.

The Singapore government, which relies on the middle class vote to remain in power, has vowed to make economic gap-levelling its top priority – for survival, even if nothing else.

(This was extarcted from The Star on Apr 12, 2008)