Four Fallacies about the Singapore Welfare State
Ng Kok Hoe
If ever one needed proof that habits of thought are hard to break, we need only look at the way social welfare is treated in Singapore. There is probably no other policy domain which impacts on our lives more directly and yet is less contested.
The whole question of the well-being of vulnerable members in our society is framed by a core of ideas that over time have become so ossified that we no longer check and challenge ourselves, and because of that, foreclose any chance for change. In times when everything else is changing – from interpersonal communication and family structures to patterns of international migration and global financial systems – static policy thinking is risky.
At risk of simplification, this static thinking about our social welfare can be roughly summed up in a few statements: Singapore is not a welfare state and should never be, because the Western welfare state is doomed to fail and social welfare is fundamentally un-Asian. As a small country with no natural resources, we have no choice but to define our own style of social welfare, which by and large has worked over the years. So why fix it if it ain’t broke?
Underlying these statements are four powerful ideas about social welfare and Singapore society. In the spirit of critical reflection, let us now examine the truth in each of them.
1. “Singapore is not a welfare state.”
There are two ways to read this. If a welfare state is loosely defined as a state that takes steps to redress the inequitable distribution of resources by the free market, then Singapore is surely a welfare state. Our progressive income tax system, highly selective social services, and various means-tested subsidies are clearly redistributive. In fact, our social spending has been rising in recent years, which suggests we are a growing welfare state. Going by this definition, very few countries in the world can claim not to be welfare states. It is only in the extent of welfare provision that nations vary.
A stricter definition of a welfare state is a social welfare system in the tradition of the Western European societies, where the term welfare state originated. By this standard, Singapore does not fit into the mould. But this notion of a Western Welfare State is more Asian caricature than empirical reality. An influential book by Gosta Esping-Anderson back in 1990, called "The Three Worlds of Welfare Capitalism", brought attention to fundamental differences among the welfare states of the advanced economies. It later inspired scholars in the region to define an East Asian welfare regime, of which Singapore was a case. Today it is common academic wisdom that welfare states are characterised by diversity of means. So we end up in the same place as with the looser definition: Singapore is a welfare state, even if the extent and manner of our welfare provision is distinctive.
2. “The Western welfare model is bound to fail.”
Singapore usually takes issue with social risk pooling in the mature European welfare states, of which unemployment benefits, nationalised health care, and pay-as-you-go public pensions are prime examples. These three programmes often draw fire from the three main contentions against the welfare state.
The first is a value argument. It is believed that schemes such as unemployment benefits corrode the work ethic and create a culture of dependency. While this argument might have intuitive appeal, it is helpful to remember that in Northern Europe where social spending is the highest, both labour participation and productivity in terms of GDP per capita are ahead of Singapore according to World Bank data. Helping professionals like social workers would also understand that the value of work to the individual is not merely monetary. Work contributes to personal identity, provides fulfillment, and gives access to social networks. For these reasons, even the most generous unemployment benefits have never attracted masses of workers off the payroll onto the dole.
Another argument for the deficiency of Western welfare is that schemes like nationalised health care are believed to be prone to abuse. We in Singapore like to think that if people are left to their own devices, demand for health care will be infinite and costs will escalate uncontrollably. While it is easy to see how co-payment like in our health care system encourages prudence especially for elective medical procedures, it is not apparent that people have a naturally insatiable appetite for health care services. How much health care, really, can one consume? The abuse or free-riding argument has also been applied to our public assistance scheme, hence the strict criteria and low rates. But there has never been published evidence in Singapore of the free-riding phenomenon. There is however anecdotal evidence among social workers that social stigma and problems of access sometimes prevent those who need help from reaching out. Considering the size of the unemployed population in Singapore – a crude proxy of potential welfare dependents – is about 65,000 while the number of public assistance recipients is only about 3000, we must be a long way from that slippery slope. In any case, abuse is a problem of implementation, which should not detract from the intent and worthiness of the policy. We do not shut down the 999 hotline for fear of prank calls.
The last and possibly most damaging case against Western-style social welfare is that it is financially unsustainable and will eventually bankrupt the state. At a seminar on Singapore’s Central Provident Fund (CPF) last year, a senior politician likened European pay-as-you-go pensions to political Ponzi schemes that were never going to pay up on their promises. This view is misinformed. It is true that pensions constitute the heaviest fiscal burden among all sources of social spending in Europe and have come under pressure from population ageing and economic stagnation. But this area is complex and dynamic. Research done at the London School of Economics has found that reforms in recent years have addressed policy constraints to different extents across Europe and in some cases have put pension systems back on a more sustainable path. The reference to Ponzi schemes is also disingenuous because it fails to recognise how these pensions have helped many generations of older persons in Europe avoid poverty and retire with a sense of financial independence and personal dignity. Sociological studies have shown that these pensions often enable older adults to contribute to their adult children as they look to establish their own families and careers. In contrast, the majority of elderly Singaporeans are compelled to rely on their adult children for financial security, even though retirees are likely to have fewer children in future. Can we say that either system is more sustainable?
The weakest argument against the fiscal sustainability of Western welfare is probably that it led to the current economic crisis. It did not. The current economic crisis gripping Europe may be due to many things, such as negligent regulation of banking practices or even inherent flaws in modern capitalism, but it was not due to the welfare state. The misperception may have arisen from the sweeping cuts to welfare spending that countries have made. But in this case, the site of treatment does not indicate the source of ailment.
3. “Social welfare is un-Asian.”
In the early 1990s, as the world marveled at the rapid economic development of the newly industrialised countries in this region, also branded as the East Asian miracle, a peculiar blend of political rhetoric and cultural theorising shaped the thinking that Confucianist societies such as ours have a natural aversion to state-driven social welfare and prefer instead to rely on the family and the community. Today, this idea no longer holds sway in the wider academic community and is mostly regarded as political opportunism and cultural posturing.
The reason the cultural argument faded away is that even in East Asia, a variety of welfare states have evolved in the past decade or so. Taiwan and Korea have not taken the CPF’s lead. Instead they have introduced pay-as-you-go pensions, European style. We do not talk about it, but even Hong Kong – which is comparable both in economic positioning and cultural make-up and is often regarded as our closest rival city – has implemented universal pensions for residents aged 70 and above with no means testing. Every elderly Hong Kong resident receives the equivalent of S$160 per month. It is not much, but we can only imagine what difference that might make to poor elderly Singaporeans.
One school of thought advanced by American scholars Stephen Haggard and Robert Kaufman is that social welfare develops in line with economic development and democratisation. The rapid opening up of political competition in Taiwan and Korea has led to significant growth of social welfare, whereas the unique political situations in Singapore and Hong Kong explain their relative stasis despite abundant fiscal resources. In other words, there is nothing intrinsically un-Asian about social welfare.
4. “In spite of what critics might say, our social welfare system has worked.”
We sometimes take this even further and suggest that our system should be a model for others. For example, we like to point out that we spend less in health care than most developed countries but achieve better outcomes. This is true and reflects the cost-efficiency of most of our social welfare programmes. But global indicators do not tell the full story about the real cost of our social welfare system.
One way to interrogate the impact of our approach to social welfare is to ask about the spread of outcomes across different segments of society – something which should be second-nature to social workers, with our intuitive attention to individuals, families, and qualitative experiences. For instance, as a population, Singaporeans may be living longer lives. But what are the health outcomes for low-income families compared to richer ones? Does income gap also imply a gap in quality of life? A thought-provoking report by Tan Hui Yee in the Straits Times recently pointed to low social mobility in Singapore, meaning that children of families with poorer economic status are themselves less likely to do well later in life. The European welfare states achieve much better social mobility due to the leveling effect of universal social welfare programmes. If we are concerned about work ethic and competitiveness, then we should be concerned about social mobility. Because nothing dampens aspiration and industry more than the knowledge that you live in a society where you have limited prospect of overturning those disadvantages into which you are born.
Even when we pull the analytical lens back to examine outcomes across the board and for larger social issues, there are serious implications about our social welfare model which we sometimes overlook. If only we could free up our policy imagination, we might find answers to some of our most pressing problems. One is our low fertility rate, which is one of the lowest in the world and has seemed impervious to policy intervention. Again, we do not talk about it, but Northern Europe might offer some clues. According to data from the United Nations World Population Prospects, the total fertility rate of Sweden, Norway, and Denmark averaged 1.9 during 2005-2010. It was 1.3 in Singapore. Their female labour participation rates are also noticeably higher than Singapore’s. Population policy is as complex as individual decisions about child birth. But it is easy to trace a connection between the healthy fertility rates in the Scandinavian countries and the prominent features of their welfare states: accessible state-run childcare services, institutionalised child benefits, and widely-practiced flexible work arrangements for parents. It then becomes obvious why the Baby Bonus has not made a difference for us. Social welfare policy is not only about helping the poorest, it also shapes social norms and individual decisions across all strata of society.
In the end, the form that every welfare state takes is a choice that society must make. No policy is a matter of course, every policy is a choice. This choice must be made with thorough consideration of the full range of viable alternatives, and the benefits and trade-offs implied by each option. It is more about picking and calibrating our position along a spectrum of possibilities, rather than choosing between all and nothing.
The process requires a society of open and engaged minds from the top to the ground that resist old habits of thought, are not afraid to learn, and always demand evidence. There is an obligation of public accountability to present all the options and explain the rationale before making a call. We also have individual responsibilities of citizenship to scrutinise official lines of thinking, ask important questions, and learn to engage constructively in policy debate. There is merit in public engagement itself. But engagement and debate are especially critical to the development of sustainable and stable social welfare systems. Because unlike other more removed and technical domains of policy-making, social welfare is a society’s collective decision about its commitment to solidarity and mutual responsibility. In no other realm of public policy do decisions so powerfully shape the tone and fibre of society.
Peter Townsend, a renowned British professor of social policy who sadly died in 2009, once remarked that “It may be worth reflecting, if indeed a little sadly, that possibly the ultimate test of the quality of a free, democratic and prosperous society is to be found in the standards of freedom, democracy and prosperity enjoyed by its weakest members.” He might have been talking about us.
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