Balancing social inclusion, individual responsibility, and sustainability: the Singapore welfare model

Tan Ern Ser

ADB Workshop on Social Inclusiveness in Asia's Middle Income Countries 13 Sep 2011 Jakarta, Indonesia

Starting with the bottom-line (I)

The two extremes: full social protection and full self-reliance. All welfare systems are somewhere in between. Capitalist society: believes individuals need incentives to produce wealth, and well-being. Welfare state: a dampener on work incentive and wealth creation?

Starting with the bottom-line (II)

Market system: irresponsible blindness to outcomes. Socialism has not gone out of fashion. Socialist principles became the foundation upon which societies are being reconstituted after WWII. 3 models: welfare state, socialist, and productivist welfare capitalism.

Singapore welfare model (I)

Welfarism does not sit well with official ideology and vocabulary. Aversion to redistribution and egalitarianism. Sharing success and Leveling up Fair, not welfare Fair=equality of opportunity, not reward or outcome. Prefer to subsidize human capital investment, not consumption. Against handout or clutch mentality.

Singapore welfare model (II)

Provide citizens with opportunities to train for skills or credentials. Training, retraining, upgrading Improving productivity and wages. Maintain a vibrant economy, generate sufficient well-paying jobs. Happy outcome: highly skilled people working in high value-add jobs. What happened if there is no happy outcome, due to recession, global competition?

Singapore welfare model (II)

CPF Scheme: defined contributions from employees and employers; self-financing, not at risk of bankruptcy. Compulsory saving scheme; multiple uses (homeownership, childrens education, health care, retirement). Economically viable, but does not insure against risks of employment and income insecurity. Low social safety net.

Comparison
Welfare state: good buffer against risks, but vulnerable to risk of bankruptcy. The Singapore model: sustainable, but need to find an optimal balance between providing benefits and upholding incentives. Taken as a whole, it is inclusive and comprehensive, if we consider the community, the family and the individual as key welfare providers. Who takes care of senior citizens with no savings and medical insurance? The sandwiched generation.

Concluding remarks
Inclusive and sustainable Optimal position which supports social justice, without dampening work incentive. This position may call for taxing the very rich, reducing wastage, and supporting corporate social responsibility. Creating a more secure, comfortable middle class in a society which emphasizes meritocracy and social mobility. Rapidly ageing population; grant general amnesty to help reduce the burden on future generations.

Thank You