The Widening Income Gap in Singapore is Worrying

Unless you’re rich, you would probably be among the people who are worried about the rising housing prices and the cost of everything else in Singapore.  Retirement does not seem plausible at all, which is why most people struggle in jobs that they hate. It’s why even the Singapore media, the Straits Times, is covering the income gap issue.  In their survey, most people are concerned about inflation and housing prices.  According to their article this is the income gap situation:

The average incomes of the top 20 per cent of households rose by 53 per cent – from $12,091 to $18,472 – from 1997/98 to 2007/08.

By comparison, the average incomes of the poorest 20 per cent of households were kept down as a result of globalisation, competition from emerging economies and new technology.

They fell by 2.7 per cent over the same period – from $1,309 to $1,274.

Most Singaporeans can’t afford their own home. Aside from cultural reasons such as filial piety and strong bonds with our parents, most of us have no alternative but to live at home. The alternative for married couples, is to live with your parents or in-laws and that can be a stress on an already stressful new marriage. And they wonder why Singaporeans are not producing babies. Besides not being able to afford decent housing without being in debt your whole life, babies are an additional cost we just can’t afford, even with the current incentive schemes.  It’s not that Singaporeans don’t love or want kids, they are just too tired from working insane hours to even think about babies.

The situation is even worse now with the rising housing prices. A friend told me that Singapore is becoming the Switzerland of the East and that is why all the money is flooding in.

Prices for cars have always been crazy, now even more so, which is why people with cars baby them so much. Cars in Singapore are polished till they sparkle. But without a car, the alternative for the office worker is jam packed trains during peak hours. Not an option if you can’t afford to get to work late.

From experience I know that taxi prices have also doubled in the past couple of years and I really wonder if it is cheaper to take taxis than own a car. Its no wonder that more people are hazarding riding bicycles in unforgiving Singapore traffic. Also how would you transport all your groceries on the MRT or bus. It will be quite a struggle.

I was taken by an article in The Huffington Post, which speaks the truth plainly. Here’s an extract of the article by Alex Kennedy where Singapore is portrayed as not quite the Disneyland everyone imagines. Well it may be Disneyland for a few, but not the rest of us.

ALEX KENNEDY | February 17, 2011 07:09 AM EST |

SINGAPORE — Singaporean Ramzi Mohamed is tired of sleeping in the living room of the two-bedroom apartment he shares with his mother and older brother.

His problem is that housing prices in the city-state are up almost 70 percent since 2006 while the 29-year-old gym administrator’s monthly salary of 1,200 Singapore dollars ($938) hasn’t budged in five years.

“When I was 20, I thought I’d have my own place by 30,” Ramzi said. “Now that I’m almost 30, I wonder if that will ever happen.”

Like tens of thousands of others living in the tiny island nation that boasts one of the world’s highest levels of GDP per person, Ramzi’s failure to realize his modest ambitions is no accident.

A flood of cheap immigrant labor – and stiff competition for manufacturing jobs from Asian neighbors like China and Vietnam – has kept wages stagnant for many and widened the gulf between a very wealthy minority and the island’s poorest. Housing prices have skyrocketed as rapid population growth outstrips supply.

At the same time, ostentatious signs of the wealth enjoyed by the elite have multiplied. That has put the government under pressure to loosen its tightfisted stance on welfare in the next national budget Friday as it tries to defuse criticism its policies have worsened the plight of ordinary Singaporeans.

I feel bad complaining, because I know there many who are worse off than I am. Truly, I am one of the lucky ones in comparison. Crystal from Expat Bostonians gives us some perspective as well as she shares that S$1200 is her grocery bill for the month and her rent is quadruple the amount.

I think not many know of the plight of the ordinary Singaporean and that we don’t really have a minimum wage in place.

I love how our most famous Singaporean blogger, Mr Brown, makes his social commentary by seeing the light side of things. It’s our sense of humour that keeps us going. But if our hawker food prices go the way of taxi prices, I don’t think jokes will sustain us.

About bookjunkie

Blogging about life in Singapore & recently cancer too.
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10 Responses to The Widening Income Gap in Singapore is Worrying

  1. kirsten says:

    It is very sad that even though this is my home country, it is very unlikely that I will be able to afford my own home any time soon. In fact, unless I inherit from my grandparents/parents, I don’t think I would ever have enough money to buy my own home. And even if I did I would be chained with an insanely long loan period.

    The widening income gap and social disparity is ripping our country apart. There is so much resentment and I wish it didn’t have to be this way.

    We are very far from being the Switzerland of the East, no matter what we tell ourselves. We are nowhere near their standard of living or quality of life. We are nowhere near their level of civil liberties or freedoms. For majority of Singaporeans working long hours and watching costs rise, Switzerland is a lifestyle that is very very far away.

    • bookjunkie says:

      I guess Switzerland of the East only in terms of the way the money is coming in. Instead of Swiss bank accounts, now there are Singapore bank accounts for the insanely rich.

      It’s not that the younger generation doesn’t work hard or doesn’t save. No matter how hard they work or scrimp and save they will never be able to afford housing on their own income. i think this is the biggest issue in SIngapore right now. On the other hand there are people who speculate on the housing market and buy and sell to make a profit. So I understand totally about the resentment.

      I wish I had a real Swiss lifestyle where I don’t have to worry about healthcare. That would be a dream. No wonder people in Nordic countries are the happiest.

      • kirsten says:

        Even if I could have the option of buying my own place, I wouldn’t want to because I don’t want to be tied down by a 30-YEAR loan. 30 years is ridiculous.

        As I mentioned before in previous posts, I think it’s actually quite problematic that young Singaporeans can never seem to have their own space. I know it’s not just a Singapore problem, but the squeeze and the lack of choice/ability to be able to leave home can be really frustrating.

        • bookjunkie says:

          Yes the arrested development is never a choice. And to have your own space is such an important thing, even if it’s just a tiny place. It’s also to have that sense of security (a roof over your head if everything else fails) because a rented place doesn’t allow for that.

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  3. I didn’t know that you have this blog, too!! I have been thinking about this issue, too! I live in Jakarta where I feel that it’s at the place where Singapore was over 15 years ago. Even here it feels expensive, but when I visited Singapore 5 years ago, I was surprised how expensive the life has gotten in Singapore compared to when I lived there over 15 years ago. It’s crazy. I am glad I’m in Jakarta since it’s still more reasonable although life here is very expensive as well. Just not as expensive as in Singapore.

    • bookjunkie says:

      Thanks so much for coming here as well 🙂 I’ve been having doubts about running 2 blogs but I am just too afraid to transfer everything to one site as I’ve heard nightmare stories of people losing all their content and posts. Also I was hoping to make this second one more focused on being an insider guide to Singapore while the other one remains my personal journal. Strangely this domain that I bought and is hosted on Go Daddy has less features than the free one. There’s no gravatar button or stats or subscription button all of which made me not want to leave the free page. Have you thought about buying your own domain as well? My main reason was to be able to have ads on if I wanted to some time in the future. That is if any company actually wants to place ads in the first place 😉

      Thanks for confirming and sharing your comparisons about the costs of living in Jakarta vs Singapore over the years. So I’m definitely not imagining things. Costs have really escalated here. I sometimes worry about the future value of money and how we will survive here in old age as healthcare gets more and more expensive. I am sure the lower income really feel the crunch and I am lucky compared to them so I feel bad when I complain too much.

      What is it like in Jakarta in terms of safety? I always worry about the safety aspect.

  4. Crystal says:

    I think what I find most disturbing is that *we* certainly don’t see ourselves as wealthy…that at Ravi’s current salary, we do make constant choices and sacrifices.

    A car-In the US, we each had a car. When we were both working outside the home, it was an absolute necessity (as there weren’t realistic public transit options). Once I had E and was at home, and we moved within walking distance of R’s work, we consolidated to a single car at our condo and kept the second car at my in-laws (and eventually sold it when we moved to Singapore, although we still have the Accord at my in-laws). In Singapore, car ownership is so expensive that there is no way it’s a realistic choice for us, even though it would certainly make both our lives easier.

    Schooling–Because Elanor is a non-PR expat, she would be last in line to get a seat at a public school in Singapore (which we would still pay for). Private schools run 14,000 and more SGD per year for PRE-SCHOOL and easily 20+k per year once she’s in primary. It’s certainly one of the arguments against staying in Singapore longer than a few more years…spending 20k SGD a year (or 40, once a second child was school-aged) more or less nullifies any money we might be trying to put toward purchasing a home or paying for university for them.

    I think the saddest part is that we felt like our apartment was a compromise. When we came for our “look-see” visit, we didn’t see a single apartment for less than 7-9k a month. Finding something at 4800 SGD felt like a gift, and we’re nervous about what happens when we need more space in a year or so when we have another child–it would be tough for us to fit them into our current space.

    While we do partake of some luxuries (meat, western food, 24/7 Air Con), even with Ravi’s salary, we’re not shopping at the designer stores at ION (other than groceries and books…and Daiso). Our lifestyle compared to that of many other expats is firmly “middle class” and not wealthy. That we’re financially so much better off than the average Singaporean is truly horrific.

    • bookjunkie says:

      I sometimes feel guilty complaining because I do have nice meals and air-con 24/7 as well – I would die of heatstroke otherwise. But I really do feel the crunch here. It’s impossible to save, let alone save for retirement. When I was working and earning S$4000 I felt that most of it was going on transportation, clothes for work, and retail therapy for all the distress (bad workplace) and long hours including weekends. It just was not worth it. Now to even get that salary again seems to be impossible due to the gap in my resume. I once went for an interview and was told that S$3000 was too much to pay even though the salary advertised for the job was much higher. I am told that I am overqualified with a masters. I was offered S$1700 for a job – the whole amount would go on meals and taxis so I didn’t take it and I was asked to write an essay on LKY (was it a trick essay?). It’s all very frustrating. To be honest and at the expense of sounding egotistical, I think I am worth at least S$5000. I can’t help tying worth to salary even though I know I shouldn’t be doing that.

      Right now I am glad I have the luxury unlike most to explore my options and take a breather from the rat race, but I still feel worry when I constantly hear talk about needing to save for retirement.

      A friend of mine who is Singaporean, finally migrated to her husband’s home in Australia because of the schooling problem and just the high stress life here. She didn’t want her kids to go through our school system. She too mentioned the exhorbitant fees at the Australian School in Singapore.

      The prices of cars…just too crazy here. You could probably get like 2 nice cars in the US for the price of one small one here, considering that we have to pay to use the roads with the Certificate of Entitlement or the dreaded COE? Anyway I wouldn’t want to drive here as people are very rude on the roads.

      Thanks for supporting this new blog of mine and sharing your thoughts. I always find them very insightful and they allow me to gain a wider perspective that I wouldn’t otherwise have.

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