Wednesday, May 16, 2018

Reduce inequality in Singapore

A few of the 4G leaders are now saying that they wish to tackle the inequality in Singapore.

This inequality means that the gap between the high and low income earners is very wide, and is probably among the worst in the world.

This inequality can be achieved by paying higher wages to those who are earning low incomes and getting the high income earners to pay more tax.

The fear is that the higher tax may lead to the higher income earners moving to other countries. I do not agree with this "fear" because most of the high income earners, such as doctors, lawyers, corporate executives and political leaders earn their high income from Singapore and cannot just "move to other countries".

However, I will just set aside the question of getting the high income earners to pay more tax.

If most poople can earn enough to lead a comfortable life, they do not really care that the rich are much better off then them.

Therefore, it is important to have a strategy that ensures that citizens are able to get jobs that pays wages that are adequate to meet the cost of living in Singapore. 

I suggest the following strategies.

a) We have to pay higher wages to those at the lower income level. This can be done through a minimum wage policy. Most countries have this policy. Singapore should follow them.

b) The public sector jobs should be reserved only for citizens. Citizens are not willing to take up some jobs because the wages are too low, We have to raise the wages to a level that will get citizens to take up these jobs. I am referring to jobs of nurses, transport workers and police officers. The higher wages in the public sector will set the benchmark for the private sector.

c) We also have to make the private sector employers prefer to employ citizens, rather than foreign workers. Right now, most private sector employers, especially the small and medium size enterprises, find the cost of doing business to be too high. They prefer to employ foreign workers who are willing to accept lower wages than citizens. This situation has to be corrected. The government has to impose a levy for employing foreigners and give a subsidy for employing citizens. The levy and subsidy should be high enough to tilt the balance in favor of employing citizens.

d) It is also important to bring down the cost of living, which is too high now. This cost can be reduced by up to 10% by abolishing GST entirely. There is no nee for the government to collect revenue from GST as they already have more than adequate revenue from other sources.

e) The government should also take effective steps to reduce the cost of education (i.e. private tuition) and health care. Currently, these expenses are too high, due to lack of control of the market forces.

The best way to reduce the income gap is to pay higher wages, to ensure that citizens can have jobs, and to reduce the cost of living. If the majority of the citizens can earn enough to meet the cost of living, it does not matter that some people are earning much more than them.

This approach will automatically reduce the gap between the low and high income earners.

Tan Kin Lian

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