Singapore: A Poor Man's Country in Rich Man's Clothes

Singapore: A Poor Man's Country in Rich Man's Clothes
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Labor Day makes for a good time to dive into why Singapore remains one of the world's most unequal countries.

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This Labor Day, it may be a good time to look at the wages of Singaporeans.

I came across an article in NPR last month which said: “Norwegians are among the richest people in the world, meaning many of the country's citizens can afford a new electric car. In the 25-year period from 1992 to 2017, Norway's gross national income per capita more than tripled to nearly US$64,000, according to the World Bank.”

And it made me think – how does Singapore compare, since Singapore and Norway have been ranked among countries with the top 10 GNI per capita in the world?

When I followed the hyperlink in NPR’s article to The World Bank, and when we look at Norway’s GNI per capita, based on purchasing power parity, it indeed shows that Norway’s GNI per capita has increased from US$17,920 in 1990 to US$64,760 in 2017.

When you compare that with Singapore, Singapore and Norway started out with about the same base, and Singapore’s GNI per capita has risen from US$21,970 in 1990 to US$90,760 in 2017.

NPR pointed out that Norway’s GNI per capita has increased by more than three times. And when you look at Singapore, Singapore’s GNI has actually increased by more than four times.

While Norway’s GNI increased by 3.6 times, Singapore’s GNI actually increased by 4.1 times.

So it would seem that Singapore has actually performed better.

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Figure 1: GNI per capita of Norway and Singapore. Source: World Bank

Since Singapore and Norway have among the highest GNI per capita in the world, one might imagine that wages in Singapore and Norway would be about similar too.

GNI per capita is, moreover, the gross national “income” per person.

Also, since Singapore’s GNI per capita has been increasing as fast – and even faster – than Norway’s GNI per capita, you would also imagine that the wage increase in both countries would be similar, or even faster in Singapore.

So, let’s take a look at the wage comparison.

In Norway, for the minimum wage of cleaning workers (the sector with the lowest wages), the current minimum hourly wage is 181.43 Norwegian krone (S$28.50, US$20.89) or, based on the current salary conversion determination of 37.5 hours a week, means the minimum wage for cleaning workers in Norway is about NOK 29,935 (S$4,700, US$3,445) a month.

And when you look at the wages of domestic services in 1990, cleaning workers then earned NOK 150,871 a year in 1990, or about NOK 12,173 a month.

Thus, in Norway, the minimum wages of cleaning workers grew from NOK 12,173 in 1990 to NOK 29,935 in 2019, which meant that wages in 2019 actually grew to 246 percent of the wage in 1990, or by nearly 2.5 times.

Now, when we look at Singapore, the minimum wage that cleaning workers on older contracts currently earn is S$1,060 (NOK 6,760, US$778) a month.

And if we look at how much Singapore’s cleaning workers earned back in the 1990s, the gross median wages for cleaning workers in the lowest earning group was between only S$832 and S$1,072 during the 1991 to 1995 period.

In other words, the wages of Singapore’s cleaning workers have barely grown at all since 1990 until today. But using S$832 as comparison, the wages of cleaning workers grew by only 27 percent since 1990, or not even by one-third more.

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Figure 2: Norway’s and Singapore’s minimum wages for cleaning workers. (Chart adjusted for parity based on the currency conversion rate in 2019; Norway’s wages in Norwegian krone on the left axis and Singapore’s wages in Singapore dollars on the right axis; and Singapore’s wages for 1990 is based on the 1991 to 1995 period)

Can you see how big the disparity is?

First, cleaning workers in Singapore today earn a base of only S$1,060 (NOK 6,760) a month, while in Norway, cleaning workers earn a base of NOK 29,935 (S$4,700) a month, which is more than four times more.

However, if Singapore and Norway both rank as having one of the top 10 highest GNI per capita in the world, how does it make sense that Singaporeans are earning such low wages?

When you look at other countries ranked among the top in terms of GNI per capita, Luxembourg, which ranks 6th highest in GNI per capita, has a minimum wage of 2,071 Euros (US$2,310/S$3,150) per month; Ireland, which ranks 11th, has a minimum wage of 1,656 Euros (S$2,570); and the Netherlands, which ranks 15th, has a minimum wage of 1,616 Euros (S$2,460).

Thus even when you compare the base wage of S$1,060 that cleaning workers in Singapore earn, with these other high-GNI per capita countries, Singaporeans still earn only about one-third to half of what citizens in other high-GNI countries earn, or less than one quarter what the Norwegians earn.

In fact, if wages in Singapore grew as fast as that in Norway, the base wage that cleaning workers earn should have increased 246 percent to S$2,045 (US$1,502) today, or closer to the level where other high-income countries are.

But if Singapore is one of the richest countries in the world, and if its citizens earn such low wages, then the question to ask is – where did the country’s money go?

Why isn’t the money the country is earning going back to its citizens?

Looking back at Norway, while its GNI per capita grew by 3.6 times from 1990 to 2017, its minimum wage grew by 2.5 times.

But in Singapore, while its GNI per capita grew by a faster 4.1 times, the wages cleaning workers earned only grew by a much slower 1.3 times. And if you look at cleaning workers in the lowest-earning group as a whole, wages barely even grew over the last 30 years.

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Figure 3: Changes in GNI per capita and minimum wages of cleaning workers. Singapore’s GNI per capita grew faster than Norway, but the minimum wage of cleaning workers in Singapore grew slower than Norway. (Norway’s wage for the 1990s is based on the wage in 1990 and Singapore’s wage for the 1990s is based on the 1991 to 1995 period)

In fact, if wages in Singapore grew as fast as Singapore’s GNI per capita, the base wage that cleaning workers earn should have increased by 4.1 times more to S$3,437 (US$2,525).

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Figure 4: How much Singapore’s minimum wage for cleaning workers should be.

But let’s look at the increase in prices.

From 1990 to 2016, Norway's Consumer Price Index increased from 65.9 to 113.4.

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Figure 5: Norway's Consumer Price Index.

And in Singapore, the Consumer Price Index increased from 71.8 to 112.6.

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Figure 6: Singapore's Consumer Price Index.

Therefore, prices in Norway grew to 172 percent of 1990 prices, while prices in Singapore grew to 157 percent of 1990 prices.

As such, prices in Singapore and Norway increased by roughly about the same rate.

Now, Singapore has been ranked by The Economist as the most expensive city in the world to live for six years in a row, and while Oslo in Norway ranked as 5th most expensive last year, it has dropped out of the top 10 most expensive list this year.

Therefore, on the whole, Singapore’s cost of living is on par with Norway, if not more expensive in some aspects.

The question we have to therefore ask is, given that Singapore’s GNI per capita has grown as fast as Norway and in fact even faster, then why did wages barely grow in Singapore?

Also, given that prices in Singapore grew at about the same rate as Norway, why did wages barely grow in Singapore while wages grew by about 2.6 times in Norway?

In fact, when you compare with the minimum monthly wage of NOK 29,935 (S$4,700, US$3,452) that cleaning workers in Norway earn a month, there are actually 57.5 percent of Singaporeans who earn less than S$4,000 (US$2,938) and 67.5 percent of Singaporeans who earn less than S$5,000 (US$3,673) a month.

This means that in effect, there could be as many as 67.5 percent, or close to two-thirds, of Singaporeans who are earning less than the lowest-income earners in Norway.

But how does this even make sense when Singapore ranks together with Norway as having one of the top 10 highest GNI per capita (gross national “income” per person) and with one of the highest prices in the world, but yet Singaporeans actually earn lower wages than all the Western European and Anglo-Saxon, countries, and East Asian countries with a similar cost of living?

Something is not quite right here.

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Figure 7: Minimum wages. Sources: Wage Indicator (Switzerland), The Bitter Truth: Why Asia's Tigers Suffer while the Nordics Thrive (Part 1) (Denmark, Sweden, Finland), Iceland Monitor (Iceland), Australia Fair Work Ombudsman (Australia) New Zealand Government (New Zealand), Government of Canada (Canada, for Ontario), Eurofound (Austria), The Korea Herald (South Korea) Japan Press Weekly (Japan), South China Morning Post (Hong Kong), Eurostat Statistics Explained (all other countries). (Note: Wages in the Nordic countries, Switzerland, Austria and Singapore are not national minimum wages, but minimum wages in the cleaning, hospitality or transport industry)

Now, even when you look at taxes, the net average tax rate that Norwegians paid last year was only 27.5 percent, and for a cleaning worker earning the minimum wage of NOK 29,935 (S$4,700) a month, taxes and social security would only amount to 22 percent a year, using Norway’s tax calculator.

But this is similar to the 20 percent that Singaporeans have to pay into the Central Provident Fund (CPF) social security – which, by the way, is used for similar things such as for healthcare and retirement, as the tax and social security of 22 percent that the Norwegians pay.

And because low-income Norwegians earn more than four times more than Singaporeans, after deducting the tax and social security from their wage of NOK 29,935 (S$4,700), Norwegians still take home NOK 23,269 (S$3,650) a month.

Meanwhile, in Singapore, after deducting for CPF from their wage of S$1,060 (NOK 6,760), a Singaporean will only take home S$848 (US$623) a month.

In other words, low-income Norwegians earn in one month what low-income Singaporeans take 4.5 months to earn.

For a better perspective, low-income Norwegians earn in 10 years what a low-income Singaporean must take a lifetime of working 45 years to earn.

And note, we are comparing two countries with similar GNI per capita and costs of living, where the wages low-income Singaporeans earn are therefore simply inadequate.

In short, Singaporeans are very short-changed.

Now, how can this make sense?

Singapore’s GNI per capita ranks as one of the highest in the world, together with Norway. In fact, Singapore’s GNI per capita also grew faster than Norway.

Singapore’s consumer price index grew similarly to that of Norway, and Singapore has been ranked as the most expensive city in the world for six years in a row, based on overall prices that can be afforded by the country’s wealth.

But Singapore’s wages for low-income residents have barely grown, when prices have grown by nearly 1.6 times more, and the GNI per capita has jumped more than 4 times.

Now, if you thought median income Singaporeans have it better, you might have to think again.

In Singapore, the median wage in 2017 (not including employer CPF) was S$3,749 (US$2,754)

But in Norway, by 2014, their median wage was already 27.99 euros (S$42.56, US$31.26) an hour, or about 4,620 Euros (S$7,024, US$5,160) a month. Now, Norway’s median wage increased by 18.5 percent from 2006 to 2010, and by 9.6 percent from 2010 to 2014, which means that by today, it could have increased by another 10 percent to 20 percent, which taking 15 percent as a possible gauge, means that Norway’s median wage would have increased to more than S$8,000 (US$5,877).

As such, the median wage in Norway, or what 50 percent of the Norwegians earn, would therefore be two times more than that of Singaporeans.

In fact, 84 percent of Singaporeans earn less than S$8,000.

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Figure 8: Norway’s and Singapore’s median wages. Singapore’s median wage is only half that of Norway’s.

Not only that, when you compare Singapore’s median wage with other Western European and Anglo-Saxon countries, their median wages are all higher than Singapore’s as well.

This suggests that median income earners in Singapore are also worse off than median income earners in the other Western European developed countries with a similar cost of living.

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Figure 9: Median wages. Sources: Eurostat Statistics Explained (for Austria, France, Germany, Luxembourg, Sweden, Ireland, Denmark and Norway: note that these median wages were calculated based on 2014’s figures by multiplying with 40 hours of work a week and 4.4 weeks a month, and their median wages will be higher today), SWI swissinfo.ch (Switzerland), Statistics Iceland (Iceland), The Sydney Morning Herald (Australia), Wikipedia (United States), Statbel (Belgium), Yle Uutiset (Finland), IamExpat (The Netherlands), The Guardian (United Kingdom), Government of Canada (for Ontario), Stats NZ (New Zealand)

When you compare the minimum and median wages to their GNI per capita (current US$), it becomes more apparent that Singapore’s wages are very low. In Figure 7, the countries are plotted against their minimum and median wages. The countries in blue are those with a GNI per capita of more than US$50,000 while the countries in red are those with a GDP per capita of between US$38,000 and US$50,000. In general, the higher the GNI per capita, the higher the minimum and median wages of the countries. However, as you can see, Singapore is an anomaly – it is further away from the trendline than the other countries, towards the lower side. Based on Singapore’s GNI per capita of US$54,530, it should actually be located somewhere between Denmark/Iceland and Ireland/Sweden/Australia. Instead, Singapore is even further behind the countries with GNI per capita lower than US$45,000. In other words, Singapore’s minimum wage should be around S$3,000 and Singapore’s median wage should be around S$5,000 if they should follow the trendline, like the other countries. Instead, Singapore’s minimum wage for cleaning workers is only S$1,060 (or only one-third what it should be based on the trendline) and Singapore’s median wage is only S$3,749 (or only three-quarters what it should be). As such, it is clear that Singaporeans are severely underpaid and short-changed based on their country’s GNI per capita.

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FIgure 10: Minimum vs. median wages

But do you want to know one thing that did increase in Singapore?

Yes, the cost of living has increased, but here is another one.

In 1992, the Norwegian prime minister earned an annual salary of NOK 420,000. And today, the Norwegian prime minister earns an annual salary of NOK 1,631,346 (S$255,840).

Now, compare this with Singapore. In 1989, the Singapore prime minister earned a monthly salary of S$49,608 or an annual salary of S$595,296, and together with a variable bonus of half a month and a performance bonus of up to two months, the prime minister could have earned as much as S$719,316 in 1989.

Today, the Singapore prime minister earns a reported salary of S$2.2 million a year, but including his bonuses, I had estimated him to have earned as much as S$2.7 million a year.

And don’t forget, prior to 2011, the prime minister’s salary was even as high as S$3.1 million, and this is not even yet including all the bonuses.

As such, the salary of the Norwegian prime minister today has risen to 388 percent its 1992 value, or by 3.9 times. Meanwhile, the salary of the Singapore prime minister has also risen by about 3.8 times.

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Figure 11: Norway’s and Singapore’s prime ministerial salaries. (Chart adjusted for parity based on the currency conversion rate in 2019; and Norway’s salary in Norwegian krone on the left axis and Singapore’s salary in Singapore dollars on the right axis.)

But when you look at the salary increases in nominal terms, the salary of the Norwegian prime minister increased by only NOK 1.2 million (S$190,000, US$139,570), while the salary of the Singapore prime minister instead leaped by about S$1.98 million (US$1.45 million).

In other words, in nominal terms, the increase of the Singapore prime minister’s salary was 10 times more than the increase of the Norwegian prime minister’s salary.

Both prime ministers presided over countries with similar GNI per capita and similar populations. There is no reason why one should earn more than 10 times more the other (the Singapore prime minister’s total salary is more than 10 times higher than the Norwegian prime minister).

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Figure 12: Norway’s and Singapore’s prime ministerial salaries. Singapore’s prime minister earns 10.5 times more than the Norwegian prime minister.

Also, while Norway is able to pay its lowest-income workers S$4,700 (US$3,453) while low-income Singaporeans still only earn S$1,060 (US$779), this means that the Singapore government is doing a very bad job at ensuring the welfare of its citizens is taken care of.

If so, the Singapore prime minister does not deserve the salary he is giving himself now.

In fact, while the Norwegian prime minister only earns 4.5 times that of the lowest-paid worker and about 2.5 times that of the median wage worker, the Singapore prime minister actually earns 212 times more than the lowest-paid worker and 60 times more than the median wage worker.

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Figure 13: Norway’s and Singapore’s wage gap comparison. Norway’s prime minister earns 4.5 times median wage and 2.5 times the minimum wage of cleaning workers, while Singapore’s prime minister earns 60 times median wage and 212 times the minimum wage of cleaning workers.

In other words, a cleaning worker in Norway takes 4.5 months to earn what his/her prime minister earns in a year, and this takes 2.5 months for a median income earner to do.

But in Singapore, a median income earner would need to work for five years based on the current median wage, to be able to earn what the prime minister earns in a year, and even after working a whole lifetime of 40 years, the median income earner would still only earn what the prime minister can earn in a short eight years. The current prime ministerial salary was changed in 2011 and it has been eight years since, which means that the prime minister has earned in these eight years what the median worker would have taken a whole lifetime to earn, and in fact he might have earned even more.

And for the cleaning worker, he/she would need to work nearly 18 years on the current minimum wage for cleaning workers, to earn what the prime minister earns in a year. After working a whole lifetime, a cleaner would only be able to earn what the prime minister can earn in his luxurious comfort in just two years. And as we have seen, wages for cleaning workers have barely increased for 30 years, and while our low-income Singaporeans toiled hard in sweat for the past 40 years, the prime minister would have earned what they earned in this lifetime, in just the last two years.

As you can see, Norway is a much, much fairer country, where the gap between the low-income workers with the prime minister is very low.

But Singapore is a very, very unequal country, where the gap between low-income Singaporeans and their prime minister is shocking.

Another way to visually understand this is to compare Figure 10 with Figure 2. Whereas in Figure 2, the wages of low-income workers in Singapore remained stagnant (red line) while that of the Norwegians grew (blue line), but in Figure 10, the red and blue lines have swapped positions, and it is the prime minister salary in Singapore which is on top.

Look at it another way: If the Singapore prime minister earns the same salary as the Norwegian prime minister, and if the rest of his salary is distributed to increase the wages of low-income Singaporeans by S$500 (US$368) each for a year, this would benefit more than 400 people every year. And if all the ministers, ministers of state and parliamentary secretaries, (who are paid the highest political salaries in the world) as well as the permanent secretaries and heads of government agencies and government-linked companies do the same, this would be able to increase the salaries of thousands, and even tens of thousands of Singaporeans, and help uplift many out of poverty.

But the Singapore government has refused to do that. Instead, they have chosen to reward themselves and take the benefits of the hard work of Singaporeans for themselves.

And, as written before, countries with a higher GDP per capita generally also have higher salaries for their political leaders. However, as was explained, the Singapore prime minister’s salary does not follow the trendline as the other countries. Instead, based on the trendline, the Singapore prime minister is earning a salary more than three times what he should be paid.

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Figure 14: Salary of political leaders vs. GDP per capita

When compared with Figure 10, where the large majority of Singaporeans are earning lower wages than what they should be paid based on the country’s GNI per capita, while the Singapore prime minister is earning significantly more than what he should earn, how is this reasonable, just or fair?

In fact, that the prime minister and his government would do something so unequal and unethical is wrong, especially since the low wages have resulted in an estimated 20 to 35 percent of Singaporeans living in poverty, as estimated by Ambassador-at-Large at the Ministry of Foreign Affairs and Law Professor at the National University of Singapore Tommy Koh, quoting a report by the Lien Centre for Social Innovation at the Singapore Management University.

Do the people who have made themselves the decision-makers in government not feel guilty at all that they have taken all this money to pay themselves such high salaries while the low and lower-middle income Singaporeans are suffering on low wages?

As a reminder, nearly two-thirds of Singaporeans earn less than the minimum wage of cleaning workers in Norway.

Why should the Singapore prime minister be allowed to earn 10 times more than the Norwegian prime minister, when low-income Singaporeans earn five times less than the Norwegians? Why should the Singapore prime minister be allowed to earn 212 times that of a cleaning worker?

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Figure 15: Prime ministerial and minimum wage comparison

Also, while the Singapore prime minister’s salary has increased by about 275%, Singapore’s low-income workers have only seen their wages grow by 27% – if they grew at all.

And while Singapore’s GNI per capita grew by 313% from 1990 to 2017, Singapore’s low-income workers only saw their wages grow by 27%.

In other words, the prime minister has allowed his own salary to grow with the GNI per capita, but the wages of low-income Singaporeans and median earners in Singapore have not been allowed to catch up at all.

If this looks unfair, that’s because it is.

The situation in Singapore today is very unfair.

The fair question you have to therefore ask is: If Singapore has been growing richer and richer, why have Singaporean’s wages not grown?

And why did the prime minister and his government reward themselves with the money, but not Singaporeans?

Did the hard work that Singaporeans put in to grow Singapore not matter at all?

If Singaporeans have not been earning all this money and the money has not gone to Singaporeans, then where has this money gone to?

Singaporeans have voted for a government over and over again which seems more interested in only taking care of the elites in power, rather than of Singaporeans. It is clear that Singapore has more than enough money to go around, but the People’s Action Party (PAP) does not seem to want to share it.

In fact, if Singapore’s wage structure is similar to that of Norway, not only will low-income workers benefit, so will middle-income and upper-middle income Singaporeans as we have seen – everyone’s wages will increase across the board, and don’t forget, the tax and social security the Norwegians pay – which is not that different from what Singaporeans pay in CPF – go into providing what is universally known as free healthcare and education, and adequate retirement for the Norwegians, while Singaporeans on the other hand pay for one of the most expensive healthcare and university fees, and one of the least adequate retirement funds in the world, on their comparatively much lower wages. It’s a double whammy for Singaporeans.

Singaporeans have to really decide for themselves if the PAP which has controlled government for 60 years since 1959 still cares about them, or if the PAP really only care for themselves.

This Labor Day, it is time to take a deep, hard and honest look.

Read Next: The Crazy Rich Salaries of Singapore's Ministers Versus the Poor Peasants Who Support Them

Editor: Nick Aspinwall (@TheNewsLens)

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