"Over the past decade, stresses and strains both internationally and from within our society have impinged upon us. We have seen globalisation go further than ever before. ...Overall it's a great plus for Singapore but at the same time it is putting pressure on our low-wage workers and widening the income gap" - PM Lee [Link]
In a recent speech, PM Lee blamed globalisation for the widening income gap in Singapore. While it is true that globalisation has an impact on income gap and many countries have seen the income gap widening in the past 2 decades, it does not explain why Singapore has the largest income gap among developed nations. No other developed countriy has imported cheap foreign labor on the same scale as Singapore, no other developed country has tilted their policies as far as Singapore to favor big businesses and allowing the income gap to widen so much. In recent years, the govt cut corporate taxes even as corporate profits as a % of GDP reached record levels. Regressive taxes such as GST that impacted the poor the most were increased. The govt pursued policies that increased the financial burden for those who are sick (means testing), poor (most expensive public housing in the world) and old (limited public assistance). The income gap and rising cost of living resulted in a large segment of the poorer working population living in financial strain due various compulsory "self-reliance" schemes when they have to set aside their own money for retirement (CPF, CPF Life) and medical care (Medisave). These schemes were only workabe when the income gap was narrower and the cost of living was lower relative to income. The govt's policy to expand the population by importing foreigners has been great for the bottomline many of the businesses linked to the govt such as the telcos, supermarkets, transport companies and banks but has been disadvantageous to ordinary Singaporeans as the cost of living (in particular housing) rose and quality of life fell due to overcrowding (esp. public transport).
"But last year Singapore's government revealed that while average wages were rising with the economy, incomes among the bottom 30 percent of households had actually fallen since 2000. " - IHT Report [Link]
The PAP govt solution for income inequality is retraining. This mantra of retraining has been uttered for more than a decade, yet we see income inequality rising. The fact is many low wage workers are retrained from one low payng job to another low (sometimes lower) paying job just to stay employed as the govt opens the floodgates to foreign imported labor to keep wages competitively low for businesses. Productivity has fallen over the years and the govt continues to resist moves such as implementing a minimum wage that give businesses an incentive to automate and increase productivity.
The PM now tries to blame the income gap on globalisation. Our income gap is the biggest among developed countries and much of this the result of PAP policies. By saying this problem is the result of globalisation, PM Lee is also implicitly saying that there will be no major policy changes/initiatives to address this issue i.e. much needed change is not going to come unless you make it necessary for this govt to implement change. The PAP will preserve the current system and maintain the status quo because tnis is the best setup to serve their own interests.