Of income and wealth inequality in Singapore

Year: 2020

This post is written as a brief comment to a Press Release by the Singapore Department of Statistics on Key Household Income Trends, 2019 (20 February 2020).

“In February 2020 the DOS reported that income inequality in Singapore was, at 0.452 and 0.398 before and after government transfers, thereby theoretically the lowest levels in two decades.

This trend will certainly be reversed in 2020 and 2021. Income inequality will become far starker not because the top income decile will rise but the middle decile will fall due to un and underemployment.

The lowest income deciles will continue to be propped up by the greatest share of special transfers. More insidiously is not income inequality, which DOS reports, but wealth inequality, which it does not report.

The capital rich in Singapore earn most of their income in terms of investment returns which are non-taxable and are not subject to estate duties which permit intergenerational rollover of wealth, whereas at the bottom end there is an intergenerational rollover of poverty.

Once the countercyclical measures wash off in 1H2021, Singaporean workers will wake up from complacency and wishful thinking and pull back from speculation in the property and equity markets, and once prices in these asset classes correct to a point of greater sanity, the rich will enter the market scoop up prizes at bargain rates while the retail investors lose their jobs and their shirts. Caveat Emptor.”

– Devadas Krishnadas
CEO, FMG