Chart of the Day: See the sharp spike in Singapore’s social spending

Government policies have shifted left.

Singapore has seen a surge in social spending since 2011 as government policies sought to expand social safety nets and bridge the rising income gap. This chart from Bank of America Merrill Lynch shows that the share of spending on social, healthcare and education have risen sharply in recent years, as overall policies shifted left.

“Under [former Finance Minister Tharman Shanmugaratnam’s] purview, policies shifted visibly to left of center, focusing on upgrading the lives of lower-income and elderly Singaporeans. He introduced schemes which expanded the social safety net, including the Pioneer Generation Package, Medishield Life, Silver Support Scheme and Workfare Income Supplement,” BofAML economist Hak Bin Chua said. 

He noted that the former Finance Minister also pushed for policies that reduced the dependency on foreign workers and incentivized productivity, which also fuelled the jump in social spending.

However, Chua said that progress on expanding the social safety net and reducing inequality made more headway than improving labor productivity.

“Average income, inclusive of transfers, for the bottom 10% of families rose about 25% between 2010 and 2015, the highest among all income groups. But labor productivity growth has been below zero for the past four years, averaging just -0.1% in 2012-15. This is far below the aspirational target of 2-3% that the government initially set. Productivity has failed to compensate for weaker labor force growth, resulting in much lower overall growth,” Chua noted.