Singapore began its quest for fast economic development over four decades ago, a move aimed at benefiting each Singapore citizen and its society at large (Lim, 2016). According to the world bank, Singapore is classified as a high-income economy with US$54,530 per capita as of 2017. Singapore is ranked as one of the world’s countries with the best and most business-friendly environment (Chatibura, 2021). This has made Singapore to speedily develop from a low middle-income to a first world developed country. The development in Singapore can be attributed to economic, social, political, and historical contexts. Singapore remains a stable economy because it has no foreign debts and high revenue, which is highly driven by exports (Hwang, 2020). This paper aims to give a deeper analysis and research on the mentioned above contexts and challenges facing Singapore and address the migration, population, and housing policies within Singapore society as the possible solutions to the challenges and how they have shaped Singaporean society’s economic development.
Despite being among the high-income country globally, Singapore as a society has faced various domestic challenges towards its social mobility (Ho and Tat, 2021). The following are the three major challenges facing the Singapore economy at the domestic level: population, inequality, and managing external dependence. These challenges have been in existence the attainment of independence and have posed a threat to the government’s economic sustainability movement.
At independence, the government of Singapore, through the National Family Planning and Programme, came up with a plan to reduce the fertility rates among its citizens. The strategized plan was to be rolled out after every five years(Ho and Tat, 2021). After successfully achieving the plan to reduce the fertility rates, there came another challenge of slow population growth. The slow growth across all the population ages has stagnated the workforce, thus weakening productivity.
Despite the government trying to revive its population by incentivizing the rearing of children, fertility rates continue to fall further. For instance, in 2017, the fertility rate is said to have dropped further to 1.20(Ho and Tat, 2021). The growth of the resident workforce has been decelerating greatly compared with 4.5% in the 1970s and 1980s, to 2.1% in the 2000s, and is projected to drop further to 0.1 by 2030, according to the 2013 Population White Paper. If the falling continues with the tightened immigration guidelines, it may be negative, thus affecting productivity growth.
Singapore’s society is highly unequal, especially with other successful developed economies, especially in North Europe. The economic benefits from Singapore are unequally skewed. This is evident from the Gini coefficient, a conventional income inequality measure that assigns lower scores to many equal societies (Ho and Tat, 2021). The Gini coefficient of Singapore remains high even though it dropped to 0.456 in 2016. From the available Gini coefficient data, there is evidence of income inequality between 2000 and 2008.
Management of External Dependence
After independence, Singapore had little labor force to sustain its workforce demands. This made the country depend on foreigners highly, which has brought some consequences. There are many ways Singapore depends on foreigners, and one of them is the provision of a labor workforce. The result is that many foreigners have migrated to Singapore as either skilled or non-skilled laborers. Normally, a nation that depends on foreign labor spends a lot of capital to pay the workers and lay down policies that could protect the foreign workers. The overdependence of foreign labor means that the citizens of Singapore have little contribution towards the economic growth of their nation.
Either money paid to the foreign workers does not directly benefit Singapore since the workers will tend to send back to their country of origin. In addition, the high number of foreigners brought a housing problem. The government of Singapore could not be able to provide proper and good housing services for both the citizens of Singapore and foreign workers. The housing shortage problem had to be addressed since many residents were forced to live in harsh conditions such as slums.
Policy Solutions to The Challenges
At independence, the larger part of Singapore was unemployed, affected by high mortality rates and poverty, and the government depended highly on labor importation. As a result, the Singapore government’s priorities have been focusing on the incorporation of population issues, considering that geographically, the country is small and has a scarcity of natural resources (Chu, 2014). Either, while trying to solve the issue of high rates of unemployment and settlement on the slums by the economic planners, the country’s success in rapid industrialization, reduction of the rate of birth, the improvement of the education in the 1970s and 1980s provided a significance labor surplus by mid-1980s. Family planning as a population policy was introduced.
In Singapore, population planning is an initiative that balances the economic needs for more highly skilled workers and the considerations that are social and political like the ethnic and local or foreign population composition (Teng and Gee, 2016). As a result, over five decades since its independence, the Singapore government has focused on introducing policies to control birth rates and in-migration.
A few years after independence, the National Family Planning and Programme came up with a plan with five elements aimed at fertility reduction (Teng and Gee, 2016). The basic issues to be addressed were: contraception access, abortion and sterilization liberalization, educating the public about comprehensive and extended family planning, incentives and disincentives, and lastly is manipulating the determinants of socioeconomic fertility like improvement of education of women. It also came up with a definition on their target number to reach after a given specific duration of time which is at the end of every five-year plan duration. This means that the Singapore government treated the issue of population control with urgency.
Between 1966 and 1980, the Singapore National Family Planning and Programme was able to achieve some of its goals. It was able to provide quite a good range of family planning services (Chu, 2014). The services were offered via an island-wide chain of maternity and children’s clinics which offered contraceptive services, visiting homes, and men’s clinic for family planning services. In 1970, Singapore legalized the Voluntary Sterilization Act, which opened room for offering such services at government hospitals. In 1975, a liberalization allowed on-demand sterilization at a low affordable cost and was available in private hospitals (Tan, 2012).
In 1984, a few years after achieving most targets set for a five-year plan, the government came up with a strong anti-natalist plan and measures to promote large families on well-educated women (Graham, 2007). This shifted the focus towards pro-natalism by 1987, which focused on encouraging economically strong families to have large families of three or more. This translated to a new population policy supported by financial aid for the rearing of children. As a result, the period was characterized by rapid economic growth in Singapore and the restructuring of the economy. In 2000, the Singapore government introduced Baby Bonus due to the rapid decline in fertility in the 1990s (Chua, 2009). The Baby Bonus is aimed at providing and helping parents manage the cost of upbringing of their children. It mainly comprised cash gifts and an account for child development.
As a high economy society, Singapore has a unique system of housing which comprises quite a good number of its housing stock constructed by the Housing and Development Board (HDB) and ownership of homes through the Central Provident Fund (CPF) (Phang and Helble, 2016). Since 1959 when the first elections were held, and in 1965 when Singapore gained independence, the Asian nation has been ruled by the People’s Action Party government, which adopted a housing program for the public that they classified as the foundation stone that the party was to build its legitimacy.
The establishment of the HDB-COF scheme in the 1960s has changed Singapore’s municipal housing, which has remained intact for more than 50 years (Phang, 2007). In Singapore, housing policy has changed over time to respond to different emerging housing challenges. For instance, the 1960s political tensions, mergers with Malaysia, and abrupt independence made it difficult to attract long-term investments (Phang and Helble, 2016). A large number of immigrants and population growth caused a high housing shortage. Previous colonial government measures in planning towns and offering rental service housing and flats proved to be inadequate. Housing for the public constructed by the Singapore Improvement Trust (SIT) managed to accommodate only 8.8% population of people in the year 1959 (Phang, 2007). These housing areas lacked access to water and basic amenities due to over crowdedness.
The newly elected government prioritized the provision of homes in large numbers. It developed the housing schemes on three major pillars: the formation of HDB in 1960 and the 1966’s enactment of the Land Acquisition Act (Phang and Helble, 2016). It gave CPF an additional role in becoming a financial institution towards housing in 1968. By the 1970s, the HDB-CPF was effectively working to channel resources into housing. As a result, the housing shortage problem was resolved a few years later in the 1980s. The renewal of the aging houses in the various estates became a challenge. Subsidies of housing in the form of donations were introduced. Since 2000, the challenge in housing construction has been to curb speculative and investment demand for housing, increase income inequality, and aging population.
Considering that a good number of foreigners live and study in Singapore, the housing statistics show a clear distinction between resident and non-resident populations (Phang, 2007). In 2000, non-residents were made up 19% of the total population. Government data indicate that the housing market caters to residential and non-residential citizens (Phang and Helble, 2016). The HDB regulates Singapore’s public housing rental sector, which represents the public housing sector.
The housing scheme of Singapore has been of great benefit to the socio-economic. Such improvement of the housing standards in the urban environment has been of great success towards the adopted Singaporean government’s economic and housing strategy (Phang and Helble, 2016). The benefits have been seen, such as an increase in the savings rate, increased quantity and quality housing stock, a high number of homeowners, and the development of the mortgage market.
A few years after gaining independence, Singapore’s growing economy required both skilled and unskilled foreign workers, thus welcoming permanent and temporary foreign workers (Chu, 2014). The result led to an immigration system with various policies for the immigrants, which has increased the number of foreigners. For instance, data indicates that 47% of the residents born in Singapore in 2017 were foreigners compared to 28% in the year 1965%. The government of Singapore does not discriminate between naturalized workers and those who were born citizens when it comes to its workforce characteristics.
Migration in Singapore is liberal but targeted and is limited to migrants who only enter Singapore for economic and educational reasons (Chu, 2014), which is different from other nations like the United Kingdom, that only allows refugees and seekers of asylum. The analysis of the migration trends since 1980 shows that there has been an increase in the migration of immigrants to Singapore (Tan, 2012). The migrants entering Singapore are classified into two major groups; foreign talents and low-skilled workers.
Since the year 1997, the immigration system in Singapore has modernized and changed greatly. The adoption of liberal immigration laws has increased the number of foreigners in Singapore (Wong, 1997). There is no labor market test in Singapore, only those workers need to have wages above a certain given threshold to qualify for portable and flexible visas that allow for naturalization. The immigration system of Singapore facilitates an inflow of foreign talents, which will create a knowledge-based economy that encourages the immigration of foreign investors, thus boosting productivity and employment opportunities. Also, in Singapore, hiring foreign workers from abroad is open, and in most cases, it involves employment agencies.
The government has adopted a model famously known as Chinese-Malay-Indian-Others (CMIO) that has contributed to racial harmony. The CMIO has greatly contributed to the ethnic depoliticization, strong central authority that was able to influence its people effectively, egalitarianism across ethnic groups, and lastly, the depoliticization of ethnicity.
Despite having gone through many challenges in its economic development quest, Singapore has still managed to rise and become one of the high-economy societies. This can be linked to the good policies laid down by the government of Singapore to counter the challenges. Also, the policies have helped to have a well-organized, peaceful environment for both domestic and international investors and human laborers, who have boosted the economic growth of Singapore.
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