Saturday, 9 October 2021

How much money do households in Singapore need to achieve a basic standard of living?

Family of four needs $6,426 a month for basic standard of living in Singapore: Minimum Income Standards Study 2021
By Tham Yuen-C, Senior Political Correspondent, The Straits Times, 8 Oct 2021

A family of four, with parents, a pre-teen and a teenager, needs at least $6,426 a month to afford a basic standard of living, a study on household budgets has found.

A family of two, with a single parent and a toddler or pre-schooler, meanwhile, needs $3,218 a month.

But a substantial and concerning proportion of working households in Singapore - about 30 per cent - do not earn enough to meet these needs.

The study was done by National University of Singapore Lee Kuan Yew School of Public Policy (LKYSPP) and Nanyang Technological University (NTU).

Its findings were released in the report Minimum Income Standards For Households In Singapore (2021), and were disputed by the Ministry of Finance (MOF) in a statement on Friday (Oct 8).

LKYSPP senior research fellow Ng Kok Hoe and NTU head of sociology Teo You Yenn, two of the study's six authors, said that the study on how much people need to achieve a basic standard of living in Singapore has exposed some gaps in society.

Using the figures as a benchmark and comparing them against existing income data as well as public schemes show that some segments of the population are not able to meet their basic needs, added Dr Ng at an event presenting the study's findings held over videoconferencing platform Zoom.

But the MOF said "the conclusions may not be an accurate reflection of basic needs largely due to assumptions used", pointing to the limitations of the Minimum Income Standards (MIS) approach used.

The study defined standard of living as one in which Singaporeans can afford housing, food and clothing, and also have opportunities for education, employment and work-life balance, as well as access to healthcare.

It should also enable a sense of belonging, respect, security and independence and afford the choice to participate in social activities and cultural and religious practices.

Based on this definition that emerged from focus group discussions, researchers then convened more focus groups for people to come up with lists of items people from different stages of life will need.

The researchers went to shops or websites mentioned by the participants to find out the real price of each item. These lists were then combined to form the budget of various configurations of households.

Dr Ng said a critical pillar of the MIS approach is to ensure that each focus group is economically diverse, so the budgets resulting from the discussions are not just for particular segments, say the rich or poor. Instead, these budgets apply universally for all Singaporeans, he added.

A total of 196 participants of different genders, ethnicity and socio-economic backgrounds took part in 24 focus group discussions.

This method differs from other methods of assessing needs, which typically depend on experts and household expenditure.

The MOF said the budgets arising from the study were in excess of the basic needs for an average household.

This time, it covered younger households, including those with a single parent with one child aged two to six, and those with parents with two children, one aged seven to 12 and the other aged 13 to 18.

It also updated its findings on households with a single elderly person, by accounting for inflation, among other things.

Adopting the household budgets as benchmarks and comparing them with data on actual income from work, the study found that after taking major taxes and benefits into account, workers earning the equivalent of the median wage in 2020, which stood at $4,534, will make more than enough to cover the needs of the single-parent and two-parent households.

Based on the study, the average wage per working parent needed to meet the basic standards of living is $2,906 per month.

The study's authors suggested that this can be a starting point for a socially acceptable living wage for Singapore, which will allow people to meet their basic needs.

However, the study found that some groups were at risk of falling below this minimum. The youngest workers, as well as those without tertiary education and those in certain low-wage sectors, would fall short if they belonged to these single-parent and two-parent households.

For example, cleaners and labourers take home a median monthly income of only $1,535, while salespeople make $2,345.

The Progressive Wage Model (PWM) and Workfare Income Supplement were also inadequate in helping to make up the difference, with wage levels under these schemes coming up to about 60 per cent of what the single-parent and two-parent households need.

"Clearly, interventions currently available are not enough for working households with children," said Dr Ng.

He added that if such households depend on employment in PWM sectors such as cleaning as their only source of income, they are likely to experience significant financial strain, calling for wage intervention to go further than the PWM currently does.

For elderly households with one person, basic needs will cost $1,421 a month.

Income data suggests that older workers would have just enough to cover this. Workers who are 60 years old and above make a median monthly wage of $2,330.

But elderly people depending on Central Provident Fund payouts may find themselves short, while those needing public assistance would be a long way from achieving a basic standard of living, the study found.

The CPF Basic Retirement Sum, which pays out $800 a month, covers only 56 per cent of what a single elderly person needs. The Silver Support Scheme covers only 11 per cent to 21 per cent, the study found.

While the study offers a scientific benchmark for policymakers to refer to, it does not prescribe a way to help close the gap, said Dr Ng.

He suggested that there were two options, either rebalance the private and public provision of public services such as education and healthcare, or improve wage interventions such as PWM.

The study found that housing, healthcare, education and childcare accounted for a significant proportion of spending for all household types - 28 per cent of the budget for two-parent households, and 39 per cent for single-parent households.

More state funding for such public services, through universal subsidies or direct provision, would help lighten the financial burden on households, he noted.

"What we mustn't do is say we can't move on any of these fronts. If you don't move on any front then people will not have enough," he added.

The study's authors also said the MIS method of constructing household budgets, adopted by countries such as Britain, France, South Africa and Thailand, reflects the lived realities and ordinary habits of people and captures the values and principles that ordinary Singaporeans identify with.

For instance, participants agreed that money should be allocated for contributions at funeral wakes, or birthday presents, but rejected air-conditioners as a necessity.

They also agreed that land lines were not needed, since most people use their mobile phones nowadays, and that taxi rides are a necessity a few times a week, though cars are not.

Associate Professor Teo said: "The spirit of this project is really about trying to capture how ordinary people think about the basic standard of living in a particular time and... many participants were very articulate in saying that it shouldn't just be about breathing and being alive.

"It's also about thriving, having respect and security and belonging."

The importance of this sense of belonging had come through especially strongly this time around, compared with the first study in 2019, as parents spoke about how children need to be able to do things other children do, so they feel they belong.

That is why the household budgets also included money for them to join their friends at outings outside of school, she added.

Dr Ng said: "It was very meaningful... that people can agree what basic needs in society mean, that people from very different backgrounds agree that there is such a thing called basic needs, agree what it means and looks like...

'This should urge all of us to think about how in policymaking and public deliberation and thinking, we should bring people into it and not think that answers are best produced by narrow groups of elites."

Report on minimum income standards not an accurate reflection of basic needs: Finance Ministry
By Ng Wei Kai, The Straits Times, 8 Oct 2021

The Ministry of Finance (MOF) has flagged issues with a report by several academics on minimum income standards for households, saying those reading it should bear in mind the limitations of the approach researchers used.

"The conclusions may not be an accurate reflection of basic needs largely due to assumptions used," the ministry said in a statement on Friday (Oct 8).

"With most participants having post-secondary education and 15 per cent living in private properties, the findings expressed may not be reflective of the circumstances of the lower-income families," MOF added.

The study on household budgets, by a group of researchers from the National University of Singapore's Lee Kuan Yew School of Public Policy (LKYSPP) and Nanyang Technological University (NTU), found that a family of four, with parents, a pre-teen and a teenager, needs at least $6,426 a month to afford a basic standard of living.

But a substantial and concerning proportion of working households in Singapore - about 30 per cent - do not earn enough to meet these needs, it noted.

These findings were released in the report Minimum Income Standards for Households in Singapore (2021), which was also extended to the Government.

In its statement, the ministry made three observations on how this might have affected the study's findings.

First, it said researchers included discretionary expenditure items such as private enrichment classes, jewellery, perfumes, and overseas holidays in the estimates.

It said the study did not take into account alternatives to these items, such as government-run student care centres and the various self-help groups, which provide enrichment classes at low cost.

Second, researchers considered mortgage payments for flats an expenditure item.

However, they downplayed the point that the non-interest parts of mortgage payments can be seen as savings that help households build housing equity, MOF said.

The third point MOF raised was that while the report concluded that the MIS budget required is around $1,600 per month per person for both single and two-parent households, the $1,600 figure is closer to what an average household spends, based on the Household Expenditure Survey 2017/18.

"This means that it is in excess of basic needs for an average household," said MOF.

The ministry also said that there are errors in certain assumptions made in the report, which under-state the amount of government subsidies and financial support received by low-income families.

The amounts reflected in the report are what the median earner - not low-income families - receives, MOF added.

The ministry cited, as an example, how a low-income household can receive up to $80,000 under the Enhanced Housing Grant for a new flat, more than the $15,000 received by a household with two median-income earners.

At the same time, MOF acknowledged that the report offers an additional data point on the expectations and aspirations of Singaporeans, which will continue to evolve over time.

"The Government is sensitive to these shifts and regularly reviews our scope and coverage of assistance to ensure it is relevant and adequate," it added.

It went on to detail some of the policies it has put in place to beef up spending on social programmes, adding that over the last 10 years it has doubled social spending from $17 billion in the 2010 financial year to $31 billion in the 2019 financial year.

MOF added that the Government recently announced moves to uplift low-wage workers at this year's National Day Rally.

It also said that over the last few years the Government has improved pre-school subsidies, Ministry of Education financial assistance schemes for school children and bursaries for students at institutes of higher education.

It added that the government has also enhanced healthcare subsidies such as Community Health Assist Scheme coverage for citizens with chronic conditions, rolled out special healthcare subsidies for Pioneer Generation and Merdeka Generation seniors, and introduced schemes such as MediShield Life and CareShield Life.

"The Government will continue supporting those in need through a combination of building their capacity for self-resilience, strengthening their family support, and partnering with the community for further support," said the ministry.

How study drew up what makes for basic living standard in Singapore
Four-year study arrives at the basic needs of Singaporeans despite cross-class differences.
By Teo You Yenn and Ng Kok Hoe, Published The Straits Times, 13 Oct 2021

Is it possible for Singaporeans from diverse socio-economic backgrounds to come together to set a universal baseline for needs?

Can people who have different levels of income and wealth, whose social positions and roles differ, and their everyday lives and habits therefore diverge, find consensus about what a basic standard of living should entail? Will they be able to agree that "yes, this is a basic need" and "no, this is not a need, more of a luxury"? How could people articulate and agree on the needs every person living in Singapore today has?

In 2017, when we first made plans to use the Minimum Income Standards (MIS) approach, we were uncertain about the answers to these questions. The consensus-based focus group approach had been developed and used by researchers at the Centre for Research in Social Policy (CRSP) at Loughborough University in Britain since 2008, and adapted by researchers in Ireland, France, Portugal, South Africa, Mexico, Japan and Thailand.

We were impressed by its possibilities - the strong attention given to ordinary people's lived experiences, the commitment to capturing realistic norms around basic needs, and the rigour and detail of data generated. This seemed exactly what we need in Singapore given where we are on issues of poverty, income and wealth inequalities, and the social welfare regime.

We had not brought together Singaporeans of diverse backgrounds like this before. We knew that wide disparities in income and wealth lead to very different consumption patterns and lifestyle expectations. We were inclined to think that it would be challenging to reach consensus about "basic needs".

By this month, after four years and two waves of research (with a total of 299 participants in 36 focus groups), we have spent hundreds of hours facilitating conversations, listening to focus group discussions, and poring over transcripts

We have heard older people joke about mobile phones and the curt texts they receive from younger family members ("not even 'ok', just 'k'!"). We have listened to partnered parents discuss how it's cheaper and time-saving to buy baby playmats online; single parents told us how they need to buy or do something nice for themselves because it is so tough being "both mother and father" to their children.

We saw that people do indeed have different tastes and styles when it comes to things like clothing and make-up. Some like to have friends over for meals, some prefer to treat their families to dinners out, and still others prefer more solitary hobbies. Some feel strongly that annual holidays to nearby countries are crucial to their mental well-being, while others think saving up for a major trip every few years to somewhere farther would better serve their desire to see a little more of the world, as Singaporeans love to do.

Young people brought laughter to the room by teaching these mostly middle-aged researchers that bubble tea is not just a drink, but also a social activity - the walk to and from the shop with friends or co-workers is part of the package.

Reaching consensus on basic needs

Amid these colourful variations, and participants' mutual acknowledgement of diversity in focus groups, they were able to come to a consensus that people living in the same society share the same basic needs.

In certain areas where personal preferences may dictate choices, people still agreed to allocate a sum of money for that category of things, if not the specific items. What unites, what they have in common, and what they recognise as universal is the human need to feel a sense of belonging and respect, to have a sense of agency and independence, and the capacity to participate meaningfully as members of their social worlds.

All their decisions about individual items are directed towards these human needs. Are jewellery, holidays and restaurant meals luxuries that only the wealthy have a right to? Beyond the fact that the budget they have set aside is modest (for example, $50 a year for "jewellery" for accessories like hair ties, earrings and brooches), our respondents painted the context that framed their answer: Absolutely not.

Anxiety over education system

Sometimes, listening closely to their deliberations, we hear frustrations. Parents from all walks of life, for example, express anxiety and frustration over the education system. Is tuition really a basic need? Yes, came the resounding answer. Without tuition, children cannot keep up in school. Children themselves often request it, and as parents you cannot ignore them. Sometimes teachers advise it.

We asked repeatedly to try to understand their rationales: How is it a need? What would happen if children didn't have tuition? One participant made the others laugh by saying out loud what others seemed to think: "If Singapore says no more examinations, everybody go to school just play, just learn, no meritocracy, no PSLE score, no A levels, then I don't think it's essential lah. But sadly, Singapore is all based on scores and results."

Are free or low-cost tuition options run by charities sufficient to meet the need? After discussion, participants came to the consensus of no, because those may not be accessible to all children when the need for tuition arises, and may also not serve the need of getting children already struggling to learn better.

Likewise, enrichment classes were listed as a basic need. We asked why is this necessary when there are co-curricular activities (CCAs)? Parents got animated and sometimes agitated as they shared what it now takes to get into a CCA of interest, and how schools often choose only children who are good enough to compete in a given sport or activity.

Tuition, enrichment classes not 'wants'

Children's needs to pursue interests and develop passions thus have to be fulfilled somewhere else. Again, despite differences and variations in actual consumption patterns, our participants were able to clearly agree and explain the social context that frames specific things as needs. From the palpable frustration displayed in these discussions, parents would much rather spend money on other household needs than on tuition and enrichment which they think are certainly not "wants". At the same time, they recognise children's needs to feel secure, to be in step with their peers, which solidifies their resolve that, even if frustrating, this is a need they have to meet as parents.

University education a basic need

Participants were also sharp in recognising that not everyone in Singapore can meet the needs brought up. We gained much insight from the youth themselves. Speaking about the needs of older children aged 19-25, they see university education as a basic need in Singapore today and certainly in their futures.

They are not naive.

They know full well that does not mean everyone can receive it. Indeed, mirroring the parents' concerns on tuition, these young people had first-hand experience that different types of tuition exist - at different price points and quality - and that these impact who can make it to university and who cannot. But the fact that some people do not have access to something does not mean it is not a need.

They told us emphatically: Without a degree in Singapore today, the job opportunities are very restricted.

Managing cross-class dynamics

Among our participants, some obviously live comfortably above what was discussed, and some obviously with less. This was not an easy dynamic to manage. As experienced qualitative researchers, we tread carefully.

Cross-class interactions are rare in Singapore: we not only placed people from diverse socio-economic backgrounds in conversation, but the talk was about money. It is not possible to talk about needs, things and prices, without thinking about whether one can afford them. And thinking about affordability for oneself unavoidably creates tension both when something is considered from that individual's perspective as "too cheap" or when it is seen as "too expensive". We mitigated these tensions by using case studies, reminding people that we are talking about "Mr K" or "Mrs K" or "child Z" and "not about you".

When participants dwelled too long on what they themselves preferred, such as wanting higher- quality things or relying on getting things for free, we reminded them that the purpose of discussion was to establish a baseline for everyone in society. What exactly is the need? Why and how is it a need? What happens to child Z if she or he does not have it?

We have to first clarify the need before we can worry about how people meet it. Facilitating discussions in this way - allowing the space for people to bring in their personal experiences, and yet tempering the discussions so that people would neither show off nor feel ashamed - the participants are able to come to a consensus about basic needs for everyone.

Over these four years, we have learnt from our participants that everyone living in Singapore today has needs for housing, food and clothing, opportunities for education, employment and work-life balance, as well as access to healthcare. Everyone needs a sense of belonging, respect, security and independence. Every person needs choices to participate in social activities, and the freedom to engage in one's cultural and religious practices.

We have learnt from them too that they know not everyone in Singapore today is meeting these needs to the same degree. This does not lead anyone to say that any of these are therefore not needs; that only those who can afford it deserve belonging, respect, security and independence; that some children should have paid tuition suited to their needs and other children will just have to accept whatever they can get from charity.

In spending time and energy to share their experiences and insights with us, our participants have put in our hands the responsibility of putting this question on the table: If ordinary people can see and express that there are universal needs, that there is a baseline below which no one should fall, what will we do collectively to make sure all members of our society meet these basic needs?

Now that we know what a basic standard of living in Singapore should entail, the work ahead must be to ensure that everyone can achieve it.

Teo You Yenn is Associate Professor, Provost's Chair, and Head of Sociology at Nanyang Technological University. Ng Kok Hoe is Senior Research Fellow and Head of the Case Study Unit at the Lee Kuan Yew School of Public Policy, National University of Singapore. This commentary draws from "What people need in Singapore: A household budgets study" co-authored with Neo Yu Wei, Ad Maulod, Stephanie Chok, and Wong Yee Lok. Details at this website.

What it means to live well in Singapore
Social inclusion, affordable options and self-responsibility are key to living well and sustaining social cohesion
By Terence Ho, Published The Straits Times, 14 Oct 2021

How much does a family need to live comfortably in Singapore? A study, led by researchers from the National University of Singapore Lee Kuan Yew School of Public Policy and the Nanyang Technological University, has come up with the following estimates: $6,426 a month for a couple with two children aged seven to 18, and $3,218 for a single parent with a child aged two to six.

These findings are based on a research methodology known as the Minimum Income Standards approach. Focus groups comprising members of the public were asked to discuss and agree on the goods and services needed by a family for a basic standard of living, taking into account social norms and expectations.

According to the study's authors, basic needs go beyond what families require to survive; also included are items that enable "a sense of belonging, respect, security and independence".

The study drew a response from the Ministry of Finance (MOF), which pointed out that the findings were highly dependent on the profile of focus group participants and the ensuing group dynamics.

MOF also highlighted, among other things, that the study should have considered lower-cost alternatives to expenditure items in the basket of needs - for instance, enrichment classes by government-run student care centres and self-help groups, which could substitute for privately run programmes.

MOF's statement affirmed continued support for those in need "through a combination of building their capacity for self-resilience, strengthening their family support, and partnering with the community for further support".

Both the household budgets study and MOF's response draw attention to vital aspects about living well in Singapore: the importance of social inclusion, the need for affordable living options, and the responsibility of individuals, families and the community.

Need for social inclusion

One approach to determining individual or family needs is to have experts provide input based on nutrition, healthcare and other essentials of living. While this can establish an absolute benchmark for poverty or subsistence, it is less relevant in identifying spending that appears discretionary, but is nonetheless important for social inclusion.

In Singapore, absolute poverty is much less of a concern today after decades of strong economic and income growth. However, the rising tide has lifted some boats much more than others.

Inequality, the product of Singapore's economic success and global city status, matters in at least two key dimensions: its impact on social mobility, and its effect on social inclusion. For these reasons, relative poverty is also pertinent.

Many goods and services provided by the market cater to what the bulk of the population can afford - for instance, casual restaurants have proliferated across suburban malls and residential estates, while hipster cafes are now common in many gentrified precincts in Singapore.

Social exclusion may arise when a child feels she cannot afford to join her friends for lunch at the mall after school, or when her classmates are comparing their holiday experiences abroad and she is left out of the conversation.

There are also social norms dictating the amounts people contribute to funerals or weddings, which impinge on an individual's social respectability.

Enrichment classes speak to both social norms and social mobility. Notwithstanding the high quality of public education, many parents feel obliged to put their children through private tuition and enrichment programmes, which they view as necessary for their children to keep up or keep ahead.

The approach taken in the household budgets study, subjective as it may be, takes a crack at factoring in social norms and expectations which have a role in shaping social inclusion.

Affordable living options and common spaces

If social inclusion is the glue holding society together, sustaining inclusivity must rank high among national policy priorities. While raising incomes and providing social transfers play a critical role in addressing the cost of living, the Government also possesses other levers that can influence affordability and hence inclusion.

For instance, government land sales affect property and rental prices. A steady supply of land adequate for residential and business needs can avert supply crunches that would drive up prices; where necessary, the authorities may also take steps to rein in property speculation. No less significant are upstream measures to influence demand, such as medical insurance reform to contain healthcare inflation.

By managing the cost of delivering public goods and services, the public sector can avoid transferring an excessive burden to the public when pricing these for cost recovery.

Innovation, too, may help to cut costs. Improvements to system design and processes in public agencies and corporatised service providers have led to significant savings which may be passed on to end-users.

The point made by MOF on lower-cost alternatives is an important one. Whether provided by the public, private or people sector, affordable options for food, transport, housing, healthcare and education can hold down the cost of living for the less well-off.

Take food, for instance. Supermarket house brands coexist with premium brands, catering to a spectrum of budgets and needs. Singapore's distinctive hawker fare has kept the price of cooked food relatively low for a rich country, besides engendering a shared culinary identity across socio-economic strata.

Affordable hawker food is itself the outcome of policy choices. In 2011, the Government announced that it would resume building new hawker centres after a 26-year hiatus. Social enterprise hawker centres were set up, and the subletting of hawker stalls, which had previously driven up rentals, was disallowed.

The sustainability of hawker culture depends crucially on the next generation of hawkers. To this end, a work-study programme in "hawkerpreneurship" was launched to prepare young Singaporeans for a career as hawkers.

In other domains, policy decisions may likewise determine affordability. Cycling could be a viable alternative to other forms of transport if made safer and more convenient; smaller public housing units and no-frills public amenities may be welcome options for those with less financial means.

Singapore's urban planners have done well in making available free common spaces for public enjoyment, including playgrounds, parks and beaches. These are places where children from different backgrounds can mix, where families can bond over picnic dinners, and people may exercise or simply enjoy the outdoors - all without burning a hole in the pocket.

Public museums, too, are free for locals, while sports facilities can be booked at nominal fees. There is potential for these common spaces, vital for social inclusion and mixing, to be gradually expanded over time, so that Singapore will remain an inclusive home for all Singaporeans and not just an exciting city for the well-heeled.

Responsibility for self, family and community

While recognising that socio-economic driving forces necessitate a step-up in social transfers, it is important not to let go of the spirit of personal effort and responsibility that Singaporeans are known for.

The Pioneer Generation had industry and grit in abundance; today's young have a different set of challenges, but would do well to emulate the drive and resilience of the pioneers.

If there is a gap between one's income and what is required to meet basic needs, it should be reflexive to ask what one can do to reduce the gap. In today's context, this must go beyond just putting in more hours of work - managing personal finances, making prudent investments, upgrading one's skills and innovating at the workplace may all have a part to play.

In many industrialised societies, responsibility for social provision has largely passed from family and the community to the state. However, there is merit in retaining in our society the "gotong royong" spirit - where members of a community look out for one another and lend mutual support.

The community is often better-placed than the state to respond quickly to local needs; social bonds are strengthened, and collective resilience enhanced, when people transcend divisions of race, religion, education and income levels to reach out to those in need.

A suite of public policies encourages responsibility for self, family and society. These include tax reliefs for topping up one's own or family members' Central Provident Fund (CPF) accounts for basic retirement needs; tax deductions and matching contributions for donations to charitable and social causes; and state support for social service agencies and voluntary organisations that serve the needy.

The "many helping hands" approach to social service provision has resulted in instances of service gaps or overlaps, but it is sometimes necessary for the public sector to take a step back to allow the people sector to step forward.

To sustain social cohesion in Singapore, social inclusion must be prioritised; public policy should promote affordability and inclusion; and self-responsibility ought to be nurtured and reinforced.

With a strong ethos of personal responsibility accompanying robust social support, Singapore can aspire to be a homeland where all citizens feel they belong - a home that not only provides for their needs, but also equips and challenges them to give their best for themselves, their families and the wider community.

Terence Ho is associate professor in practice at the Lee Kuan Yew School of Public Policy. He is the author of Refreshing The Singapore System: Recalibrating Socio-Economic Policy For The 21st Century. (World Scientific, 2021).

Does a family of 4 really need $6,426 a month for a basic standard of living? It depends
It is about what people feel they need to be socially accepted, not just what they can afford
By Grace Ho, Opinion Editor, The Straits Times, 21 Nov 2021

A family of four needs at least $6,426 a month to afford a basic standard of living, according to a study released in October.

Put together by a group of researchers from the National University of Singapore's Lee Kuan Yew School of Public Policy and Nanyang Technological University, the study caused a stir and even drew a response from the Finance Ministry.

Out of curiosity, I went through the lists of household budgetsthe study compiled. These were agreed among 196 participants from different backgrounds, and debated over 24 focus group sessions.

Here is an extract for households with two parents, a pre-teen boy (aged seven to 12) and a teenage girl (aged 13 to 18), with reasons given by the participants:

- Five-tier wooden bookcase, Shopee: $80 ("To encourage reading habit, shared among children in same bedroom")

- Samsung tablet, older model, $200. ("Tablet is needed especially during home-based learning. Every child should have their own as they may need it at the same time.")

- Micke desk, Ikea study table with drawer: $149.00 ("Table can be shared by children")

- Davidoff Cool Water eau de toilette (EDT) 100ml from Venus Beauty: $39.90 ("For good impression")

- Restaurants twice a month: Saizeriya ($5.90 to $13.90 per person), Pastamania ($12.90)

- H&M shirts, three pieces: $17.95 ("Children outgrow clothes very fast at this stage")

- Annual 4D3N trip to nearby countries e.g. Ipoh and Port Dickson, Syeun Hotel & PD Avillion Admiral Cove, by coach, peak period Nov-Dec 2020: $1516.00

- Christmas, Deepavali, Hari Raya, Lunar New Year, including cash gifts such as red packets: $500 each year, shared between couple

- Work activities not sponsored by company, such as colleagues' birthdays: Twice a year, $30 per occasion ("For team bonding, important for career")

- Friends' birthdays: Annual budget $50, $10 per gift for 5 birthdays, or $25 per gift for two best friends ("To avoid being discriminated")

We can all agree that none of these items are essential. But I instantly recognised on those detailed lists, things that I felt I needed to fit in as teenager but did not have.

For a few years, money at home was tight. I did not go on overseas field trips or to the cinema, and made excuses to skip class gatherings at restaurants. Each missed activity meant one less shared experience and common talking point - and one step closer to feeling as if I did not belong.

This is where the minimum income standard (MIS) approach, which relies on public consensus and not just expert opinion, comes in.

Here is the definition of MIS in the United Kingdom, where the methodology originated:

MIS is the income that people need to reach a minimum socially acceptable standard of living in the UK today, based on what members of the public think. It is calculated by specifying baskets of goods and services required by different types of households to meet these needs and to participate in society.

MIS covers necessities, not luxuries: Items that the public think people need in order to be part of society. In the UK, the MIS has influenced the government to raise the statutory minimum wage and call it a living wage, though not by using the same method.

In a similar vein, economist Amartya Sen advocated a capability approach to poverty, which provided the conceptual underpinning for the UN Human Development Reports:

From such elementary physical ones as being well nourished, being adequately clothed and sheltered, avoiding preventable morbidity, and so forth, to more complex social achievements such as taking part in the life of the community, being able to appear in public without shame, and so on.

In Singapore, such approaches can be useful to understand social aspects of living that involve choice, such as going out with friends and deciding what is a "respectable" amount to put in a wedding red packet. After all, who is a domain expert on whether a poor person should wear Davidoff EDT ($39.90) instead of Value Dollar Shop deodorant spray?

But I can also see why MOF objected to the study.

It is hard to justify treating discretionary expenditure items, such as private enrichment classes, jewellery and overseas trips, as a right and not a privilege or an option.

Nor can government agencies set thresholds based on the negotiated agreement of a small group of 196 persons. What happens when the next group, next year, comes up with a different basket of items and budget?

National University of Singapore associate professor Vincent Chua called it "futile" to adjudicate between the two interpretations.

What is more interesting, is there is in the first place a dissonance between what is "officially" perceived as a need, and what people on the ground regard as needs.

He said this could be because both sides are speaking from opposite ends: "One sees this from the viewpoint of poverty elimination and defines 'means' accordingly. The other is a mirror to people's efforts at achieving wellbeing. Hence the inclusion of 'wants' like travel."

Take a step back from the $6,426 headline number, and there are other notable points from the study.

While there is disagreement over the number and how it was derived, the average wage each working parent needs is $2,906 per month. This assumes that both parents work full-time, and is adjusted for taxes, universal benefits and major means-tested schemes. Those who are on Progressive Wage Model wages, inclusive of CPF contributions,fall a significant 38 to 49 per cent short of this number.

Second, there are inequalities among different workers and sectors. Cleaners, labourers, and casual workers' median incomes fall far short of what is needed, as do those with below secondary education. Those with secondary and post-secondary education fare better, but still fall slightly short.

Third, unwed single parents face particular challenges. Their housing costs are double as compared to their married, widowed, or divorced counterparts.

But with the recent move to allow unwed single parents aged 21 and above to buy new three-room flats in non-mature estates, there ought to be less need for them to spend more to rent on the open market, or move in with their relatives.

The picture is also gendered. Single mothers expressed more anxiety over their children's needs. They were especially articulate in revealing their strategies for stretching limited budgets, and would cut spending even if it meant forgoing their own needs.

Fourth, recreation and culture - which include paid activities such as going to the movies, karaoke sessions, and using community centre badminton courts - account for larger proportions of MIS budgets compared to actual expenditure.

The gap is biggest among households in the lowest income quintile, revealing the extent to which recreation needs are not being met among the lowest-income Singaporeans.

MOF has countered that the study's assumptions under-state government subsidies and financial support to low-income families.

It also had this to say about the study's treatment of mortgage payments for HDB flats:

Researchers considered mortgage payments for flats as an expenditure item, but downplayed the fact that the non-interest components of such payments are more akin to savings that help households build up valuable housing equity.

Since the study is about needs and not savings, are both sides again talking about different things?

My HDB may be an asset. But until the time comes when I am able to sell or rent my flat out to generate income, I still have to pay the mortgage today.

Instead of setting up a false dichotomy, one way to reconcile the two perspectives is that the study adds to the richness of the conversation about what it means to live well in Singapore.

As Dr Chua notes, the mental health crisis precipitated by Covid-19 has underscored the need to study the wellbeing of Singaporeans from a positive psychology lens, and not just mere survival.

The term positive psychology is closely associated with University of Chicago psychologist Mihaly& Csikszentmihalyi who, after seeing the pain and suffering of people around him during World War II, studied happiness and what makes life worth living:

Ideas of social inclusion and exclusion broaden the conceptual terrain when discussing what else Singaporeans need. These conversations started years ago, and have gathered pace due to Covid-19:

- What is a decent wage for households to meet their basic needs in keeping with social norms, especially those in sectors and occupations whose earnings fall far short of what is needed?

- Is there a need to review the income limits and amount of aid given under means-tested financial assistance schemes? These schemes are available only to households whose incomes are already well below the level needed to meet basic needs.

- Is there room for more direct delivery of services, or universal subsidies? These could lighten families' financial load significantly, especially in housing, healthcare, education and childcare, which eat up the largest chunk of household budgets.

- Continue to find ways to hold down the costs of food and other essential items.

On that last point, MOF made a crucial observation on the availability of affordable alternatives.

I recall how supermarket house brands, from NTUC FairPrice detergent and dishwashing liquid to eggs and vegetables, helped my family tide over a period of income loss. When we found food courts too expensive, we could visit hawker centres and neighbourhood coffee shops.

But even after Covid-19-related supply chain bottlenecks ease, food prices cannot stay at their current levels forever.

Can more be done to offset price increases for the lower-income, such as by expanding the eligibility criteria, time period, and number of merchants for grocery voucher schemes?

Going through the budget lists, an item caught my eye: "Gift for self, annual budget $50".

One participant explained it like this: "To get something special outside of 'normal' budget. Been giving to others, deserve a treat on birthday."

The saying goes that money cannot buy happiness. But there are material things in life that are seen as normative, and can build up or shatter our sense of wellbeing.

At the heart of the debate is this paradox: Both the study and the official numbers are right.

One captures the basic needs - getting by in Singapore. The other captures something more akin to belonging to this society- getting better. But the distinction between choice and constraint is not always clear-cut.

Wrapped up in all of these are people's love, anger, hopes and hurt, and the larger question of what it means to be Singaporean. Navigating this minefield will require both a tough mind and a tender heart.

Spending on an individual's well-being likely to benefit society and economy too

Straits Times opinion editor Grace Ho's helpful review of a study on the minimum income standard by researchers from the National University of Singapore's Lee Kuan Yew School of Public Policy and Nanyang Technological University, and the Ministry of Finance's response to it, neglects to consider the economywide impacts of the individual costs enumerated (Does a family of 4 really need $6,426 monthly for a basic standard of living? It depends, Nov 21).

This is admittedly a limitation of both the study's focus-group methodology and the aggregate household expenditure surveys cited by the ministry.

The ensuing discourse focused on needs versus wants and necessities versus luxuries is essentially subjective and values-driven.

Hence disagreement is likely in a diverse society though the focus-group sampling attempts to achieve a consensus.

But taking the data-driven approach of social benefit-cost analysis favoured by economists and business analysts shows that even expenditure considered to be "discretionary" for a particular individual is likely to benefit the economy and society as a whole, because it increases collective productivity.

Decades of international educational research, including in China, show that self-esteem and perceived social support reduce delinquency and enhance schoolchildren's academic achievement (and thus their future career success and economic independence).

Having the financial wherewithal to participate in enrichment activities, social outings and overseas trips thus has a long-term payoff to society in excess of the social cost and individual benefit of immediate improved well-being.

Recently, studies in countries such as Britain and the United States have drawn a link between mental health and business productivity.

In the US, corporate wellness programmes are all the rage now that it has been proven that better employee mental health reduces absenteeism and work behaviours that undermine productivity (and thus profit), as well as physical illnesses like heart disease and hypertension.

Workers' improved well-being reduces healthcare costs for employers and for society as a whole.

Some employers now make taking vacations (and switching off virtually) compulsory. Some tech start-ups even offer "unlimited vacation time".

Social participation (which includes exchanging gifts and sharing meals outside the office) has also been shown to improve workplace collaboration (productivity) just as it does students' school performance.

In this context, spending $50 a year on jewellery or perfume, or to take a holiday in nearby Johor or Batam, to make an individual "feel better" is both cost-effective and productivity-enhancing.

For economists and for business, meeting the minimum income standards for some will make us all better off.

Linda Lim


No comments:

Post a Comment