Singapore's Middle Management

By Terence Chong, TODAY

SINGAPORE: When championing globalisation, it used to be that politicians only had to worry about low-wage workers. Now it is increasingly clear that globalisation not only threatens low-wage workers in developed countries, but the middle class as well.

The burgeoning corpus of studies in Europe and America has exposed one of the fallacies of globalisation - that is, the middle class would always beat the competition by re-educating and retraining.

Instead, these studies have shown that white-collar "new economy" jobs have flown from high-wage to low-wage countries, especially to low-wage countries that educate and train their own workers in order to attract high-value investment.

In recent weeks, Prime Minister Lee Hsien Loong made two important announcements that addressed the concerns of the middle class. Firstly, the needy sections of the Singaporean middle class will get Government assistance and, secondly, Singaporeans will pay less than Permanent Residents (PRs) and foreigners for education and health services.

These announcements, designed as systematic policy initiatives to buffer the more vulnerable sections of the middle class from the side-effects of globalisation, also signal a change in the Government's relationship with its middle class.

Being the largest, albeit hard to define, and usually most politically reliable constituency, the middle class' relationship with the Government is the broadest barometer for the social compact between state and society.

This social compact, according to President S R Nathan in his address at the opening of Parliament, is being forged anew. Under the "old" social compact, the middle class received sweeteners from time to time in the form of the Progress Package or Singapore Shares, but has, in general, been largely left on its own. This is because it was, unlike the working class, assumed to possess the necessary skills and qualifications to survive global market trends.

The Government's new initiatives suggest that it is now politically trickier to tell the needier members of the middle class to lower their expectations to meet their income means.

During the Asian financial crisis in 1997 and the recession in 2001 it was not uncommon for Singaporeans to be told that the Government could not be expected to provide financial assistance to maintain their pre-recession lifestyles.

However, a number of other genuine cases were turned away because their monthly household income exceeded the threshold to qualify for help. As was pointed out by another writer earlier in this column, for the sandwiched class, absolute monthly household income should not be the criterion for financial assistance - instead, the number of persons relying on this income should be taken into account.

Furthermore, the persuasion to downgrade, also prevalent during adverse economic times, seems to have all but faded, replaced by the ringing refrain of Mr Lee's "no Singaporean will be left behind" assurance.

Some may take this as evidence that the Government has gone "soft" on welfare, but a less cynical view would be that it recognises that the ill-effects of globalisation cannot be disentangled from its fruits, and that the middle class has taken its fair share of hits. The sentiment on the ground is that being Singaporean must count for something other than qualification for HDB subsidies.

And this is where the second initiative - to cut health and education subsidies for PRs and foreigners - comes in. This move will have more symbolic impact on the sandwiched middle class than on the poor or rich.

It has been announced that PRs would see a 10 percentage point reduction in hospital subsidies over two years. It remains to be seen what the education figures will be, but overall, they are not expected to be too drastic - enough to psychologically reinforce the rights and privileges of citizenship, but not enough to deter foreigners from coming.

This political management of perception over the comparative statuses of citizens and foreign talent suggests that the "new" social compact must take into account the sensitivities and perceptions from the ground, and not just simply deliver the economic goods, as was the case in the past.

At best, this move could foster some sense of collective identity; at worse, it would be a token gesture to appease the insecure.

In acknowledging that the middle class has needs, the Government is, in effect, conceding that the politics of class and envy are entrenched in Singapore society. Such politics are not merely informed by the woes of globalisation, but also complicated by the issues of foreign talent and the elite divide. What was formerly dismissed as complaining, unrealistic expectations from a spoilt middle class is now treated as a serious policy issue to be accorded serious attention under the promise of a "new" social compact.

The Government's initiatives could also force us to re-examine our faith in the infallibility of meritocracy in the long run.

Globalisation and neo-capitalism have little regard for talent and merit that do not help sustain them. Hence, while Singaporeans believe that all our talents will be justly rewarded, globalisation is a fussy benefactor that only rewards what the market demands.

The section of the middle class increasingly marginalised by capricious market trends will wonder what happened to the mantra of honest pay for honest work. For them, the ideology of meritocracy could ring hollow.

As Singapore society accelerates towards greater stratification, and as the classes begin to reproduce themselves, the politics of class and envy would increase. Conspicuous consumption by the rich, callous remarks by the "elite" and the pernickety forces of globalisation may blur the lines between the working and lower-middle class in the years to come, creating a collective identity of frustrated citizens.

Hence, the Government's initiatives and promise of a "new" social compact are a timely intervention in the ongoing renewal of state-society relations.

The writer is a Fellow at the Institute of South-east Asian Studies. This is a personal comment.