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SINGAPORE – Deliberately slowing down Singapore's economic growth will not help, but will instead make it worse, said Manpower Minister Josephine Teo on Friday (Oct. 26).
"It will have the harshest impact on the bottom," Mrs Teo said. "Jobs will be lost and incomes fall for those at the end of the workforce, while at the top end, those with talent or entrepreneurial ability to sixteen opportunities elsewhere will up and go."
Mrs Teo was speaking at a panel discussion during a conference organized to celebrate the 30th anniversary of the Institute of Policy Studies (IPS) at Marina Bay Sands.
She pointed out that slowing down growth "so that those behind can catch up" may sound like an intuitive solution to inequality, but the evidence suggests the reverse.
Much of Singapore's growth since 2000, when its gross domestic product grew by an average of 8 percent a year. Median income adjusted for inflation grew by 20 percent during that decade, and "virtually all" of it came during that four year period.
"By going for growth when the conditions allowed, we offset the downturns we experienced earlier in the decade," Mrs Teo said. "In the process, we reduced unemployment and raised wages for Singaporeans after the standstill in the first part of the decade."
She added that slow growth will not ensure a more equal society as long as we live in a globalized world.
"Over the last 10 years, we have seen inequality moderate, both in tandem with the gradual pickup of the global economy, but also in the context of the global economy picked up, "she said.
Her comments came after Deputy Prime Minister Tharman Shanmugaratnam said on Thursday that to tackle income inequality, Singapore must first ensure that everyone in society – including those in the middle class – continues to progress. He gives the analogy of being on an escalator, which has to keep moving so that everyone is better off.
Mrs Teo's fellow panellist, Nominated MP Walter Theseira, also spoke about inequality and social mobility in Singapore.
The labor economist, an associate professor at the Singapore University of Social Sciences, said that the basic problem is that income inequality has a very high chance of reproducing itself.
Addressing this problem will mean we weigh the trade-offs, he said.
"A completely redistributive society is going to fail." So, too, will a society that are more likely to be, "he said. "We have to weigh the trade-offs There is a real cost to having an equal society."
Mrs Teo said that pursuing economic growth is not at odds with reducing inequality.
It is easier to negotiate for more profitable and more profitable, which tends to coincide with periods of rapid growth, she said.
Businesses are also more motivated to invest in productivity with a brighter outlook, she added.
"An expanding economy can also provide the state with resources to effect transfers," she said. "Together with a progressive system of taxes and benefits, we help to mitigate the effects of inequality."
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