Essay Draft 2

There are varying definitions of globalisation but in short, globalisation is the interchange of goods, services, technology and ideas between countries worldwide. As a result, countries are not only inter-connected, they are inter-dependent as well. Though globalisation has brought about great wealth to many, it has also resulted in a widening income gap in many countries, and Singapore is not an exception. Singapore’s Gini-Coefficient stands at 0.478 (Department of Statistics Singapore, 2012, p.1), which makes Singapore’s income inequality the highest amongst other highly developed nations. High income disparity is never a good feature for it can potentially destroy the delicate social fabric that Singapore has taken years to build. While the exchange of money, people and ideas will never cease, and income inequality can never be eradicated, income inequality can be reduced through strong government policies and good, effective governance.

Globalisation has worsened the rich-poor divide as it has increased the entry of low-cost labour, depressed wages and thus, allowed the rich to profit (Chan, 2012). Due to technological advances, people can now commute from one country to another with ease. Being a bustling business hub, Singapore naturally attracts low wage workers from China, India and other developing countries (Chan, 2012).There is thus, increased competition and access to cheap labour (Chan, 2012). As a result, employers would rather hire a foreign worker at a lower cost than a Singaporean at a higher wage. Hence, wages are kept low and stagnate, while the rich continue to profit. Singapore’s mantra, a prosperous economic growth equates to a successful country, since the 1960s is simple. However, this motto cannot be fulfilled considering the fast pace of globalisation and the social unrest stirring in Singapore. To aggravate matters, the Singapore government does not have a minimum wage policy. In an attempt to reduce income inequality, the Singapore government has reduced the quota of foreign workers to curb the flux of foreign labour entering Singapore (Toh, 2013). However, there have been no significant signs of improvement and Singapore’s Gini-Coefficient still remains high, thus ascertaining that curbing the number of foreign workers can only do so much. In my opinion, the government needs to implement a minimum wage policy or agreement in order to reduce the rich-poor divide. Countries such as Switzerland have made use of collective bargaining agreements between the employers and employees such that lower skilled workers earn between 2,200 and 4,200 Swiss Francs while the minimum salary of skilled workers ranges from 2,800 to 5,300 Swiss Francs (Said, 2013). Lower skilled workers in Canada too earn C$9.50 to C$11 per hour which translates to C$16, 710 annually (Said, 2013). These two highly developed nations have implemented a minimum wage policy and agreement to achieve extreme low levels of income disparities in the world. Thus, foreign labour or not, workers are paid justly and income inequality is kept to a low.

With globalisation, there will always be a constant influx of new and advanced technology which will reduce and replace menial jobs and intensified the income gap between higher-skilled workers and lower-skilled workers (IMF, p.47). After all, “Technological change favours those with higher skills” (IMF, p.47). By reducing the demand for lower-skilled activities and increasing the premiums for higher-skilled activities, those at the bottom stagnate while those at the top continue to climb the social ladder (IMF, p.47). This lack of upward social mobility amongst the middle to lower income groups will only worsen the distribution of income in advanced economies like Singapore (IMF, p.47). Many working Singaporeans from the lower and middle-class find themselves stagnating and unable to progress in their careers. As it is difficult to keep up with the pace of technological advances and the transfer of technology, the only way to make such advanced technology more accessible is to educate and upgrade the skills of workers. The Singapore government may have upgrading schemes for workers but they are not enforced tightly enough. By making education and such upgrading plans a priority, less-skilled and low-income groups can take advantage of the opportunities globalisation has created (IMF, p.56). Effective governance is imperative as well in order to execute such ambitious plans. Without the commitment of the government to its own citizens, it will not be able to protect the welfare of its own people, and citizens will eventually lose hope.

Globalisation is an inevitable force and Singapore, being an open economy, is right at its heart of the driving force. Interconnectedness of the world has created benefits but it has also intensified the rich-poor divide. Current policies executed by the Singapore government are insufficient and policies such as the minimum wage, which has shown to be effective in other developed nations, need to be considered. Combined with good governance, Singapore will be able to reap even more benefits from globalisation and thus, curb income inequality.

Reference List

http://www.straitstimes.com/breaking-news/singapore/story/budget-2013-foreign-worker-levies-go-quotas-services-and-marine-sector (Toh Yong Chuan, Feb 25 2013)

http://www.singapolitics.sg/fast-facts/tackling-income-inequality (Robin Chan, 2012)

http://www.therichest.com/business/the-top-10-countries-with-the-highest-minimum-wages (Sammy Said, 2013)

http://www.imf.org/external/Pubs/FT/weo/2007/02/pdf/c4.pdf (IMF)

http://www.singstat.gov.sg/Publications/publications_and_papers/household_income_and_expenditure/pp-s19.pdf (Department of Statistics Singapore)