The inequality of growth

NOVEMBER 28 — Singapore is among the richest countries on Earth. 

On a per capita basis, Singapore’s nominal GDP per capita is around US$64,000 (RM271,296) per year which puts us behind only a few states — rich micro nations like Macau and Luxembourg and a few heavyweights like the USA and Switzerland. 

If you measure average wealth per adult — which measures not simply annual earnings or output but the assets held by an individual including real estate, CPF (Central Provident Fund) and investments — Singapore again sits at 10th place  globally. 

The average Singaporean adult owns S$455,000 worth of assets.  

Sounds good, doesn’t it? 

But if you dive deeper, the reality isn’t quite so rosy. When you look at median wealth per adult, Singapore suddenly drops to 20th place worldwide.  

The median value is important as medians are less distorted by concentrations of wealth. For example, if you have a sample of 10 people with nine holding S$1,000 assets and one person holding S$1,000,000 you’ll still end up with a very high average figure. 

As a middle value, the median is often a better indicator in these contexts. 

Median wealth in Singapore is a much more modest S$118,754 which puts us behind the UK, France, South Korea and even Taiwan.

Basically Singapore’s mean wealth is heavily skewed by the amount of wealth held by the top one per cent of the population.  

Singapore’s mean wealth is heavily skewed by the amount of wealth held by the top one per cent of the population. — Reuters pic
Singapore’s mean wealth is heavily skewed by the amount of wealth held by the top one per cent of the population. — Reuters pic

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In Singapore, the top one per cent of the population holds 33 per cent of the nation’s wealth — do try to get your head around that. 

One third of our wealth belongs to just one per cent of our people. Now income inequality is a global problem, not just a Singaporean one.  

In Japan the top one per cent owns 18 per cent of national wealth, in Korea they own around 23 per cent — not great situations but Singapore is substantially higher, which is why we plummet when you move from calculating mean to calculating median wealth. 

I was surprised by just how big the fall was, I never thought Taiwan where the nominal GDP is less than half of Singapore’s would have more median wealth. 

Places like France, Korea and Taiwan include a lot of farmers and rural areas so finding out that the median wealth there exceeds ours is really interesting.  

We all live in a big globalised city; our cost of living is far higher than people living in rural Korea or Taiwan or in a smaller city in France. 

Of course with Singapore at 20th globally in terms of median wealth, the country is far from being poor. 

We have come a long way by any metric. But the relatively low median wealth figure does mean there is a long way still to go too.

The Singapore government has long eschewed high income taxes and taxes on investments and assets. This approach  has helped attract wealth to Singapore and this has been essential in terms of making our rapid growth possible — but perhaps now that our basic development is secure, it’s time to focus more on really growing the wealth of ordinary Singaporeans. 

As we gradually draw closer to a century of nationhood, surely the next few decades should be spent making the ordinary people of this nation truly wealthy.

* This is the  personal opinion of the columnist.

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