Singapore - Income inequality in Singapore is significantly worse than official reports have indicated, and social mobility - the city-state's foundational promise - is declining across generations, according to a government paper released ahead of next week's Budget statement.
The Occasional Paper on equality and mobility, published by the Ministry of Finance, reveals that when all resident households and non-employment income are included in calculations, Singapore's Gini coefficient rises from 0.426 to 0.452 - a worsening of approximately 6 percent and among the highest inequality levels in the developed world.
Recalculating inequality
Previous official measurements excluded households with no working members and income from capital sources like rent, dividends, and interest - omissions that understated inequality by leaving out both the wealthiest and poorest households.
"The Paper has now confirmed that once all Resident households and non-work incomes are included, actual income inequality is higher," wrote Ng Kok Hoe, a social policy researcher at the Singapore University of Social Sciences, in an analysis published Friday.
The corrected figure places Singapore closer to highly unequal societies than to the Nordic model it sometimes claims to emulate. More troubling for policymakers, the Paper shows that Singapore's approach to redistribution through taxes and transfers does far less to reduce inequality than in comparable wealthy nations.
The redistribution gap
In a particularly striking comparison, the Paper shows that inequality in Singapore before taxes and transfers is at the lower end compared to OECD countries - but rises to the higher end once taxes and transfers are included.
"In other words, social policies to mediate inequality do much less work here than in other rich nations," Ng wrote.
The government's defense - that Singapore imposes lower taxes and provides better value for money than high-redistribution European welfare states - drew criticism for methodological inconsistencies. The Paper includes European social security contributions in tax calculations but omits Singapore's CPF (Central Provident Fund) contributions, which serve a similar function.
"It is not known what counts towards benefits for the two European cases," Ng noted. "Are public services such as healthcare, childcare, education and social housing included? In service-heavy European welfare states, these are sizeable provisions which are often highly subsidised or free at the point of use."
Social mobility stalling
Perhaps most concerning for a society built on meritocracy is the data on intergenerational mobility. The Paper shows that children born to fathers in the bottom 20 percent of the income distribution are increasingly likely to remain in the bottom 20 percent themselves - and that likelihood has grown across three successive birth cohorts from the late 1970s to late 1980s.
"The likelihood of remaining stuck at the bottom end across generations has in fact increased over time," the Paper acknowledges. "Social mobility, the central measure of opportunity in our society, is not improving."
For a government that has long argued its education system and housing policies ensure equal opportunity regardless of family background, the admission is significant.
Challenging the social compact
The findings come as Singapore prepares for what analysts expect will be a "care and cost of living" Budget on March 3, with measures aimed at middle- and lower-income households facing persistent inflation and rising costs.
But the Paper's revelations raise deeper questions about whether incremental adjustments can address structural inequality - or whether Singapore's model of light redistribution and market-driven outcomes needs fundamental rethinking.
"Ten countries, 700 million people, one region - and Singapore, long held up as proof that growth and stability trump redistribution, now faces data showing its social compact is fraying at the edges," said Donald Low, director of the Institute for Emerging Market Studies at the Hong Kong University of Science and Technology.
The government has not yet responded to the methodological critiques or announced policy changes in response to the Paper's findings.
