Government's approach towards social policies has to evolve in the digital age

Professor Barbara Shank, President of ICSD

Professor Tan Ngoh Tiong, Chairman, Planning and Organising Committee of the 19th ICSD International Symposium

Distinguished guests

Ladies and Gentleman

1. A very good evening to all of you and to all our friends from overseas a warm welcome to Singapore!
   

2. One month from now, Singapore turns 50 years old. We celebrate our Golden Jubilee. We are still a young nation, certainly by international standards, but in many ways we have come a long way. Just more than 50 years ago, my grandfather was a fisherman whose income depended on his luck at sea. He lived in a Malay village – they call it a kampong – in Singapore. He had seven children, including my mother, and they all lived on his meagre income from catching fish. Then in the early 70s, my parents got their first public housing apartment – these are flats built by the government state, public housing but not in the way you think of public housing in many countries. In Singapore, more than 80 percent of the population live in public housing. They got their first flat in an area called Marine Parade. It is close to the sea and in those days the neighbourhood was not desirable because it stood on reclaimed land. Nobody wanted to buy because they thought it was unsafe. Today, it is prime property for public housing. So it was a dramatic transformation in less than 50 years. And many other things in Singapore have likewise been transformed all within a generation. Many countries have seen similar transformations. Today in Singapore, our public services in healthcare, public housing, and water management, are highly regarded and receive global acclaim. It is thanks to our pioneer generation and founding leaders, like Mr Lee Kuan Yew our first Prime Minister, that we are enjoying the fruits today of their labour.
   

3. Mr Lee and his team of leaders had the critical foresight that Singapore had to be plugged into the world. Naval-gazing would be to our detriment. We had to ride the wave of globalisation. We had to convince multi-national corporations that Singapore was a choice destination so that people could have good and gainful employment. And again, this was in contradiction to the conventional wisdom of their time where multi-nationals were seemed to be exploiting labour. We welcomed that because it created jobs for Singaporeans. And this strategy has uplifted Singapore to be among the league of advanced countries in the world today.
   

4. But we are not the only city that has benefited from globalisation. Throughout Asia, there are rapidly emerging nodes of economic activities. Through network effects, through economies of scale, these have become crucibles for jobs, capital, and innovation. For example, five years ago in 2010, the city of Tianjin in China had a GDP of around US$130 billion. This is about the same size as Stockholm in Sweden. In ten years' time, estimates indicate that the GDP of Tianjin alone will be similar to the entire country of Sweden. It may be very well be in 10 to 15 years but the point is the trajectory is rapid. And this is just one city in China.
   

5. The digital age accelerates the dynamism and development of cities. Technology is a powerful and ubiquitous force for change and progress. Just look at the release of iPhones in September last year – 10 million were sold over one weekend. Collectively all of these iPhones that were sold in one weekend was more than what the whole world had just 20 years ago in 1995 in terms of computing power. Think about when the radio was first introduced, it took almost four decades for the radio to attract 50 million listeners. When Facebook came along in its first year it had six million users, and the number multiplied 100 times over the subsequent five years. So, we are seeing more rapid advances in technology and more rapid proliferation of technology. And with better connectivity, technological advances, entrepreneurs are re-configuring the way resources are allocated, and re-ordering the livelihoods of people everywhere.
   

6. In cities, the digital age has intensified the working of market forces. New algorithms and geo-location services are getting better at optimising and matching supply and demand. We have Uber for car-rides, AirBnB for temporary stays, Mechanical Turk for ad-hoc tasks like data entry. There is better matching of supply and demand and this has resulted in more efficient and dynamic markets.
   

7. And all these developments can bring about tremendous good. Some people will find new jobs and enjoy higher incomes. Many will delight in better and more responsive services. Previously un-utilised or under-utilised capital will be better exploited to serve real needs. And so, technology will augment globalisation, and will inject more dynamism and opportunities in every city.
   

8. But dynamism and volatility are often two sides of the same coin. The integration of capital markets also carries the danger of financial contagion. And we all well remember what happened in 2008, when the challenges of global imbalances, easy credit, lack of regulatory oversight, and bad mortgage loans came together in a perfect storm. Globally, we lived through the biggest bank bail-out in history and the deepest recession since the Great Depression.
   

9. With the fates of economies knitted more closely together, economic and financial shocks also reverberate further. And the pressures are already being felt most acutely in the workplaces in many countries. In the past, the competition would come from low-wage, low-skilled workers. Now, we see competition from low-wage, but high-skilled workers. So reading X-rays and filing tax returns can be done by lower-paid radiologists or accountants – they do the work in India, and send the results back the next day via fibre-optic cable. When Applied Materials, the US-based solar panel company decided to build the world's largest commercial solar R&D centre, it chose Xi-an in China as the location. Applied Materials had openings for 260 scientists and technologists. It received 26,000 applications from people in China – 100 times the number of jobs available.  And 30 percent of the people who applied had Masters and PhDs!
   

10. So technology also poses a threat to traditional employment models, which have typically been the source of stable jobs for many people. Companies like Uber and AirBnB are bringing down the costs of transactions. So traditional business models are coming under threat. What this means is that more workers will get intermittent, contract-based work, instead of stable, long-term jobs in companies.
    

11. When we look ahead, there even a possibility that many more workers will be affected by technology. For example with the proliferation of self-driving vehicles or 3D printing. These changes can be highly disruptive in the workplace. Foxconn, the largest private employer in China, is already testing robots in its assembly lines. They call it “Foxbots”. When scaled up, these “Foxbots” may well replace a good proportion of human labour.
    

12. So in this highly connected technology-driven world, we are likely to see a wider polarisation of jobs and employment opportunities. Those who do well are the ones who think critically, who have the entrepreneurial drive and talent to seize and convert opportunities. All others are vulnerable to outsourcing or automation. And this is contributing to rising income gaps around the world. And it is at least partly why there is widespread social malaise and discontent, manifested in protests and demonstrations in many countries.
    

13. Just last year in the San Francisco Bay Area, there was even a protest against Google buses. Why would anyone want to protest against a Google bus? Well, apparently they were deemed as symbols of opulence with their fully knitted-out video games and HD televisions for Google employees and became a lightning rod for the non-tech workers who were getting affected by the technology companies. There was rising income inequality – they were not getting their fair share so they were certainly affected by rising rentals. And so when growth becomes tainted by the excesses of capitalism, when opportunities become sharply polarised, our social glue weakens.
    

14. What do these global trends mean for social development? How can governments and other players respond so that we can continue to provide opportunities, social mobility and a quality of life that improves with every generation?
    

15. I don't think there are easy answers but let me offer some suggestions on who we can rethink our social policies.
    

16. First, our assumptions about education have to change. In schools, it cannot just be about teaching content and knowledge. The substantive content will only get our children so far. In fact, the content they learn today will be obsolete in 10 years' time when they are in the workforce. So they have to learn to react quickly, think independently to be able to respond to change, and come up with creative and innovative solutions.
    

17. The old mindset that students go first-to-school, then-to-work also has to change. Today, a lot of learning takes place in our schools and tertiary institutions – in the first 20 years of our lives. Certainly this is true in Singapore – there's not enough of continuous learning happening in the workplace. So having worked hard to go into university and get a degree, some people feel that they've learnt all that there is to know and that they will be all set for success in life. Unfortunately in reality, things are very different. Because with rapid technological changes, skill sets learnt today may be irrelevant tomorrow.
    

18. In short, all of us, regardless of our age, have to be prepared to continuously learn and master new skills. Moving into the cycle of continuous learning may not come naturally to people. Companies may not be prepared to invest in skills training, out of fear that the workers they train may leave them to find work elsewhere. So governments must do their part to catalyse this culture and mindset of lifelong learning.
    

19. This is why in Singapore, the Government is investing in a new national programme we call SkillsFuture. It's a nation-wide push for skills development and lifelong learning. We are giving every Singaporean SkillFuture credits which will enable them to support their learning needs. We want to make it possible for every individual to decide on his or her own learning journey: when to go for fresh infusions of skills or knowledge, be it specialised professional training, acquiring soft skills, or developing a new interest. Our aim is to build a meritocracy of skills – a society where people keep learning and pushing their potential, and are valued for their contributions at each stage of their life.
    

20. Second, the Government's approach to social policies must also evolve. In a more dynamic economy with increasing churn, fewer employees can rely on pension plans and medical insurance tied to their employers. Moreover, more workers are likely to become self-employed contractors instead of salaried employees. So the state must step in to do more to help those who start off with less, to give the elderly a sense of security and to ensure that every citizen continues to have a fair share in the nation's success.
    

21. These are objectives that I believe governments everywhere would want to uphold. The challenge is always in the implementation – in designing effective schemes that can be funded and sustained, not just for one or two electoral terms, but across generations. Otherwise, we are simply living on borrowed time.
    

22. In a stress test done last year, it was estimated that 85% of American public pensions would go bankrupt in the next 30 years.  Most estimates are that the pension systems are not going to be sustainable in the long time and the problems are not just found in the US. In fact, the “pay-as-you-go” pension systems in many developed countries are creaking under demographic shifts. There are fewer younger workers paying for older citizens whose life-spans are increasing. That's the harsh reality.  It's also well-known that subsidies once given are hard to take back so reform of the system is very difficult. I remember what a well-known American President once said that “the government bureau is the nearest thing to eternal life that you see on earth.” That's Mr Ronald Reagan. And it is true because it is impossible politically to take back the subsidies once it is given out. That's why despite the fiscal measures in many countries none have been able to cut back on entitlements or welfare benefits even when they are clearly unsustainable beyond the next generation.
    

23. Everywhere, government leaders worry about the future of their workforces and societies and are searching for new social models. There are no easy solutions, and we certainly do not have the answers in Singapore. We too are watching and learning as we seek out new directions in our social policies.
    

24. We want to expand and strengthen our social safety nets and we are doing so in Singapore. Fundamentally, we believe that a sustainable and an effective social safety net must be complemented with the ethos of self-reliance. It may seem like a paradox but this tension between having a more effective safety net and having that sense of self-reliance must always be there. It is not about leaving families to face uncertainties on their own. Rather it is a strategy of government support for individuals to learn and strive to achieve their aspirations. It's about state activism that is supportive of individual efforts that helps people to stand with pride and contribute to society.
    

25. So even as we do more in Singapore and expand our social safety nets, the dignity of earning one's keep is a tradition and a mindset that we want to uphold. This is why instead of a universal system of welfare entitlements we prefer to target our subsidies at those who need them the most. It is also why we have a system of workfare credits, essentially a negative income tax, to supplement the incomes of our lowest-paid workers. And when we recently introduced universal medical insurance here in Singapore, we have tied it to a system of medical savings accounts, where individuals use their own medical savings, but supplemented with top-ups from the government to pay for the insurance premiums.
    

26. I've spoken about what governments can do in enhancing education and in strengthening social safety nets. But government policies are only part of the solution. No society can function as a winner-takes-all contest. If everyone looks out only for his own interest and champions ideas that only benefit himself or his own interest group, then we will have no common ground on which to build our society.
    

27. So the social challenges we face cannot be tackled only in transactional terms, or in terms of income redistribution. It must involve the community – to engage the human spirit, to provide personal fulfilment and to strengthen collective well-being. It must strengthen the culture of responsibility, so that we all feel a duty to one another and not just a right to the benefits of citizenship.
    

28. And so, this is why I believe philanthropy, giving, must be an integral part of the solution in strengthening our social model. Philanthropy has the potential to mitigate inequality, and soften the hard edges of the free market. It provides a mechanism to dismantle the accumulated wealth tied to the past, and reinvest it to strengthen the entrepreneurial potential of the future. And through this recycling of wealth, philanthropy creates social stability and opportunity for those who have to be helped to the starting line. It's an important part of the implicit social contract that continuously nurtures and revitalises our society.
    

29. America has a long and great tradition of philanthropy. America's great capitalists of the 19th century, like Andrew Carnegie and John Rockefeller, amassed enormous wealth but also gave generously. And the fruits of their philanthropy can be seen all across the country, from hospitals and universities to a range of cultural institutions.
    

30. Today, some of the wealthiest people in the world like Bill Gates and Mark Zuckerberg are continuing this tradition of philanthropy. In fact, they are taking it further, taking a more focused approach in their philanthropic giving to create bigger impact. They go beyond writing cheques and providing financial support. Instead they operate more as social entrepreneurs, looking to where society is most in need, and helping to create new and innovative solutions.
    

31. Here in Singapore, the culture of giving and philanthropy is not yet as well entrenched but we are seeing signs of improvement. Our philanthropic tradition here started with our early immigrants who came here in search of a new world of opportunities much like in America, except that we have a shorter history and in a different part of the world. Those who went from rags to riches took it upon themselves to give back to society and help the immigrants who came after them. Where there were no temples or mosques, they donated and raised resources to build them. Where schools were needed, they established them to enable the next generation to benefit from the education that they themselves had missed.
    

32. This sense of mutual support remains strong in Singapore today. We have buildings and school faculties all named after their major donors we also have several family foundations that are actively involved in philanthropy.
    

33. The government can also do its part to nurture this culture of giving and philanthropy. For example, in Singapore, we've set up the Community Foundation of Singapore to offer advice for individuals wishing to support worthy causes, and where feasible, pool funds from multiple donors so as to manage them more efficiently. We offer tax deductions equivalent to three times the amount donated. In this year of our Golden Jubilee, we've launched a national fund-raising and volunteerism movement. We call it the “Care and Share” movement, where the government will contribute $500 million in matching grants to double the impact of every contribution to the social service sector. So, when you donate you get a tax deduction on one side and a matching grant from the government to double the contribution. All that we are doing is to create a conducive environment to encourage giving – to help our Volunteer Welfare Organisations to improve their capabilities, and to ensure resources are directed to social service programmes that serve the disadvantaged groups in our society.
    

34. Finally, while I have spoken at length about technology, it is important to note that technology cannot substitute some domains of our social life. Strings of code can broker more efficient transactions but they cannot replace the human spirit. In the digital age, we are ironically becoming more conscious about what truly makes us human.
    

35. This sense of what binds us together is especially important in a young and immigrant society like Singapore, where we have people from different races and religions all in one little island. Because of our diverse ancestries and cultures, we in fact do not have the natural building blocks of a nation. But in 50 years, we have created a distinctive Singaporean culture and identity. It's not so easy to describe this culture in words and guests from overseas who come here for the first time may struggle to understand what Singaporean culture is. But you find it in our shared memories and experiences. You see it in the way we unite together around our heritage, around our well-loved places, like the Singapore Botanic Gardens, which was recently inscribed as our first ever UNESCO World Heritage Site. And we also see it in the resilient spirit of our people, especially our pioneering generation who were here when Singapore was practically a swampland but they defied the odds to build this country and a first world nation.
    

36. The domains of arts, heritage, sports, and community also help to fortify our sense of nationhood. In a world of ever-increasing automation and efficiency, I believe that these softer aspects of our humanity become even more important. These are the things that shape our national identity. And a national identity is what makes a society resilient amid turbulence and destructive change. A national identity is what enables the whole to be greater than the sum of its parts.
    

37. Just a month ago, Singapore hosted the Southeast Asian Games, the largest sporting event in the region. At the medal presentation ceremony for the swimming relay, our swimmers who won a gold medal, proudly stood on the podium. The ceremony proceeded, the Singapore flag ascended, and our national anthem, Majulah Singapura, was played. Then during the last stanza of the anthem, the sound system broke down. Actually it was not just the sound system. We have a very sophisticated system. It is completely automated so the sound and the music, and the raising of the flag is all automated and synchronised by computer programme. It is all done by technology, tested many times. There was a momentary pause then the crowd took over, singing the remainder of the national anthem. Technology failed, but the Singapore spirit prevailed.
    

38. This brief episode captures for me the essence of what we are trying to achieve. As globalisation and digitisation usher in greater dynamism and bigger challenges, we will need to rethink social policies, and strengthen the culture of giving. Technology will bring considerable improvements to our lives. But it can also be disruptive, and it may not always work the way we want it to. When the going gets tough, let us never forget that humans are indomitable when we stand together. For us in Singapore, we remember the can-do spirit of our pioneers, who lifted our nation from Third World to First. This gives us confidence that we can tackle all our future challenges, and build an even better Singapore in the next 50 years and beyond.
    

39. So on that note, I thank you very much and wish you all the very best for your symposium and for the rest of the evening. Thank you.