Singapore Tries to Redress Income Gap

By Wayne Arnold

Published: February 15, 2007 in the International Herald Tribune

This article is about radical economic changes underway in Singapore to make the benefits of globalization more widespread throughout their people. The government of Singapore unveiled their new budget that seeks to maintain the country’s international competitiveness while address the widening income gap. The country is going through a transitional period, making the shift from a manufacturing-led economy to one led by knowledge-based services.

“We are taking a bold new approach to help those at the lower end of our work force,” said Tharman Shanmugaratnam, Singapore's second finance minister. “Their wages are being held down by globalization.”

Singapore's proposed changes are part of a growing international trend that recognizes that globalization, while producing unprecedented global prosperity, is also leaving significant portions of the world's workers behind, particularly among the politically powerful middle class.

In the era of globalization where workers are forced to compete globally, "the role of government has to be more important to make sure workers are protected," Noriel Roubini, a professor of economics at the Stern School of Business at New York University, said last month at the annual meeting of the World Economic Forum in Davos, Switzerland.

There may be no other nation that sits as closely to the flow of globalization as Singapore. The trade moving through the country's busy ports exceeds the country's entire economy in value.

Singapore has been able to ride trends in the global economy to provide jobs for its citizens and elevate what was a third-world nation at the time of independence in 1965 to one of the world's wealthiest nations today.

This article is important because it is an example of how governments are dealing with globalization’s affects on their economies. Globalization is very powerful, but some have argued that the benefits are only for the educated upper and middle-upper classes, who were likely to succeed anyhow. This is the same problem that the US is having with globalization. It is believed that process of globalization is one of the biggest contributing factors to the widening wage gap. Singapore can provide the world with a microcosm to study how government intervention can help balance the effect of globalization.