During a dialogue session with Prime Minister Lee Hsien Loong, young adults said that they were concerned with not being able to afford “basic goods”, namely a flat and a car. Professor Eugene Tan, a former Nominated Member of Parliament, said: “Singaporeans see Singapore as a wealthy country but feel like that they are not very wealthy themselves.” The root of the speculation on Singaporeans viewing themselves as not wealthy at all comes from the rising costs of living in Singapore. Despite the fact that Singapore is thought to be a luxurious first world country, Singapore citizens often suffer by working harder to maintain their high standards of living. This paper will be raising awareness of rising cost of living in Singapore. It covers the different type of inflations that causes problem and also the effects on Singapore citizens like delaying of marriages, unhappiness in citizens and the specific group that receives the biggest impact from rising cost of living in Singapore.
The main cause of the rise in living costs is inflation. Singapore’s inflation rate had been known to be lower than the average inflation rates of trading partners. Inflation would ultimately have an impact on a long-run potential growth due to its negative impact on Singapore’s ability to attract and retain investments and human capital. This, in turn, would increase the rising cost of living. An example of an inflation that happened to Singapore would be in a report from the Institute of Policy Studies, “Based on data from the EDB Annual Census of Manufacturing Activities (CMA) 2013, growth in total business costs in manufacturing from 2003–2012 have averaged 7.56% year-on-year, while growth in materials costs have averaged 7.77%, and growth in remuneration costs have averaged 4.76%.” (Manu Bhaskaran, 2016) .
2.1. Consumer Inflation
Consumer Inflation talks about prices of final consumer goods and services going up. Inflation is commonly measured by the increase in the Consumer Price Index (CPI). Over 6,500 brands and array of goods and services which resident household frequently purchased are included in the CPI. Citizens usually suffer the most from consumer inflation as it affects their daily lives, increasing the costs of necessary purchases and services.
2.2. Asset Inflation
Asset Inflation talks about prices of assets such as housing properties rising rapidly. Young aspiring adults wishing to purchase a home for their future family would be having a very difficult time. Unlike the days in the 1990s, the apartments available for purchase to the public is getting much more expensive and smaller.
2.3. Business cost Inflation
Business cost Inflation talks about the costs of rentals and goods, labour costs and components rising sharply. High business costs would mean start-up businesses having a difficult time to develop. This would result in the reduction of the competition level favouring the incumbents. High business costs further reduces the chances for smaller firms to invest in other businesses, increasing the need for government subsidies and grants.
Many people would be concerned with the effects of rising cost of living as it usually affects them in a noticeably way. However, lower to middle class groups will be hit more significantly with rising prices. An example would be “According to the Bureau of Labour Statistics, the median weekly earnings for full-time wage earners was $780 in the first quarter of 2014 – unchanged since last year, although the CPI has risen 2.1% since then.”
(Ullman, 2015). While the rising inflation rate stacks higher than the pay increasing rate, citizens would be expecting a huge hole in their wallets as the increasing of cost of living is just about every aspect of daily life.
3.1. Lower class group
For majority of the household, the primary items responsible for higher cost of living are food, school ,tuition and medical costs. Lower class families would be hit especially hard from the rise in cost of living because the proportion of expenses spent on basic needs is the biggest. Unlike middle and higher class groups, where they spend a bigger percentage of their budget on goods and services.
3.2. Delay in Marriage
Citizens are delaying their marriage so that they would be able to save up enough to keep up with the high cost of living in Singapore. Factors to consider when saving up for a marriage includes the wedding reception, purchasing a home for the family, renovation and children. Delaying marriages might ultimately lead to an ageing population which would then lead Singapore into a slower economy growth from the lack of workforce.
3.3. Happy Index
With a rising cost of living, Singaporeans will be working harder for that extra cash to keep with up their standards of life. Office workers might take up more overtime work just to get that extra pay. With longer hours of working and lesser time spent to enjoy their time, the happy index of Singaporeans have seen a decrease.
This paper has given an overview of how the rising cost of living in Singapore is very evident and would be a problem for the citizens of Singapore. Acknowledging the problem will be the first step that the citizens and the government can take to ensure that the problem will be controlled. In the near future, a solution the government can consider on would be the reduction of transportation cost. Since the workforce of Singapore relies so much on public transportations, so much as so that it would not be an exaggeration to say that it is similar to fresh air for Singapore’s economy, a cut on the transportation costs will definitely relieve on the essential costs that citizens need to pay. This will in turn, allow Singapore to move a step closer to building a jeopardy towards rising cost of living.