youth povertyYouth Poverty: A Lurking Social Issue?

by Nabilah Mohammad

This commentary was also published in Karyawan, A Magazine by the Association of Muslim  Professionals (AMP), July 2017, Volume 12, Issue 3.

Poverty: is it really all about the money?

After witnessing decades of spectacular economic growth in Singapore, poverty was thought to have disappeared by the 1990s. However, in the recent years, growing inequality and stagnation of wages of bottom earners have resulted in an expansion of social welfare policies. The word poverty definitely provokes strong emotions and while there is no clear definition of poverty in Singapore, it does not mean it does not exist here.

Poverty should not simply be viewed as a lack of income but, rather, as the configuration of the economic situations that disconnect them from the society.

There are different terms to poverty but the two widely-used definitions of poverty that the rest of the world takes are absolute poverty and relative poverty. Being in absolute poverty refers to being deprived of basic necessities such as shelter, clothing, and food, which most of us in Singapore are less likely to experience. Relative poverty, on the other hand, is more commonly adopted in developed countries. It is the condition in which people lack the minimum amount of income needed in order to maintain the ‘customary’ standard of living in the society they live in. Being in relative poverty means being socially excluded and deprived of opportunities and comforts that the rest of the society enjoys. For instance, you are using a mobile phone from a decade ago while everyone else is using the latest smartphone because you cannot afford a smartphone. While you can physically survive without these gadgets, you are likely to be socially excluded and probably be deprived of progress.

Measuring poverty is complex and has a multidimensional approach to it. The most simplistic way of drawing the ‘relative poverty’ line is by identifying income. For instance, by OECD (Organisation for Economic Co-operation and Development) standards, the relative poverty line is set at 50% of a country’s median household income, and anything below that can be considered as a household living in relative poverty. The median household income among residents in Singapore was S$8,846 in 2016. If we follow this standard, $4,423 is about right on the mark for Singapore. In addition, based on the latest Household Expenditure Survey conducted in 2012/13, the Average Household Expenditure on Basic Needs (AHEBN) for a four-person household was about S$1,250. By these estimated and projected benchmarks, based on the income figures from the Singapore Department of Statistics (DOS), more than 10% of our population lives in ‘absolute poverty’ and a significantly higher proportion in ‘relative poverty’, all of which are well hidden within our public housing apartments. In addition, the latest Manpower Ministry data shows that younger workers are slower in breaking out of this low-income bracket compared to other age groups.

What is of major concern is that, there is growing evidence of a shift in the age distribution of poverty. According to data on families receiving ComCare help, the number of young Singaporeans who are in need and having to rely on the Government for handouts is increasing. The number of young households who received their aid in 2015 increased by 40 per cent as compared to 2012. Although the qualifying criteria have been revised to allow more recipients to receive their help, what is worrying is the persistent proportion of young recipients despite implementation of government efforts such as subsidies and schemes.

These are the youths who were promised to be on the track of profitable careers by following the prescription of success: to pursue a higher education. Today’s youth are the most educated batch thus far, and this most educated generation in history is also on track to becoming less prosperous, at least financially, than its predecessors.

Vulnerabilities that result from poverty extend over the life course of young people, their families and communities, and likely transmitted across generations. It is of prime importance then for us to address the issue of youth poverty.

Challenges in Youth Employment

One possible reason why the number of youths relying on handouts is increasing is due to their high unemployment rate. Unemployment leads to financial struggles and reduces the overall purchasing capacity of an individual. This in turn results in poverty followed by the possible increasing burden of debt. The rate of joblessness for those below 30 years old has risen over the years and was at 5 per cent last year, double that of other age groups. Youths typically experience higher unemployment rate than the overall labour force and are more likely to be employed in part-time or temporary jobs compared to other age groups.

Unemployment in youth has been shown to have lifelong effects on income and employment stability, because affected young people start out with weaker early-career credentials, and show lower confidence and resilience in dealing with labour market opportunities and setbacks over the course of their working lives.

A small-scale, qualitative study was conducted by the Centre for Research on Islamic and Malay Affairs (RIMA) to explore the challenges faced by Malay / Muslim youths in Singapore. One of the key findings was issues encompassing employment. For many of them who cited employment as a challenge, the problem lies in getting opportunities for a decent employment while some were unemployed because they are taking time to find a job suited to their abilities and aspirations.

Studies have also shown that as median income rises, the rate of poverty decreases in close correlation. This relationship, to an extent, confirms that employment is one of the best mechanism to lift people out of poverty, including youths.

Lack of Access to Affordable Services

Early-career workers like youths also tend to fall through the holes in the economic system that delivers them inadequate income and support.

Singapore has introduced many initiatives, including SkillsFuture, to aid youths in improving their employability. However, for young households who are unemployed or earning low wages, such grants are only sufficient for basic courses or not enough to cover the bulk of the course fees for intensive courses that would enhance their employability. Most of the aids are hardly sufficient to enable these young households to boost their material conditions since the cash assistance would be used up to buy food, pay debts, and for other immediate needs.

Other schemes that target low-income workers are also not accessible to these young workers. Workforce Singapore (WSG) schemes such as Workfare Income Supplement (WIS) and Workfare Training Support (WTS) for instance, target older low-income workers who are above 35 years old, leaving the younger at-risk group with lesser support to fall back on. Other existing employment resources such as universities, prioritise their graduating students through internships or hiring programs, while government agencies tend to be more preoccupied with assisting older workers.

Moreover, as the outlook for jobs worsens, many young people might see little benefit in furthering education or training, which would have considerable negative socio-economic consequences in this era of accelerated evolution, where skills upgrading are crucial and seen as a continuum. Without access to affordable services, young households with limited income are not able to fully participate in social and occupational activities. This can threaten the self-sufficiency of vulnerable households and cause them to be at greater risk of poverty.

Is the Gig Economy Working?

Young workers today are also looking for jobs that are different from those who have vacated them. Technological change has given rise to the gig economy. Freelance gigs that used to appeal mainly to skills-based workers such as photographers, plumbers and writers have expanded to include on-demand jobs, such as private-hire car drivers and food delivery riders. Gigs appeal to the younger generation, who value diverse experiences, work-life balance, flexibility, greater career freedom and their need for instant gratification through this pay-on-the-go concepts. Despite the lack of employment benefits such as medical benefits and paid annual leave, young workers are at the forefront of the gig economy. These tech-savvy generation are riding the wave and seeing their incomes rise but their short-sightedness may cause poor long-term financial consequences .

The gig situation is potentially explosive, because something like Uber or Grab, for instance, might collapse at any time and leave them jobless. This should worry us because thousands of young Singaporeans are now reliant upon the gig-economy services for survival. The gravest danger here is that there is no safety net for gig economy workers.

In an economy where industries are constantly disrupted, we have to help our young workers stay in their jobs and minimise the time between transitions.

Lack of Financial Literacy and Management Skills

One of the challenges that keeps people mired in the poverty trap is also financial illiteracy. Understanding how to make financially responsible decisions and managing one’s credit and debt are essential skills to protect ourselves from financial predators and poor decisions that lead to poverty. Surveys have shown that youth in Singapore are overwhelmingly pessimistic about their financial situation and readiness. Majority of the youths surveyed are not confident about their current financial situation, and a high percentage feel they are not financially ready for the future.

Another worrying trend that explains why it is difficult for families living in poverty to get out of the cycle is that these families earn less than they spend. The DOS shows that the bottom 20 percentile of household is spending more than what they earn. Even though they are still spending less than the rest of Singapore from an absolute value point of view, they are still spending more than 100% of their income.

Acknowledging Youth Poverty

The combination of rising costs for raising children, falling wages, increased unemployment, disruptive economic system and high debt places young people at a greater risk of poverty. A good deal of vulnerability also emerges from the way in which groups of people are treated by the rest of society. Socially excluded minorities are more likely to endure unequal access to resources and opportunities because of who they are, or are perceived to be. The interconnection of social exclusion, inequality, and poverty tend to reinforce one another.

Singapore, despite its comparative economic power, is not immune to poverty. On the contrary, too many people remain without the sufficient means to be able to lead their lives with dignity. If we are to overcome the vicious circle of poverty and related phenomena, investment in young people is urgent, through the generation of employment opportunities, equal access to resources and adequate financial literacy.

Making poverty history will require the entire society to join the efforts.

Nabilah Mohammad is a Research Analyst at the Centre for Research on Islamic and Malay Affairs (RIMA). She holds a Bachelor of Science in Psychology and a Specialist Diploma in Statistics and Data Mining.

Photo Credit: Karyawan

 
© Copyright RIMA 2017 · All Rights Reserved