SINGAPORE – Business leaders need to do more than ever before to help tackle the three great divides that undermine social cohesion, Deputy Prime Minister Heng Swee Keat said on Friday (Sept 20).

These are: the growing inequality as a result of globalisation and advances in technology, the burgeoning divide among different generations, especially as societies age, and the deepening political polarisation that is made worse by social media.

Unless resolved, the tensions will make it difficult for countries, including Singapore, to weather the challenges of a slowing economy, Mr Heng added.

And companies can do more in this effort by becoming more socially responsible in practising gender equality, environmental sustainability, and promoting education and healthcare, he said in a keynote address to about 400 business and thought leaders at the annual Singapore Summit, which discusses global trends in business, finance and geopolitics.

Noting the economic and political influence of big businesses today, he said companies can do even more to make a difference, by working together as well as with governments to create solutions to improve people’s lives.

“More than ever before, business leaders must play a greater role – to renew the social order of the countries they operate in and revitalise the international system,” said DPM Heng, who is also the finance minister.

The summit is held at the Shangri-La Hotel and this year’s theme of “Asia 2030” is indicative of Asia’s growing economic weight and influence.

In his broad speech on problems confronting societies and the way forward, Mr Heng urged the business leaders to do more to strengthen the social compact, saying that “doing well and doing good need not be contradictory”.

“Finding a way to achieve both will help us unlock the tremendous opportunities of Asia 2030, and to make progress towards the (United Nations) Sustainable Development Goals,” he added.

He pointed out how some businesses have been championing “conscious capitalism”, or the idea that companies should not only serve their shareholders, but all other parties as well, including customers, employees, suppliers and the environment.

He also called on countries to work together to tackle common global challenges, such as climate change, poverty, food security and cyber security.

Likewise, he urged them “not (to) forsake multilateralism simply because the current ground sentiments are shifting away from it”.

“Instead, it is our role as leaders to uphold this system collectively, and convince others that this remains the best way forward,” said the Deputy Prime Minister.

The need for each country to renew the social compact, by giving citizens a stake in their society and reigniting the popular imagination, is urgent amid global economic tensions looming large and the eroding relationship between governments, companies and societies.

Societal interests have fractured, he noted, making it difficult for governments to secure a mandate to make important decisions.

“Politics is increasingly marked by snap polls, hung Parliaments and government shutdowns, which, in turn, engender further distrust towards governments and the political system.”

“All these point to a fraying of the social compact that holds societies together,” he pointed out.

The renewing of the social compact, however, requires dealing with the three great divides, he said, as he shared Singapore’s experience in doing so.

“We do not have all the answers to these complex issues,” he said. “But by sharing Singapore’s experience, I hope to catalyse a discussion on how we can address these common challenges together.”

TACKLING INEQUALITY

In Singapore, staying open to the opportunities from trade and innovation is key to economic growth, which creates good jobs. But this also works to widen inequality in society.

“To resolve this paradox, economic development needs to be paired with social strategies to invest in our people, and to enable them to access opportunities,” Mr Heng said.

He noted that households in the bottom 20 per cent have experienced faster income growth than those in the top 20 per cent.

Singapore stays committed to investing in its people – investing heavily in pre-school education, while building an ecosystem in which workers can pick up new skills at any stage of their lives.

Other policies designed to even out unequal outcomes include a high home ownership rate which “gives every Singaporean a stake in the country, and a share in its progress”.

Also, measures are taken to temper the raw market employment outcomes and these include topping up the incomes of the bottom 30 per cent of workers and introducing the Pioneer Generation and Merdeka Generation packages to help older groups of Singaporeans meet their healthcare costs for life.

ADDRESSING INTER-GENERATIONAL DIFFERENCES

The different interests and concerns of different generations can pull societies in different directions. For example, many older voters in the United Kingdom voted to leave the European Union while most younger ones wanted to stay.

“They are aggrieved that their future has been decided by those who may not live through the consequences of their choices,” he said.

Elsewhere, governments face the hard choice of cutting pension payouts, or increasing the tax burden on the working population.

“Providing for inter-generational equity is critical to the social compact,” he said. “When each generation pays for its own spending, it internalises the costs and benefits of the spending. Yet we must also invest in our young and our young must, in turn, share the fruits of progress with our seniors.”

He noted that Singapore has avoided the pitfalls of the pension approach because of its Central Provident Fund system, and that it has built up substantial reserves from strong growth in its early decades of economic development.

In Singapore, the social compact between generations is not just a matter of finances, Mr Heng added. For the government, it means thinking ahead for the country’s long-term future.

TACKLING POLITICAL POLARISATION

People are increasingly opposing each other in different political camps, and social media is deepening this polarisation, Mr Heng noted.

“Technology has exacerbated these divisions by enabling echo chambers, silos and fake news,” he added. “Political polarisation is damaging because it pits people against one another and ultimately undermines the cohesion of a country.”

Singapore’s solution is to resist the political pressures to pander to narrow interests, putting in place measures to ensure society is not divided by issues like race and religion.

Rather than take a combative approach, the Government, unions and businesses work together to grow the economy, he said.

But he acknowledged that it will be difficult for Singapore to continue to steer this course, especially in an increasingly diverse society facing forces that sharpen income and wealth disparity.

“Old differences will evolve and new divides can emerge – between the rich and the poor, the young and old, and along ideological lines,” he said.

He added that this is why he launched the Singapore Together movement several months ago to gather people with different backgrounds and concerns to make common cause, expand the space for discussion and debate, and encourage people to walk the talk.

“For young people especially, being able to actively shape the future of our nation and playing a part to build this future, is key to growing their sense of ownership and commitment towards Singapore.”

He noted that many other countries have also embarked on similar journeys to renew their social compact, citing France’s “Great National Debate” and Japan’s “Society 5.0”, adding: “We can all learn from each other”.

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