A change in the economic policy goal? Too little too late?
July 5th, 2010 | 
Author: At a dialogue session organised by the Economic Strategies Committee (ESC) yesterday, Finance Minister Tharman Shanmugaratnam claimed that one of the targets of the ESC is to increase the median wages of Singapore worker by one-third from $2,400 today to an inflation-adjusted $3,100 in year 2010. This represents an average real increase of 2.4% per annum over the next 10 years.
This seems to represent a deviation from past PAP’s stance whereby the aim of economic policy has been all about pushing high GDP growth with little regard to its distributive effect.
As far as economic development is concerned, Singaporeans need to ask themselves the following questions:
1) Whether and how much Singaporeans have benefited from the economic growth, and
2) What is the quality of this growth and whether it is sustainable?
It is clear that the average Singaporean is not benefiting from the country’s economic growth due to the very unequal distribution of income. While Singapore has one of the highest per capita incomes in the world, at $53,143 in 2009, employees receive a disproportionately small share of the GDP.
Profits take about 46% of GDP, which is extremely high in comparison with most developed and advanced developing economies. In addition, foreign-owned companies receive almost half of this unusually high profit share.
This is exacerbated by the low linkages between the high growth economic sectors and the participation of Singaporean workers in these activities. The government targeted growth in the biomedical and chemicals sectors and in capital market back office processing, but these sectors are dominated by foreigners who also receive most of the benefits.
To achieve high GDP growth, the PAP government allowed hordes of cheap foreign workers in to reduce business cost for labour-intensive activities. This kind of economic growth is easy low-hanging fruit, but it is of low quality and is unsustainable. Such growth is not underlined by productivity increases and is derived merely from factor input accumulation.
The liberal foreign worker policy has disproportionally hurt Singaporean workers in the low-end jobs most. The wages of the bottom 20-30% Singaporean workers have been depressed and have not improved in real terms in recent years. Stuck in their low wages, they cannot provide their family a decent living, are made to rely on wage subsidies, and can never save enough for their retirement.
The Progress Report of the Ministerial Committee on Low Wage Workers released in June 2009 claimed a nominal increase of 9.2% in the monthly wage of the 20th percentile employed resident from $1,200 in 2006 to $1,310 in 2008. But using the inflation rate of 9.5% experienced by the lowest 20% income group over the two year period, the low wage workers were in fact worse off in real income terms.
In addition, the economic growth has been achieved at the expense of huge externalities from overpopulation. Such a huge inflow of people has shown up in surging housing costs, higher inflation, overcrowding in our public transport, and shortage of hospital beds in public hospitals. There was a serious lack of coordination between the National Population Secretariat under DPM Wong Kan Seng, the economic development ministries MOM and MTI, and the social development ministries like MOH, MND and MOT.
The use of unskilled foreign workers also hinders technology adoption and lowers the productivity level of the country. One reason for the alarmingly dismal productivity growth numbers is the reluctance on the part of employers to adopt labour-saving technologies because of the continued availability of cheap foreign labour. Rather than investing in workers to increase their productivity, employers resort to the easy way out of hiring more cheap foreign workers.
Another cause of the country’s low productivity growth is the constant structural changes taking place in the economy. For instance, our focus in manufacturing moved from traditional industries, to shipbuilding, to hard disk drive assembly, to semiconductor wafer fabrication, to chemicals, and recently to biomedical.
This has hindered productivity growth through learning-by-doing – the capability of workers to improve their productivity by learning on the job and improving their work processes over time. As workers are displaced from their industry, productivity gains arising from knowledge deepening in their job or industry is often wasted. Each time the government jump starts a new industry, we start from ground zero again. The use and constant turnover of foreign workers also contributed to the above, as they often do not stay long in their jobs here and the knowledge gained on the job is lost when they leave Singapore.
To conclude, we need to think hard about whom all this growth is for. Economic development in Singapore must benefit Singaporeans. It must bring about a better quality of life for the citizens.
It pains many informed citizens to see that this expensive and self-praise PAP government has got the orientation of its economic policy so seriously wrong and lacked the foresight to chart out the country’s long term economic strategy.
Rather than maximising economic welfare for Singaporeans, this government blindly pursued the misguided goal of chasing after high GDP growth. The pegging of the bonuses for ministers and top civil servants has contributed to this perverse incentive.
Much more can and needs to be done to unwind the unforgivable damage that this PAP government has done to the lives of the many ordinary hardworking Singaporeans over the past decade.
Edmund Khor
Reference: Manu Bhaskaran’s article “Reassessing Singapore’s economic future” published in The Edge Singapore 25 July 2009
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Most of us here are on work or job hiatus of more than 2 years, because of the expansion of the service and building construction industry as few would like to venture out into these fields, mainly due to the low self esteem and low, repeat low slave wages.
Partly because, being chinese, we see our bosses exploiting us when you have such bosses driving big cars and wearing bing bings, and lots of showoff, very chinese.
Also being chinese, we see lots of sub contractors owing wages to the workers in the construction business, and enslaving FW’s prior to their arrival, tying hand in hand with counterparts overseas. Looking at our unions, selling collective agreements is a good example.
So here we are, supposed to be first world but slave wages, not being able to buy what we fancy and always at the “MERCY” of employers(threat of FT to replace you), and afraid of the next foreign “CHEAP” guy coming to “STEAL” your job.
Arrive we have, this critical stage, with the help of your ruling party, jobless and supposedly, waiting for the next “BIG” handout (coffee money after next yr budget)
and waiting to “GIVE” them the next big “SHAKEOUT”.
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this writer do not have a clear definition of who forms the ‘average singaporean’
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Don’t fall for PAP’s pre-election gimmicks!
In the 2006 GE, they promised to provide a better future for the poor and to look after the old.. What have they done since then?
Only more foreign workers to depress the pay of the low wage workers… Only talks about sending our elderly folks to Johor and Batam!
Those bastards can’t be trusted, or Singaporeans will be doomed!
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It’s a Lew Kuan Yew’s feudal meritocracy system.
Rewarding a few individuals at the top, but exploit the majority at the bottom.
Singapore will not be able to compete in long-term given our small population size.
But with this useless PAP government, we still can’t compete, even if we have a population size of 10 millions.
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Gd add on to this article — where GCT, Lee II went wrong
http://atans1.wordpress.com/2010/07/05/blame-gks/
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JUST VOTE PAP OUT OF OFFICE. We should not tolerate their lies any longer.
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How can wage increase benefit for those currently unemployed and those long-term unemployed (displaced by foreigners) both groups whose skills set will become irrelevant via technological obsolesence with the passage of time as a result of being out of work?
It is a bit like toilet hygiene of wiping your bottom before you doing your poo, and not doing anything constructive thereafter, right?
The usual stupid Pee-And-Poo policy thinking, planning and implementation again!!.
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When the economy picks up and every worker will return to getting their bonuses inclduing members of the ESC, the objective of the ESC will then not be REMEMBERED.
Foreign workers will then increased by leaps and bounds and productivity will go down the drain once more!!!
Are they serious that our cleaners, sweepers, canteen operators, bus drivers and grass cutters can get the amount of $3100 or close to it???, swiss standard? Like I said, when the economy turns around in a year or two, the objective of ESC will be long FORGOTTEN!!!!
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To Edmund Kor – Has the government pegged their bonuses to the increase of the median wages? All your readers need to know.
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So,when more of our own singaporeans are out of job,these guys still want to reward the foreigners,PRs/new fartizens for talking instead of working.
No wonder producitvity has gone down.
These days,smart elites reward people for lower productivity.
What the FART!
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@SilenceIsGolden
well said.. we should demand that the pappies should peg their salary increases and bonuses to the median wages, that at the 20 percentile, and the citizen unemployment rate!
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We pay PAPpies multi-million dollars each, and yet they can’t even do simple maths. Maths that can be done by Sec 3 students!
$2,400 salary to $3,100 salary in 10 years time means that You Will Get LESS THAN Inflation!! Simple as that.
Agree that PAPpies salaries must be pegged in direct proportion to median wage and unemployment rate. If median wage drops or unemployment rate increases, then their salaries should get annual cuts. This should be the KPIs of running Singapore as a country.
In simple terms, it is just like you & your spouse as heads of household. If you or your spouse got pay cuts or kenna retrenched, will you still say “So what, I am the head of the household and I deserve my perks — I want to buy a new car and go for 3 weeks Europe holiday!” This is exactly what the fcuking PAPpies are doing right now — giving themselves all the perks as heads of Singapore while Citizens (the household members) are being retrenched and getting deflated wages.
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i dont understand why our annual surplus and deflict is always + and – 1 Billion even when the economy grows by 8%. Some1 been stealing the surplus >.<
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It would seem that Minister Tharman may have let slip the ‘real’ fact of the ‘median wage’ of Singaporeans – all of whom had been tolerating the hardship of the meagre wage increases through the years, and when the Government of the Pro Alien Party had insisted that Singaporeans are doing very well.
From time to time, even the Department of Statistics had been accused to be massaging their data release – which they have always vehemently deny.
In the ‘Key Household Income Trends 2008′ prepared by the Department of Statistics – it was reported that:-
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“Median monthly household income from work of ‘resident’ households increased by 13 per cent from $4,380 in 2007 to $4,950 in 2008.
After adjusting for higher consumer price inflation in 2008, median household income saw slower growth in 2008, growing by 6.2 percent compared with 7.2 percent in 2007.
Median household income among ‘employed’ households – (households with at least one working person) – also saw a similar rise, from $4,880 in 2007 to $5,480 in 2008.” (See Ref #1)
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In the report – “Key Household Income Trend 2009″ – the Department of Statistics had even reported that:-
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“Median monthly household income from work of ‘resident’ households declined by 1.9 perent from $4,950 in 2008 to $4,850 in 2009.
After adjusting for consumer price inflation in 2009, median household income saw a decline of 2.5 per cent.
While lower when comparing with 2008, which saw a significant growth in income, median household income from work in 2009 was still higher than the other years in the last decade.” (See Ref #2).
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Is there a difference in “median wage” of Singaporeans, and the “median wage of household” ?
Obviously, the Pro Alien Party is playing with numbers to suit the occassion that they wish to develop for their own agenda.
What could possibly be Minister Tharman’s agenda now ?
Still the Department of Statistics – that is controlled by the Pro Alien Party – that is then depended on by the various Ministry (See Ref #3)
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Thankfully, Singaporeans have alternative source for information and shared on the www that puncture the web of lies woven around us:-
Singapore household net wealth
http://www.pressrun.net/weblog/2009/10/singapore-household-net-wealth.html
In millionaire-rich Singapore, majority income below national average
http://www.pressrun.net/weblog/2009/09/in-millionaire-rich-singapore-majority-earns-less-than-national-average.html
60 per cent of Singapore households earn less than national average
http://www.pressrun.net/weblog/2009/12/60-singapore-household-earnings-below-average.html
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Ref #1 – Key Household Income Trends 2008
http://www.straitstimes.com/STI/STIMEDIA/pdf/20090120/op-s15.pdf
Ref #2 – Key Household Income Trends 2009
http://www.singstat.gov.sg/pubn/papers/economy/op-s16.pdf
Ref #3 – Report on Wages in Singapore, 2008 and Singapore Yearbook of Manpower Statistics, 2009
http://www.mom.gov.sg/publish/momportal/en/press_room/press_releases/2009/20090630-Wages.html
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After 45 years since independence on 9 August 1965, what has the Pro Alien Party done for Singapore and Singaporeans ?
Are we not back to the 1950s, when our forefathers had to struggle in a supposed “Colonial Setting” that we were told were times of hardship and poverty, strife and filth around us, peeing in public ?
Are Singaporeans today not struggling with second jobs, or even looking for a job as competition increase with the unrestrained influx of cheap foreign workers ?
Back in the Year 1968, a young graduate fresh from university was earning S$1,500 and could easily afford to raise a family, purchase a decent semi-detached house in Seletar Hills, or Serangoon Gardens, or even Sembawang Hills Estate, enough left to purchase a car, and still save for the future retirement.
This is Year 2010, a young graduate fresh from university can only hope to find a job that pays $1,500 and forget about marriage, let alone to purchase a HDB flat, and certainly the dream car remains just a dream, and is there any money left to save for retirement ?
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Honestly,the current govt dos not have the slightest idea of where we are heading for.
The govt merely apes what is happenning around us.
the most inportant thing that they should have done for us,they have already destroyed in their hands.
this is our ONLY RESOURCE,talented singaporean labour.
in place of us,they put in low productivity foreigners.
what we have all strived to build over the years -jobs,educated workforce,socail fabric-are slowly wasted away in the hands of current MIWs.
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miw are running Singapore and Singaporeans into the ground. they pay their ministers millions of dollars – these highly paid ministers were suppose to transform Singapore and Singaporeans to a highly skilled and knowledge based economy – they failed badly in these areas.
to make matter worst, they give priority to low skill sectors by allowing immigrants from China and India to come in to support such industries.
if the miw is not voted out, very soon there will be no Singapore – it will become Chinaindia.
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Why Japanese staff learn to speak Chinese to welcome the RMB$$ brought in by the China tourists? Why they never welcome SINGAPOREANS in this manner? Why suddenly the mainland Chinese are so RICH? VW Passat is their Toyota Altis in China!!!! VW Passat is like Merc in Singapore??? Why? We will be looked down by Mainland Chinese!!!!!!!!!!!!!
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Atobe – well said. Something has been going on, very wrong the last 10 years or so.Is it about the world economy? No, you don’t need to be a PHd to find the answers. Young graduates are saying too, they simply cannot afford a HDB flat at the rate things are going. Not only that, they will eventually have to top up or pay for their parents flats, which some have probably bought at a high price.Its all about greed, greed from the government will eventually filter to the people, who suffers, the people in the end.
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SC:
July 5, 2010 at 10:11 am
eh last GE say they will take care of the old
This GE?
Take care by yourself
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PAP claims to be the only party that can bring economic prosperity to the country… Bullshit! Look at the how our old folks and lower-eage workers are strugling. They only know how to bring prosperity to themselves.
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Singapore = Foxconn
LKY =ktc(tiawan richess boss)
PAP member = Honghai shares holder(parent co. of foxconn)
foxconn business(contract mfr) = singapore(wash angmo testicule)
LSS slogan (faster better cheaper) = same as foxconn
singaporean work till u die\leave(PR) = foxconn workers work till u jump or leave for(kampong).
u call this a country, u call this a home, u call this your family, u call this your future.
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PAP ministers pegged their salaries to bankers i.e. Goldman Sachs and all
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What crap : eh last GE say they will take care of the old
This GE? Take care by yourself
ya , they will take care the old unless the old citizen have plenty of saving ! PM said , we must be self-reliant …
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ya lor singaporean on paper all rich
can afford house worth the money
300k for bird cage
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The pappies will win again. Many new Singaporeans love them for their generoristy in granting jobs, New citizenships , new housings , housing grants and others easily and effortlessly. They will be voted in again. The crows will be out again crowing and maybe a salary increment for their outstanding political contribution.
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Good article. We have no clue what we are doing and how we are doing it. We are stuck in the mud by ministers who are paid astrospherical salaries. They are not worth the mud they are stuck in.
Imagine all these foreign companies making all that money on an eternal tax holiday. You then know why Singaporeans are losing out in the country’s apparent prosperity. You also understand they need to control the media to misrepresent the situation to Singaporeans.
The basic problem is that over 45 years they have not got an indigenous industry going involving Intellectual property that is strictly Singaporean. We continue to prostitute our services to those MNCs from other countries who have developed their proprietary IPs. Our whole education system is to produce slaves to work for the MNCs.
Our economic policies parallel the call girl strategy; offering the most delightful services at the most competitive price. Ours is nothing more than what the Geylang Economy is all about!
So stop kidding ourselves! World Class? Can prostitutes be World Class?
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@wisesoul -
How wise of you – PAP is the only way to go. I want to give up my citizenship then come back again to be citizen. Any suggestion how to go about doing it.
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increase gst is to help the poor!!!! still have not figure out how the argument works??? Can someone ple explain to me???
been googling for a while trying to find an explanation… still no answer.
if no one knows, then anyone got lhl hp #, i call him and ask…
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@whatever, Good question.
If you go to IRAS and use the personal tax calculator, you will see that a person with an annual income of 3 million dollars only needs to pay about 500K to 600K of taxes. In other welfare state, with a personal tax rate of about 50%, the same person would have to pay about 1.5M in tax. Presumably these taxes from the high income earners will go towards providing social safety net as what PAP proclaimed as their aim.
So to make up for that shortfall of approximately 1M, PAP says they have to increase GST by 2% and another 2% etc etc. So think about it. How much purchase must we make to top up that shortfall of 1M? It means at an increase of 2% to the GST, we have to buy 50M worth of stuff to make up 1M in tax.
PAP would say that yes, but rich people with more disposable income would spend more hence contributing to the social safety net as well. But think about it, even if I am earning 3 million a year, how much could I possibly spend every single year? Do I need 30 Ferraris every year?
I know of course, nobody likes higher income tax. But if we are a community, we need to think about those less fortunate than we are.
Of course, the most important point is that I like to see the look on the faces of those PAP pigs when they have to cough up 50% of their income every year.
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