Wage Hikes Across Asia...

Singapore's low-income wage earners have seen their wages stagnate since the late 1990s. Their counterparts in the region, however, are getting better news. Wall Street journal reports Tuesday [link] that minimum wages are getting a boost throughout many countries in Asia.

China's Wage Hikes Ripple Across Asia

Wall street Journal | By JAMES HOOKWAY in Kuala Lumpur, PATRICK BARTA in Bangkok and DANA MATTIOLI in New York

More Asian governments are pressing businesses to hike wages as a way to prevent outbreaks of labor unrest, raising the specter of higher manufacturing costs for global companies—and the products they sell world-wide.

In the latest move, Malaysia's cabinet has approved the country's first-ever minimum wage to be imposed soon, according to people familiar with the matter. The decision follows similar moves elsewhere in the region, as officials from Thailand to Indonesia follow efforts by China over the past two years to boost pay after years of widening gaps between rich and poor.

•••

Beijing raised its minimum monthly wage by 8.6% to 1,260 yuan ($199) starting in January, according to the state-run Xinhua news agency. The following month, the southern boomtown of Shenzhen raised its compulsory monthly wage by nearly 14% to 1,500 yuan. The northeastern port city of Tianjin will raise its minimum wage nearly 13% to 1,310 yuan starting in April, Xinhua said.

China's moves, in part, have helped spur other such changes in the region. Indonesian workers in some areas have secured minimum-wage increases of more than 20% in recent months.Thailand plans to introduce a higher minimum wage beginning in April that will push salaries up about 40% in many parts of the country. Labor advocates in Cambodia, Sri Lanka and Bangladesh also are calling for higher wages.

The Staggering Gap between Singapore's Rich and Poor

Official statistics by the World Bank indicate that Singapore has the highest Gini coefficient in the developed world. The Gini coefficient is an abstract mathematical economic indicator that measures the extent of income inequality in a country. Yet one doesn't have to be an economics guru to understand the extent of inequality in Singapore. Simply by browsing the newspapers, Singaporeans have been exposed to a much more visceral and concrete demonstration of Singapore's staggering gap between the rich and the poor.

On Monday, the following article was published in my paper:

You can have this bungalow for $68m

This five-bedroom good-class bungalow in Ridout Road comes with its own pool and tennis court.

Reico Wong | Mon, Mar 12, 2012 | my paper

The record $39-million sale of a Sentosa Cove seafront bungalow to a buyer from India, which made headlines earlier this month, may have raised many eyebrows.

But it is far from being the most expensive prestige landed home on the Singapore property market - in terms of absolute price - at the moment.

Sources told my paper that one of the priciest residential landed properties up for grabs is a five- bedroom good-class bungalow (GCB) in Ridout Road, off Holland Road.

Its owner is asking for $68 million, or about $1,670 psf, for the property, which occupies about 40,000 sq ft of land. The large plot of land, on which two GCBs can be built, is sited on a slope and comes with its own swimming pool and tennis court.

In Singapore, the Rich Get Richer... while the rest of us Struggle with Inflation

A couple of headline news in the Business Times caught my attention today. The first is regarding record high price for a luxury bungalow plot in Nassim Road:

Peter Kwee sells Nassim Rd plot for about $47.8m
$2,000 psf on land area is a new high for a GCB on Nassim Road
By KALPANA RASHIWALA

(SINGAPORE) Motoring tycoon Peter Kwee is said to have sold a vacant plot along Nassim Road for about $47.8 million or $2,000 per square foot (psi) based on its freehold land area of about 23,920 sq ft.

While the psf land price for the transaction is slightly shy of the $2,081 psf islandwide record for a Good Class Bungalow (GCB) Area set last year, it is nonetheless said to be a fresh high for Nassim Road.

Newsman Realty confirmed it brokered the latest deal. The buyer is a Singaporean  businessman, said the firm's managing director KH Tan.

The second article is regarding the introduction of the Pagani Huayra into Singapore.

Nonsensical Forum Letter on Cheap Foreign Labour

A letter by a certain Ng Ya Ken was published on the TODAYonline Voices section. It contains several nonsensical and idiotic statements that I would wish to debunk. Note: I have no affiliation with SPP and have no vested interest in defending the SPP.

Cheap foreign labour: Who's responsible?
Letter from Ng Ya Ken 04:46 AM Feb 22, 2012

THE Singapore People's Party's chairman, Mrs Lina Chiam, thinks that the effect of foreign labour "is akin to the use of performance-enhancement drugs in sports", as reported in "Opposition parties weigh in on Budget measures" (Feb 19).

Her analogy may not be appropriate, as the use of foreign labour is mainly out of necessity and demand stems mainly from the private sector.

Tharman's 2012 Budget Speech & the Spectre of Government Failure

One of the key features, if not the key feature of the 2012 Budget Speech, is the reduction in foreign worker dependency ratio ceilings (DRCs) and Man-Year Entitlement (MYE) quotas. Stung by the results of the 2011 general elections, the PAP has u-turned on its pro-foreign worker stance and the Minister for Finance has stated unequivocally to businesses that they must reduce their dependence on foreign labour.

Read deeper between the lines, however, and you will see a tacit admission of Government failure. Here are two critical paragraphs in Tharman's budget speech regarding the clamping down of foreign labour inflow:

Debt Watch - Singapore

Following in the footsteps of the debt master Professor Steve Keen, I am starting an amateur analysis of Singapore's debt levels and debt trends.

The first chart for analysis is a plot of Singapore's consumer housing debt - as extended by banks (data from MAS) vs Singapore's GDP (singstat). I am able to get only four data points from singstat for GDP (if anybody knows how i can get a more detailed time series pls let me know), nevertheless a plot of housing debt vs. GDP shows a clear trend:

There is a major omission from this chart, and that is the debt that is extended by HDB to purchasers of HDB flats. MAS only releases data of loans made by banks, and not loans made by HDB. So we have to use educated guessing estimate the HDB debt. (if anybody knows how i can get my hands on this data, please let me know. thanks)

Time for Lee Kuan Yew to learn from Deng Xiaoping's Legacy

Singapore has been touted around the world as an economic miracle. Lee Kuan Yew, the CEO and Chief Marketing Officer of the country, has been held up high as a model statesman of the island state and Asian Economic Tiger. The PAP government likes to boast about how Chinese officials come to Singapore to learn from the ruling party about how to run a nation. Lee Kuan Yew was not afraid to boast about Chinese officials wanting to run their country the way Singapore does [link].

Yet, Lee knew that China would soon rise to the world stage and surpass what little Singapore could ever accomplish. Instead of China learning from Singapore, Singapore would be learning from China. The elder Lee once said to Deng Xiaoping [link],

‘Whatever we can do, you will do better. We are the descendants of the landless peasants of South China, you have the literati, you have the top brains, you have the poets, the artists.’

Indeed, the time has come for Singapore's political elite to take a page out of China's economic leadership.

Does PAP Government Work for Singaporeans or Foreigners?

I decided to delve into an analysis of some of Singapore's Economic statistics today. I did a bit of sleuthing around and some analysis of our GDP data, and what follows below is the results of my analysis. All the data below is publicly available from Singstat. (all charts clickable for full version)

The chart above shows the nominal GDP breakdown from 1999-2009. From the chart we can see that GDP has been steadily on the rise, apart from the recent dip following the financial crisis. The chart also breaks down the GDP into the Foreign Resident share and the indigenous share of GDP.

This chart performs a statistical analysis on the first chart above. As can be seen, the % share of GDP that went to Foreign Residents increased consistently from 37.85% in 1999 to 42.58% in 2009. In other words, a progressively larger proportion of our economy belongs to foreigners. Correspondingly, the indigenous share of GDP has declined from 62.15% to 57.42% from 1999-2009.

Why Do We Care About Mr Ng's PRC Workers when Our Elderly Struggle to Survive?

TOC has recently run a piece on Aug 5 on Singapore's foreign worker policy "MOM policy change creating problems for employers". In the piece, TOC features an interview of a business owner, Mr Ng, who describes how he is facing problems renewing the work permits for 2 of his PRC workers. The MOM recently shifted its policy stance to tighten its foreign worker quota.

“With the pick-up [in the economy], unless they quickly revise this policy, a lot of employers will face the same problem that I’m facing now,” he said. Indeed, several other employers and business owners have told TOC they too face the same problems.

Here are a few important points from the interview of Mr Ng

• Mr Ng has 29 total staff, of which 2 of them who are PRCs face non-renewal of work permit
• Mr Ng claims that if MOM does not renew the PRC workers' permits he will have "a lot of problems recruiting locals ... to fill their gap", and says that that no Singaporeans want to work in a restaurant
• Mr Ng pays the PRC workers around $800-$1000 a month

On March 29, TOC also published a piece by Gilbert Goh, titled "Employers still discriminating against older workers". Mr Goh pointed out the following:

"A weekend visit to Han’s restaurant at Harbourfront shocked me as the four staff working there were all Filipinos. From the person that took my order to the cashier and chefs, they were all foreigners happily going about their jobs. The only thing that stood them out from the former Han’s staff that I had seen previously, was the age difference. All of them appeared to be in their twenties. I found myself paying for my order grudgingly.

Darth Zorro Lim Swee Say - Liar Or A Fool?

'When times are good, we work hard together to build up ... social capital, by being one of the most pro-worker nations in the world'

- Minister Lim Swee Say, National Day Message 2010

Not content with leading his storm troopers and clowning about in his Darth Zorro suit to the entertainment of Singapore's nurses and the ire of Singaporean netizens, the NTUC Secretary General has now set his sights on perpetuating the insidious mistruth that Singapore is "one of the most pro-worker nations in the world".

The black-masked member of Lee Kuan Yew's elite "Intellectual Class," who infamously coined the term "cheaper, better, faster" and sang the song "upturn the downturn" (see below), incidentally is paid more than $2 million a year for his costume-bearing antics and pretensions to the Singapore idol crown. Yet, Lim's assertion that Singapore is 'pro-worker' could hardly be further from the truth.

Singapore Economy Would Suffer if China Property Boom Collapses

One of the hot topics circling in the global financial news and blogosphere is the potential overheating of the Chinese economy and property market bubble. Home prices in Beijing, for example, have risen to 22 times income levels, a new high that exacerbates housing affordability problems and that raises serious questions about the sustainability of housing prices on the basis of fundamental valuations.

At the same time, reports of China's shadow banking system have started to emerge. A recent video report by TheStreet talks about the "Shark Loan" phenomenon in China. The "Shark Loan" process typically starts with a homeowner taking out a loan on the equity of his house, from a commercial bank, based on the appreciation in the market value of the house due to the booming property market. The homeowner then re-lends the proceeds from the loan to a Shark-Loan operation at a substantially higher interest rate than the homeowner is paying the bank. The Shark-Loan operation, in turn, lends the money it has borrowed from the homeowner, at an even higher interest rate, to a speculator who then bets on the housing market once again. In effect, the Shark-Loan operators are acting as "shadow bankers" in the provision of credit to speculators who would not otherwise get access to capital through traditional funding sources.

The impact of the "Shark-Loan" operations is to circumvent the constraints on credit imposed by the state that are designed to cool the credit bubble that is fueling the property boom. The Shark-loan Shadow Bankers allow the housing bubble to continue its inflation by channeling credit around the legal banking system from homeowners into the hands of speculators, who then further inflate housing prices with their purchases of property. The whole system works beautifully for everybody as long as housing prices continue to rise. But once housing prices fall and the bubble bursts, the entire system of ponzi finance will come crashing down like a house of cards.

Singapore's Addiction to Gambling - in More Ways than One

In the news recently:

MORE problem gamblers sought medical treatment and help last year compared to three years ago.

Fresh figures from the National Addictions Management Service (Nams) showed that 17 per cent of patients seen in 2009 were gambling addicts, compared to 5 per cent in 2007. Nams treats about 2,000 patients a year.

Gambling addiction cases are among the top three form of addictions treated by Nams. Drug and alcohol addiction cases make up about 80 per cent of Nams case workload.

Speaking at the official launch of the Nams clinic at Buangkok Green Medical Park on Wednesday, Associate Professor Wong Kim Eng, Clinical Director of Nams, said the rise in gambling addiction cases is likely due to the increased awareness of Nams and its treatment programmes.

Nams has been operating from its dedicated outpatient clinic since June last year and provides services such as psychiatric assessment, counselling, and support groups for patients and families.

Singapore is getting more and more addicted to gambling in more ways than one.

Firstly, you have the obvious rise of problem gamblers as part of the social cost of the newly opened integrated resorts. While the IRs may have helped Singapore to post record-breaking GDP growth numbers this year, more and more Singaporeans are facing gambling addiction. Anecdotally, a friend of mine working in the psychiatric ward of NUH reports that there has been a massive jump in problem gambling cases being admitted to the hospital.

It is not just the gamblers themselves who suffer, the families of the gamblers pay an even higher social cost. Mothers have to suffer to pay the debts of their husbands, children have to drop out of school because their parents cannot afford school fees. Families break down and social cohesion is weakened.

Singapore Economy is Booming but Guess who is Benefiting? Duh... Foreigners!!!!

Associated Press reports that Singapore's economy expanded at a 18% annual rate in the first half of the year.

Who, however, is the main beneficiary of all this economic growth?

But of course! Foreigners!!! LOL, what is new?

SINGAPORE can expect the number of foreign workers to increase by at least 100,000 this year in response to the demands of the booming economy, said Prime Minister Lee Hsien Loong.

Speaking to the Singapore media here on Tuesday as he wrapped up a six-day visit to the United States, Mr Lee said the government had taken steps to moderate the number of foreign workers, but a rise was inevitable given the strong growth.

He added: 'It cannot be helped because with the market so tight, if we don't allow the foreign workers in, you are going to have overheating.

'But we are managing the number of foreign workers. Their levies are being calibrated to moderate the inflow.

'But even with that, I would imagine there would be more than 100,000 extra foreign workers this year. I cannot see it otherwise. We have to accept that.'

 Have Singaporeans' wages risen at an 18% annual rate this year? Are you 18% more productive than the year before?

Of course not!!!

The only way for the PAP to deliver its economic growth numbers is to do what it has been doing all along - bring in foreign capital and foreign labour. The PAP is doing exactly what it has been doing since it came to power - increase factor inputs, without increasing factor productivity.

Chinese Labour Strikes Put Singaporeans to Shame

The recent labour strikes in Honda factories by Chinese workers have been all over the global news. Chinese workers are demanding better work conditions and better wages, and they are willing to go on strike for their demands. The recent incidents have been reported by New York Times, Bloomberg Businessweek, Economist, AFP and many others. In one of the NYT article, was the following comments:

striking workers at another Honda plant less than 100 miles away in Zhongshan marched in the streets on Friday and made a new demand: the right to form an independent labor union.

“This is a remarkable development,” said Anita Chan, a labor expert at the University of Technology in Sydney. “Most strikes in China tend to be about not being paid or being mistreated. This was different. The workers were demanding very high salaries. And they want to elect union leaders democratically.”

In Singapore, workers have been intimidated and cowed into submission by the People's Action Party. They are told to be cheaper, better and faster. At the same time they have to accept competition from cheaper foreigners on their very own shores. And for the Singaporean men, they even have to sacrifice 2 years of their lives to protect the soil on which foreign labourers are working on. On top of that, Singaporean workers have to accept record housing prices, a congested transportation infrastructure, and even declining real wages.

They have to suck all of this in without a whimper or a sound. And they do.

Why?

Because they are pussies.

Singaporean workers would never dare to strike or speak out against the ministers. They would never dare stand up against an elite which pays itself millions of dollars in salaries while the aged uncles and aunties have to work in their 60s and 70s for subsistence pay.

Who says that democracy is not part of Asian values? Who says that strikes and democratically formed labour unions are not part of Chinese culture?

The Honda strikes in China have put an end to this utter nonsense.

Another NYT article reported:

Reports of the recent labor strikes have been unusually public here and have appeared largely uncensored in China’s state-run media.
Until now, the government has discouraged strikes and censored reports about labor unrest, apparently out of fear that the reports could fuel other strikes and lead to social unrest. But in the last few weeks, there have been reports — some in state newspapers — of several large strikes around the country.

This week, for instance, a local government-controlled union in the city of Shenyang has been negotiating with KFC, the fast-food giant, to secure a nearly 30 percent raise for workers.

Last Sunday, in another action, about 500 workers at Merry Electronics, a Taiwan-owned components maker, held a walkout that the company said was over a work dispute. Later that day, the company announced a 22 percent pay increase, though a spokesman said the raise was unrelated to the strike.

The PAP asks Singaporeans to be cheaper, better, faster. The PAP asks them to suck in the foreign cheap labour. Meanwhile,

The Chinese government has also encouraged local governments to raise minimum wage standards, and even called on companies to treat workers with more dignity. - NYT

Singaporeans vote in the PAP time and again with overwhelming majority - they keep in power the very hand that oppresses them. And they seem to love doing so.

The only possible reason is that this is because Singaporeans are cowards - sibei kia see!! Either that or they are bloody stupid to keep on believing Lee Kuan Yew's machinery which keeps them deceived with the propaganda straits times. Or they are masochists who love inflicting pain on themselves.

Which one is it???

Singaporean workers - time to wake up!!!!

Crowded MRT Station in Singapore even during Off Peak periods

SMRT isn't running as many train services during off-peak hrs as it should. This was a picture I took of Jurong East MRT when I was on the way home on a friday evening at 7.24pm.



The trains were not arriving fast enough to pick up the passengers arriving at the station and the crowd just kept building.

This is what you get when the government pumps a ton of people into this little island, and the transportation companies try to cut costs by running as few trains as possible.

Looks like we need to do a proper review of our rail infrastructure operators.

Singaporean Businesses Need to Buck Up - Innovate or Die!

Recently reported in the press is the news that SMEs in Singapore are complaining about the restrictions on foreign workers and want the government to loosen the restrictions that limit the hiring of foreign workers. A recent business survey indicates that these SMEs are quoting the same excuses that they have using all along - locals shun labour-intensive jobs, and the turnover rate for foreigners is lower. These business also want to hire foreigners because this reduces business costs, or, in other words, because foreign labour is cheap.

These latest results show that Singaporean businesses are heavily dependent on lowering the cost of factor inputs in order to compete in the market, rather than improving factor productivity. The difference between the two is illustrated as follows.

Company A hires Singaporean worker Mr Chan at $15 an hour to produce 10 widgets per hour. Mr Chan manufactures the widgets using equipment Y, which depreciates at $25 per hour. The cost of production per widget is hence $4 per widget: ($15+$25)/10 = $4. Company A can lower the cost of production by either lowering the cost of the factor inputs (labour or capital equipment), or by improving the productivity of these inputs.

Company A chooses to lower the cost of production by reducing the cost of factor inputs. Company A fires Mr Chan and hires Mr Balakrishnan from India who is willing to work for $5 per hour. However, Mr Balakrishnan was previously a farmer and he has only started to learn how to operate the manufacturing equipment, and so he can only produce 8 widgets per hour. Company A's strategy lowers the cost of production from $4 per widget, to $3.75 per widget: ($5 + $25)/8 = $3.75. However the the productivity of Company A has declined. Its production per worker has fallen to 8 widgets per hour, compared to its previous output of 10 widgets per hour.

Company B chooses a different strategy. Company B starts out with the same equipment as Company A, and employs Mr Wong at the same wage as Mr Chan. Company B also invests in research & development to improve the technology of its manufacturing equipment. Because Company B has been investing in research & development, it has a new piece of equipment. This equipment costs more, and has a depreciation rate of $43 an hour,compared to $25 previously. Company B also trains Mr Wong to use this new piece of equipment. The result of this improved manufacturing process is that Mr Wong is now able to produce 16 widgets per hour, compared to 10 widgets previously. At the same time, because of Mr Wong's improved skillset, Company B increases Mr Wong's salary to $17 per hour.

The net result of this is that Company B's cost of production is now $3.75 per widget = ($17+$43)/16. This is the same as Company A's result. However, unlike Mr Chan, Mr Wong not only keeps his job, but also has received a pay raise. Mr Wong is also able to afford another child because of his higher income, and help improve to Singapore's poor fertility rate. Furthermore, the longer term impact of this strategy is that Company B is able to continue lowering the cost of production, because it can continue to invest in R&D. Company A, however, is unable to bring down its costs further, because it is unable to find workers who are willing to work for much less than $5 per hour. Furthermore, Company B is able to expand its production and hire the experienced Mr Chan, who was previously fired by Company A.

The difference between Company A and B is the difference between night and day. Company A has chosen the strategy of lowering the cost of factor inputs, but this strategy rarely results in sustainable competitive advantage. In most cases, this strategy results in price wars and intense competitive rivalry that ultimately kills profitability when such price wars are not accompanied with increases in productivity.

Company B, however, has a sustainable competitive advantage. Its R&D program will continue to produce better equipment and labour productivity gains, and will allow it to lower its cost of production even further. In contrast, Company A cannot reduce its factor costs much further and will soon be put out of business.

Two fundamentally different strategies, two fundamentally different results.

Singaporean businesses are thinking like company A. Instead of focusing on improving productivity, they have chosen to pursue lower factor input costs. They repeatedly complain that Singaporean workers are too expensive and want to hire cheap foreign labour instead. Eventually, like company A, these businesses will be outcompeted by their more innovative counterparts.

In view of these SMEs' mentality, is it surprising at all that Singapore's productivity growth has remained stagnant relative to the US since 1995, as the recent Singapore Competitiveness Report shows? Is it surprising at all that the standard of living for the average working Singaporean has hardly improved in recent years?

No.

Singaporean businesses need to buck up and start innovating. The government also needs to stop feeding this quick-fix mentality with its liberal immigration program.

Quick-fix is ultimately no-fix, and Singaporean businesses must innovate or die.

PAP's Quick-Fix Mentality will Exacerbate Singapore's Economic Challenges

Earlier this decade, PM Lee Hsien Loong & the PAP faced a problem with Singapore's population economics. With the country's fertility rate way below the replacement rate of 2.1, Singaporeans were not making enough babies to replace themselves. The potential burden of this phenomenon was obvious - amongst other issues, the cost of supporting an aging population would have to be borne by a smaller workforce, and the government did not want to have to sustain this liability in the future.

In order to arrest the problems presented by a resident population failing to replace itself, the PAP has resorted to the quick-fix policy of opening the country's shores to foreigners. A massive influx of immigrants and foreigners has resulted in the rapid increase of Singapore's population. Between 2003 and June 2009, the population increased from an estimated 4.2m to 5m, or an increase of 19 per cent in less than a decade.

While this has, in the short-term, drastically expanded the productive work force, the longer-term impact of the PAP's immigration policy has been to exacerbate the already challenging living conditions which have discouraged Singaporeans from having children. Directly attributable to the Government's immigration policy, are two major side-effects which have made it more difficult for Singaporeans to have children.

Firstly, the cost of living for the majority of Singaporeans has risen. In particular, the escalating cost of housing to unaffordable levels is acting as an obvious hurdle towards family formation. A couple which is unable to afford a roof over their heads will obviously find it very difficult to start a family. After all, the most basic thing parents must provide to their children is a roof over their heads. Yet, instead of bringing down the cost of housing, the combination of a spike in housing demand and stagnation in supply has sent property prices to record levels. (ref. 'PAP MP blames young couples who cannot get flats for not “planning ahead”')

Secondly, labour productivity has declined. Singapore's labour productivity levels have been falling for six consecutive quarters starting in the fourth quarter of 2007. The decline has been worsening each quarter, with the first three months of 2009 seeing the largest drop so far at minus 14.7 percent. (ref. "National focus needed on efforts to boost labour productivity", CNA). Singaporeans are working harder and longer and with less to show for it. Naturally, they have less time and money to spend on their children.

The benefits of productivity on family formation are obvious. Workers who accomplish the same amount of work in shorter periods of time will have more time to spend on their family. Similarly, workers who accomplish more work in the same period of time will be able to earn higher incomes and thus be better able to afford a family. Instead of improving productivity, however, the PAP has chosen an immigration policy which has had a direct impact on this key economic statistic. The large influx of foreign workers in recent years means that each worker doesn’t have to work as hard. It also means that positions are constantly being filled by newbies without experience. (ref. 'Declining productivity here a problem')

The combined effect of housing price inflation and the decline in labour productivity has been to make the real cost of bringing up a child even more expensive, and thus further discourage couples from having children. Meanwhile, little attention is being paid to initiatives which can make a genuine impact on the standard of living.

The solution to the housing affordability problem is simple. Either supply more flats or decrease the demand. The lack of proper planning by the PAP on this issue is quite perplexing, but this issue has been dealt with by other writers and I will not repeat their arguments here. (ref. "Immigration and public housing: Should the govt or the people plan ahead?")

The deeper problem is that of labour productivity.

An improvement in labour productivity does not only require the education & upgrading of the workforce, but a fundamental change in mentality of employers from a low-cost of labour mentality to a higher value-added mentality. Meanwhile, it seems that the only solution that the PAP has to throw at the productivity problem is to point the finger at workers for not upgrading themselves.

While skills upgrading is part of the solution, it is only one side of the productivity equation. Just as important is paying attention to improving the working conditions of employees and protecting workers' rights. Employers in Singapore blame Singaporeans for shunning so-called 'menial' or ‘unskilled’ jobs, yet the only solution they seem to have is to throw cheap foreign labour into these jobs such as construction or frontline retail services. The tougher but more rewarding option of professionalising and dignifying such jobs is thrown to the wayside.

Contrary to what some may think, a career in construction can be a meaningful, dignified one. A construction worker who takes pride in his technical work and who has accumulated experience will certainly be much more productive than a cheap foreign import. When given the right tools and proper working conditions, his higher productivity will also justify a much more respectable salary than the pittance that is currently paid in the industry. Yet, keeping wages low and working conditions poor is a surefire way to make the job disrespectable, and for companies to lose their top performers. (ref. “TOC Special Feature: Is Singapore really slum-free?”, TOC)

Similarly, frontline sales staff in retail can make a significant difference to the bottom line if they are well trained, respectably paid, and given good working conditions. Conversely, untrained foreigners who do not even speak the language of business, are obviously unable to add significant value to a retail operation and sometimes even turn away prospective sales. (ref. “Australian tourist complains about PRC workers in Singapore who cannot speak English!”)

In spite of this simple logic, the government's immigration policy continues to foster a low-cost mentality rather than a value-added mentality by allowing local businesses to import cheap labour, which only serves to keep wages depressed and working conditions lousy. To be fair, enterprises are also to blame for perpetuating their low-cost mentality. But if nobody makes an effort, how will things ever improve?

Labour productivity also improves with innovation & entrepreneurship. A significant improvement in manufacturing techniques can allow a factory to dramatically increase its output given the same number of workers. Meanwhile, technological innovations in engineering or computing allow the formations of new enterprises and the creation of value-added jobs. Yet, the government continues to pursue policies which encourage an iron-rice bowl mentality rather than bold enterprise.

In particular, the scholarship system encourages Singapore's brightest students to pursue a safe (bonded) career in government rather than one in the private sector. It systematically sucks out the brightest minds from innovating in the marketplace, into the ranks of the public service. Instead of finding solutions to scientific problems, bringing new products to market or searching for a cure for cancer, Singapore's top young brains are writing policy papers and goodness knows what else, in 'silent resentment and ultimate dissatisfaction' (ref. the late Dr Allan Ooi).

The PAP argues that the government needs top brains in order to run efficiently and effectively. Yet, the stark reality is that entrepreneurs and innovators such as Olivia Lum, Sim Wong Hoo and Ron Sim have individually created many more jobs for Singaporeans than any government scholar or bureaucrat. Is it no wonder, then, that leaders such as S. Dhanabalan and DPM Jayakumar (ref. "Jayakumar wants Singapore top students to study in local varsities") have recently lamented that allowing top students to go overseas is a bad thing? And, while it may appear that the government is unrolling campaigns encouraging entrepreneurship in schools, such campaigns are but lip service when millions of dollars continue to be thrown at scholarships designed to suck youngsters into government ranks.

The recent housing pains and productivity drops are symptomatic of a quick-fix mentality that can ultimately only exacerbate Singapore's population and economic problems, rather than alleviate them. Until fundamental, structural issues in Singapore's economy are tackled head-on, Singapore will continue to see its fertility rate remain low and its productivity (and competitiveness) slide. At the end of the day, the PAP cannot continue to pump more and more immigrants onto this little island. Sooner or later, Singaporeans need to find a way to return their fertility rate to replacement levels, and make the cost of family formation affordable. Singapore will need to find a way to foster genuine innovation and entrepreneurship and to improve worker productivity.

So far, the PAP doesn't seem to be doing very well in coming up with the right solutions.

France to Count Happiness in GDP - Why Singapore is Still Nowhere Near World Class

Very interesting article in the Financial Times Today. I quote it here, editing it for my purposes.

France to count happiness in GDP
By Ben Hall in Paris

Published: September 14 2009 15:48 Last updated: September 14 2009 19:35

Happiness, long holidays and a sense of well-being may not be (Singapore’s) yardstick for economic performance, but Nicolas Sarkozy believes they should be embraced by (Singapore) in a national accounting overhaul.

France’s president on Monday urged other countries (like Singapore) to adopt proposed new measures of economic output unveiled by a panel of international economists led by Joseph Stiglitz, the US Nobel Prize winner.

Mr Sarkozy, who set up the Stiglitz-led commission last year, said that (Singapore) had become trapped in a “cult of figures”.

Insee, the French statistics agency, would set about incorporating the new indicators in its accounting, Mr Sarkozy said.

One consequence of the commission’s proposed enhancements to gross domestic product data would be to improve instantly France’s economic performance by taking into account its high-quality health service, expensive welfare system and long holidays. At the same time, the commission’s changes would downgrade (Singapore's) economic output.

The commission suggested a series of improvements to the way GDP was measured. It proposed accounting for people’s well-being and the sustainability of a country’s economy and natural resources. “(In Singapore), citizens think we are lying to them, that the figures are wrong, that they are manipulated,” said the president. “And they have reasons to think like that.

Certainly, I do not think we will expect to see the Singapore Government incorporate citizen happiness, well-being or the state of the welfare system into its GDP accounting system.

Because that would make us look like a third-world country. Let's face The Ugly Truth - Singaporeans are stressed out chickens & unhappy rat-racers. They work hard their entire lives just to be able to buy that condo or that landed property & that BMW/Mercedes Benz. Many of them can't wait to get out of the country to some place where they will not be treated as second class citizens in their own back yard.

Indeed, as I explained before, GDP is a lousy indicator of a people's wellbeing. And it's what the Singapore governnment has been using all along to measure its performance and to justify the astronomically inflated salaries of its ministers.

God bless the day we finally depose of the Leegime and have someone who thinks like Mr Nicholas Sarkozy.

DBS Shares Rally despite the Passing of Richard Stanley; Singapore Economy in the Dumps

As DBS staff bid their final farewell to chief executive Richard Stanley, who died of leukemia last Saturday, the shares of Singapore's biggest bank continued to rally. DBS stock price continued its rise, even as Mr. Stanley's cortege passed through Shenton Way this afternoon. This is despite the fact that in the last four months, it has been Mr. Koh Boon Hwee, Chairman of DBS and a non-banker, who has been steering the DBS ship amidst Stanley’s absence and Singapore's steepest recession.

DBS' stock rise comes amidst a broader market rally. It is thus not clear if the stock rise indicates that investors are placing confidence in the bank's chairman, or if it is a simply a stock movement in tandem with the broader market. The DBS board, nevertheless, feels that Mr Koh is worth his weight in gold.

In comparison to Mr. Stanley who was paid almost $5 million for eight months of work in 2008, Mr. Koh has received $2 million in 'special remuneration' from DBS for assuming an 'active management oversight' role from Jan 1 to April 30 last year.

"2008 Was a Year to Forget" - 2009 Probably will be One to Forget, Too

Singapore's MTI recently released the country's Q4 2008 economic statistics. The numbers are, quite simply, absolutely dismal.

Singapore's economy shrinks 16.4% annualized rate in Q4
By Chris Oliver
Last update: 9:33 p.m. EST Feb. 25, 2009

HONG KONG (MarketWatch) -- Singapore's economy contracted at an annualized 16.4% in the October-to-December quarter, its sharpest pace of contraction in 33 years, according to revised figures released Thursday by the Ministry of Trade and Industry. For the whole of 2008, the economy grew 1.1%, after expanding 7.8% the preceding year, the ministry said in the 169-page Economic Survey of Singapore report. The manufacturing sector declined 10.7% in the fourth quarter on year, while the services sector was down 1.3%. Initial estimates published in January were for a 16.9% annualized contraction in the fourth quarter.

Think that's bad?

Wait until you compare this contraction with other economies around the world, and you'll see how bad it really is.The following image, courtesy of the Business Times, tells a thousand words.



Hmm. No wonder that Singapore's economists are not particularly optimistic. Here's some quotes to ponder, and enjoy (bold added):

'The manufacturing weakness story is well known, but the main thing is the speed and severity with which the services sector rolled over,' said OCBC economist Selena Ling. 'When two of your engines fall off, you can't see the economy flying at all.'

...latest estimates prompted OCBC to cut its 2009 full year forecast, from -2.8 per cent to -4.8 per cent. 'Frankly, we don't see any light at the end of the tunnel for financial services. It will be the main drag on services,' said Ms Ling. 'And we think consumption will fall off the cliff once we get the retrenchment numbers.'

...

'Broadly speaking, 2008 was a year to forget,' said Standard Chartered economist Alvin Liew. 'The data revision was minimal. It was already bad but it got a little bit worse,' he said.

Well well, I guess the PAP ministers can't possibly be patting their backs this time, like they always do each time Singapore announces its economic growth numbers. A marketwatch commenter has hit the nail squarely on the head:

"Wonder if their egos shrank at the same rate? They must have put the economy through the wringer and then the dryer. Should never wash cotton economies in hot water and then dry in dryer."

Ha ha ha. But now let's get serious.

What's the prospects for Singapore's economic recovery? How is our growth possibly going to be restored? Stanchart's Mr Liew, again:

Stanchart's Mr Liew noted that much of the fall-off in total demand was due to a 9.6 per cent drop in external demand in the fourth quarter. ...

'The recovery process - if we see any at all - needs to come from the external sector. If that doesn't recover, we are looking at a very protracted downturn,' he said.

Singapore's export oriented economy means that any recovery is going to be driven by a revival in exports, driven by our biggest export markets - US and Wester Europe. And what's happening to those economies right now? Hmm... let's see:

A raft of data due out is expected to show the recession-hit economy is worsening. Among the reports, non-farm payrolls for February will shed light on the labor market, with analysts expecting unemployment to reach 7.9 percent.

Following Friday's fall in U.S. stocks, with the S&P 500 closing at a 12-year low, analysts are watching to see if indexes can hold and recover from these lows, suggesting a bottom has been formed, or whether stocks have further depths to plumb.

"We continue to get hit on a daily basis by very bad economic news and the markets are trying to put in a stand here at the November 2008 lows," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

- Banks and economy to keep bears' grip on stocks, Reuters

Mr Buffett isn't the most optimistic person about the economy either:-

In his eagerly anticipated annual letter to Berkshire shareholders, Buffett also offered a gloomy economic outlook, saying "the economy will be in shambles throughout 2009 -- and for that matter, probably well beyond."

And how about Europe?

European Union economic confidence plunges to new low
MARK SMITH, Deputy Business Editor, February 27 2009

Business and consumer confidence across the 27-nation European Union plunged to new low in February, an influential survey has revealed in the latest sign that the recession is continuing to deepen in the UK's largest export market.

The declining global economy seriously hampers the ability of any nation to trade its way out of recession - and the apparent advantages of weak sterling remain of little consequence to exporters in a world where demand has fallen off a cliff.

News of the latest survey, conducted by the European Commission, also came as the unemployment rate in Germany, Europe's largest economy, edged up to 8.5% in February following a much sharper rise the previous month.

Sorry to break all the bad news, but i guess the state of the economy is what it is right now. No use papering over the cracks.

I guess it's not a surprise then that "PM Lee ... did not rule out the possibility that the Singapore economy could shrink by as much as 8 per cent this year." (ST)

What?? 8% contraction?? The world's highest paid head-of-state and you're talking about an 8% contraction?

Surely, you have got to be kidding me.