Sunday, October 12, 2008

Time for the Social Safety Nets to be READY and in place....

Last week's Sunday Times had something like 3 articles on how to save money during the recession- buy no frills housebrand goods, use less electricity and eat less meat. I suggest Straits Times not waste its space because most Singaporeans have already been forced to trim down during the "good years" due to relentless hikes - GST, transport, electricity, govt fees, kindergarden fees etc etc. We already know what to do because the good years were also lean years for many Singaporeans. With the recession, retrenchments are expected to hit sometime in Dec 2008. I think more people will go into this recession with near zero savings than in all previous recessions because of the income gap and the relentless price hikes of recent years. Telling them to tighten their belts to spend less doesn't really make sense because they have hardly enough to make ends meet and have been cutting down to the barebones minimum. We saw more poverty during the 2007 economic boom than ever before - regressive taxation, rising income gap, elimination of workers' benefits, rising costs, imported labor etc. What do you think will happen during this recession?

In the very abrupt 1998 recession when scores of Singaporeans were suddenly retrenched and found themselves desperate for help there was no social safety net in place to take care of them. Everything was done in a piecemeal fashion with the unemployed going to the MPs for help. The MPs had to understand what was needed and some token amount was given out as help on the spot. You might think that there were lessons learnt and some kind of comprehensive system should be put in place by now....but once the economy got back on its feet, the govt is sort of busy with the business as usual. With the type of economic system we have in Singapore today, many workers will hit ground zero they day they receive their pink slips because retrenchment benefits were eliminated some time back. They need quick instant help for their immediate needs.

The piecemeal approach of distributing help - queuing up at the MP's office not knowing what help you will get because there is no system in place only adds to the stress. Given the PAP's great fear of giving you too much, the minimum will be will probably be given after an on the spot means test. If the person gets sick, what does he do? Probably let the body heal itself because he has no money to see the doctor. I always wondered what happens if you turn up at the polyclinic sick and without money - will they see you? I don't know and many Singaporeans don't know. May be they will take you to a room ask you to go home and produce all the documentary proof that you have no money before they treat you. Already we are seeing poor Singaporeans not going to the A&E when they really need to do so because they don't have the $65 to pay upfront when they are there.

You might think it is commonsense to have a comprehensive system in place that is well understood by all Singaporeans so that when a crisis of the magnitude we are seeing hits and the bottom falls out, people have to be very clear about the help they can get so they can have some confidence going forward. Giving out help in a piecemeal fashion puts the people under tremendous unnecessary stress. The feller who cannot pay his electricity bill and is given a voucher probably also cannot pay for his child's primary school fees and transport, medical cost, rent and a whole array of expenses. The problem with having a system in place to give help to Singaporeans is this is sometimes called a welfare system ...and welfare is a dirty word for the PAP govt. But it is the PAP govt that created this system in which income gap is the highest among developed countries and frequent hikes by GLCs and the govt takes away the little bit many could have saved for rainy days to boost the corporate profits of Singapore Inc. When the ordinary Singaporean goes down, his plight is as much is own doing as it is result of the system.

Our govt is the most highly paid in the world. During crisis, we expect to see leadership. Hopefully not the same stardard of leadership (or rather lack of leadership) we saw in the recent Lehman Minibonds issue when authorities initially appear to distance themselves from a problem they might created deregulating such products. There don't seem to be any hesitation to 'squeeze' Singaporeans during the 'good' times....but are we going to see a reactive govt dithering on the help for ordinary citizens as the recession worsens? Leadership is about being on top of the situation and not reacting to it. What is about to unfold is the govt response to impending job losses should also be clear, systematic and reassuring. We don't expect a govt that is paid the highest in the world to go for a minimalist approach when it comes to helping ordinary citizens in troubled times. A system has to be put in place in the coming weeks and clearly articulated to the people before the queues at MP offices stretches around the block.


Anonymous said...

With those in the trenches running out of superlatives, I can't agree more, if the PAP govt. hasn't already drawn a rescue plan, we are finished. What's worst? Not hearing a single utterance of them. I am seriously worried they haven't just misread the tea leaves but are now caught like a rabbit in the headlights.

This week's precession of the global markets was like the death march. My hand holding the coffee was literally shaking on Friday, everything was ALREADY out the window, fundamentals, technicals, there's just one measure.

When I came out for lunch, it was like dreaming, everything seems normal, somehow a strange disconnect. It is like the video of tourists gesticulating jokingly about the incoming tsunami.

I have not one ounce of doubt this is a bad as it gets, we are in recession and as yet the property bubble has not been pricked, we haven't even gone through the entire plot! Seeing the bottom 20% already tethering on the edge with meager income, this really is going to be epic.

Anonymous said...

This PAP government always opts for the minimalist approach lah.
Just like all previous recessions, workers get cut down a few more percent of CPF contribution from the employers's the no-brainer tactic that the PAP fat cats can think of.

Let's see, maybe another brilliant stratgey they might think of is to increase GST in the name of a New Umemployment Fund and ask all Singaporeans to chip in :-)

Anonymous said...

I heard that we had over $100B in reserves.

But I also heard that our reserves are locked away and cannot be used under any circumstances, unless it includes bailing out ailing banks or investing in foreign talents.

Take heart, boys. If we learn to stand on our own two feet, instead of always looking to our govt for help, it would make us more independent, right?

Who needs a welfare system? Let the govt help the less independent foreign talents.

Anonymous said...

a big social problem might be comng in this recession. we were in unprecedented economic boom for the past 5-6 years and population has been increasing with foreign talents and foreign workers to meet the strong demands of this boom.

now this bubble gg to burst, and we can probably expect a nasty situation in the job market.

Anonymous said...

this recession impact to property might be different as i dun expect resale property prices to drop..becasue PRs with houses here can always fall back to their hinterland (still not in recession) to live & work in a less costlier environment while renting out their houses here to earn passive rental income.

Anonymous said...

Oh no! More help means more GST hike!

Anonymous said...

At the Reform Party inauguration dinner, at the end of his speech, Mr JB Jayaratnam said that,'it was no longer about choice, it is about survival'.

Anonymous said...

Since the 1998 recession which our esteem MIW play down, there is in increasing number of people whose financial health was affected.

The lower middle class become the poor while the poor become poorer. Some of the middle class is having problems with their daily living.

With current financial tsunami which is hitting Asia. There number of poorer people will increases. But our MIW will still be laughing while having fine dinning.

yamizi said...

Will crime rate and suicide rate increased during recession period?

Anonymous said...

'I think more people wil go into this recession with near zero savings than in all previous recession'

That is an understatement. More people will go into this recession with no savings and plenty of debts and that is the truth. So, this time around, they probably need to have a bigger and stronger net to cushion the fall. Prepare for the 'shock and awe' coming soon to our shores.

Gerald said...

You've made a very good point. In the last recession, economists were pointing out the need for unemployment insurance. That fell on deaf ears. I think more need to speak out for that now as a matter of urgency.

Anonymous said...

"Not hearing a single utterance of them. "

Didn't we learn enough of the incompetence of reactiveness of PAP given the case of Mas Selamat ?

Anonymous said...

too late.

1)they didn't build a community. they build on economy. they build on the deception of riches. very weak foundation for a nation. but it is an old story from a good book but those who knew the book could have told you centuries ago. but unfortunately, they are not krugman or whatever amongst us.

2) we have put too much emphasis on is the leadership that got us here. and it is unlikely the leadership will get us out either. even if they manage a solution, it will be temporary because,as history has shown, they will lead us back into the same mess again unless there is serious foundational changes.

3) the joker up there who hope for property to burst is probably not one of the 90% homeowners. when the person becomes a homeowner to a half a million $$$ hdb flat, let's see whether he/she still hope his home value fall by half or simply drop to negative equity and unable to offload when they need to fall back on their asset in time of great financial crisis.

having said that, those who have not committed to a property yet, be realistic, don't hope to own one in central areas unless you have the means. there are still many affordable homes and worse scenerio, press for greater subsidies from the government. put this way, do i care if my hdb 3 bdrm worth $1m if the goverment subsidize 90%? of its value( exaggerated to make a pt but you know what i mean i am sure)?

lastly, in times like this, it is the people who can salvage the crisis.


and here we are, still looking towards the leadership and worshiping them like gods?

too late.

Anonymous said...

Time to stop importing those 'foreign talent' and create/protect jobs for locals.

Stop giving out PR and employment passes so easily. Our local Singaporeans need jobs to continuously pay those fare hikes and try to figure out how to save for their retirement since they can't migrate elsewhere... when they retire and there is no gvt safety nets

The foreign talent can easily pack up and go back to their home country with the savings they have acquired in SG...

Anonymous said...

Trust me, house prices is going to tank, it always does it any recession of pass history.

When the jobs are gone, there will be an exodus of migrant workers (this we are already seeing in Europe), landlords will have a hard time finding tenant because of a rapid mismatch in the market, and face with declining house price, realising negative equity, there will be a force sale, worst foreclosure with the glut on property further eroding prices.

That is just one aspect, how about Singaporeans whom have mortgages dependent on dual income? The crunch heads home, bills mounting, bankruptcy will definitely rise.

So it not like I am happy to be the prophet of doom, it is just the reality looking ahead. Not everyone manages their finances with rolling fixed deposit waiting for that rainy day, I would say in fact, very few does so, the culture of spending on credit is new in Singapore, penny-savers, excluding the older generation are extinct. It is all about how far you can stretch your credit.

Now we in the stage of deleveraging, a situation that is especially bad because it is a firesale of your asset to pay off debt to remain solvent, cash flow is negative. Businesses are trap in the middle, creditors want their money while clients want extension on your receivables...

On a brighter note, when house prices decline it always goes up, mainly because it is so intricately linked to your pension. The burden of a problem PAP govt. has created.

Anonymous said...

The best of a bad situation to offer free advice on debt consolidation, I don't think the PAP govt. has a good handle of this crisis at the moment.

And that trained professionals can volunteer their time to provide help, the problem is regulating quality of advice and preventing unscrupulous profiteering (this might be the next boom?). The alternative is for the govt. to set up a debt advisory board, linking together avenues that govt. can assist and help, allowing arbitration if a business is involve.

Anonymous said...

PAP govt already has their hands full in overseas screw-ups:

1) They pump so much money into ailing Wall St banks.

2) They offer DBS high note investors in HK compensation in fear of mounting law suits against them in HK.

Guess who they are going to screw to squeeze more money?

feedmetothefish said...

When you get A Minister in the PM's Office and Union Chief to boot coming up with comments like
"Every month, when I receive my CPF statement, I feel so rich and the best part is, I know the CPF money won’t run away. CPF will still be around for a long, long time to come… Not only is it earning good interest, my capital is protected.", you know we are holding the shit end of the stick!

God Bless Peasant Singaporeans!

Elite S'poreans especially in PAP don't need blessings as they are rich, powerful and much closer to "God". In fact, they get CPF statement every month!


Anonymous said...

Well, serve us right not? Who voted those smart-asses into office and let them screw us? Stop whining Singaporeans, and live with your choice for more good years to come.

Anonymous said...

I think we have missed one very important point regarding political leadership in Singapore - THERE IS NONE.

The people whom we are supposed to "vote" in are managers who manage Singapore as a company. No imagination is required as to who's interest will they have in their hearts when the yogert hits the fan.

Anonymous said...

There is no safety net ... period. Stop dreaming.. their ideology banks on the down and out to go a-begging so that they will now they 'rely' on the MIW.
It's a joke that even if you have 1 million bucks in CPF and jobless, you cannot draw your own money.. This has to change to help people cope with the looming increase in unemployment.

But, this is lalaland... it's all fake.

So don't count on the safety net.. count on your own votes.
If you keep voting these guys in, you can only be blamed for your own folly. I hope this is clear to you know people?

Anonymous said...

Safety nets there are plenty.

And we are the fishes.

They will not stop casting their safety nets because they love fresh fishes.


Adam said...

Singlish is the first language of many younger uneducated Singaporeans, especially those whose parents do not share a native language or dialect, and is the second language of nearly all the rest of the country's residents due to the "Speak no dialect" campaign.


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