BREAKING NEWS : Jan 30, 2009 SINGAPORE'S unemployment rate rose to a seasonally adjusted 2.6 per cent in the fourth quarter from 2.2 per cent in the third quarter as the economy weakened, the government said on Friday. It also said job growth slowed to 26,900 in October-December from 55,700 in July-September. -- THOMSON REUTERS
In Singapore when they discuss the budget, they gather people who have plenty of soft questions, show support and praise for what our govt has done. During the Istana Open House, the ChannelNewsAsia filmed a friendly President Nathan going around telling the visitors be appreciative of what the govt has done because it has gone "out of its way" to help Singaporeans this time.
The more I think about the budget, the more I begin to appreciate how interesting it is....when more people go through it, it is actually a budget of many interesting things.....
One of the unprecedented things the govt did this time was to tap the reserves. I think that was why President Nathan said the govt has gone all out to help Singaporeans this time. I thought the reserves belongs to Singaporeans so why is it a big deal to use it to help Singaporeans? But it does get more interesting if you think more about it. Under the current govt they actually had huge surpluses including the gigantic one due to the GST increase. If you do the sums (anyone come to a different conclusion, please post a comment), there is actually no need to dip into the reserves because the govt can spend this current surplus. This surplus thing gets more interesting because it does not include land sales which brought in billions during the property bubble. So the first interesting point is this, the govt has dipped into reserves when it didn't need to do so to fund this package...now you know why they have gone out of their way.
The 2nd interesting point is the biggest idea in the budget,the Jobs Credit, which is intended to help Singaporeans. It helps Singaporeans by giving companies a wage subsidy...i.e. it helps Singaporeans(+PR) by not helping Singaporeans directly. Heck this idea is really interesting because this Jobs Credit gives money to all companies...gee the govt even gives money to itself because it is the biggest employer in the country. This idea has been sold as a "jobs saver" by our newspapers for a few days. Companies are retrenching workers not because their wages are too high but because demand has fallen sharply. Look at it this way, they are losing jobs by the millions in China where wages are very low. ...in the current situation, we are not losing jobs to China or India due to higher wages, the current bout of retrenchments is caused by a fall in demand. The main goal of the budget is saving jobs, something that cannot be done effectively since the govt has created an economy that is largely dependent on external demand.
The next interesting point is what the budget did not do. The greatest fear for most Singaporeans being jobless. Unless you have been living in your closet, you should be able to figure out that thousands of Singaporeans will be jobless in the coming months. The budget does not address this huge problem that is coming. Interesting isn't it? A budget that goes "out of its way" to help Singaporeans but does not address the biggest problem that Singaporeans are facing. A related problem is the arrears for HDB flats....about 8% (probably more by now) have defaulted on their loan ....don't these people need help? The Jobs Credit will be giving money to companies such as Intel, Microsoft, SIA, SMRT...which are cash rich. Why not give money to the people who needed instead of companies that don't need it? Because of the high cost of living in recent years, Singapore families will be entering this recession with the worse household balance sheet ever, this makes it a double whammy. It is not the fault of families to be in such bad shape because everything from transport, medical to housing was hiked continuously during the good years making it hard for them to save.
It is very interesting to watch these discussions on TV and they can actually talk for 1-2 hours and miss out on all the key issues affecting Singaporeans most.