Wednesday, March 03, 2010

Productivity and Cheap Foreign Labor...

Before I get on to the actual topic, let me ask you a question. Do you know how they operate ferris wheels in some parts of India? Here's how:

Yes, human powered ferris wheels.....found only in places where you can pay people less than $1 a day for their labor.

See when businesses have access to very cheap labor they stop investing in machines, software and processes to improve productivity. That what economists looking at our productivity growth's correlation with foreign imported labor numbers will tell you. However, this simple conclusion also it means that PAP govt has made a serious mistake to open the floodgates to cheap foreign labor causing a decline in worker productivity. However, if you look at the speeches by the SM and PM, they put the responsibility of increasing productivity on the shoulders of Singapore workers and businesses. If workers and businesses can't improve their productivity, Singapore will have no choice but to continue importing foreign workers. The PAP govt has never admitted that its liberal foreign labor policy CAUSED a fall in productivity.... so it was left to MP Low to fire his salvo at the govt and put the blame for productivity decline directly on govt foreign labor policy :

The Singapore worker can train, retrain, upgrade all he wants but if companies have access to cheap labor like ferris wheel operators in India, they will never buy machines that will make full use of the skills of the Singaporean worker. That is why in Japan which uses almost exclusively more expensive local labor has a productivity index of 100 compared with 50 for Singapore. By saying that Singapore needs to improve productivity to decrease reliance on foreign workers, the govt has reversed the real cause and effect i.e. the govt is saying our reliance on foreign workers is caused by our declining productivity. The 1st step to fixing a problem is to admit that a mistake has been made. MP Low's speech in parliament only elicited denials from the PAP I'm not optimistic the PAP will adopt the right approach to improve the lot of our workers.


Anonymous said...

My 2c. It's nothing about productivity on the human operating ferris wheel. If that's the case then we can find the so called 'non-productive' methods like operating gondolas, bum boats or any form of human involvement.
Productivity doesnt mean to remove the human factor. TELCO's improved their productivity by changing the human assisted service with self service centers and we all know how frustrating it is to talk to machines or going through the options.
If we want to improve our productivity the best would be remove the 'fat' or become 'lean'. In every thing we do there is certain duplication/ or non critical stuff which can be avoided with little risk.Be it in Gov or in private enterprises or day to day transactions.

Anonymous said...

We should ask why Singapore can't be like Japan where productivity is high with less human labour.

The answer is obvious. The culture, behaviour, willingness to learn, apply technology, education system etc. Can these be changed for the better easily?

Don't say productivity. Even service attitudes we have a big problem and cannot change easily.

Singaporeans seems to be different and unique. Most probably due to the unique upbringing, education, social and political system.

You can see that if the political system is different, all other things are also different even if it is same ethnic stock like North and South Korea.

Lim Leng Hiong said...

The human-powered ferris wheel video is cool! Though I think it's part of some festival so it isn't really relevant to the productivity issue.

Thanks for putting up MP Low Thia Khiang's video, I think he articulated the points clearly and sharply.

In political websites like TR he is often criticized by commenters for being too passive or having poor English; here I don't see that at all.

"The government's intention to use a price mechanism to manage the growth of foreign workers will probably not affect large profitable companies.

As you can read in the newspaper, most of the concerns came from SMEs.

You will probably create a divided economy with profitable companies hiring foreign workers as per normal, and struggling companies relocating or downsizing." - MP Low

Which may have the effect of cobbling the emergence of local private industry and maintaining the status quo for multinational corporations and GLCs.

"It does not look like a system designed to control the growth of foreign workers, but as a source of revenue for the government." - MP Low

Amazing that foreign worker levies will generate over a billion dollars for the government annually!

This will occur long before any productivity gain has materialized.

cy said...

A lower capital-labour ratio will promote more labour-intensive industries as it is where their comparative advantage lies.

Singapore being a developed country with higher capital-labour ratio should be promoting more capital-intensive industries, but by introducing so many cheap foreign workers, govt is distorting the capital-labour ratio,thus keeping the labour intensive industries alive.

As low thia kiang pointed out, this is like sniffing opiate, it is unsustainable,leads to low productivity and cause various social problems (negative externalities)

Only by correcting our capital-labour ratio (turnng it back to normal), then productivity can be raised, social problems can be ameliorated. Thus, i support LTK's call to abolish levy and rely more on quota instead

Amused said...

An easy way to gauge the productivity of a country is to count the number of waiters (waitresses) in a typical restaurant. If labor cost is expensive, restaurant owners will hire fewer waiters, and bingo the productivity increases!

So to increase productivity, you need to close the floodgate of cheap foreign workers first.

runroad said...

'In political websites like TR he is often criticized by commenters for being too passive or having poor English; here I don't see that at all.'

I beg to disagree, LLH. There was nothing wrong with the content of Low's speech but his earnest sing-song delivery, the unnatural cadences and inflections, the strange pauses at just fractionally the wrong moment all made the listening experience unbearable for me and I clicked him off after less than 1 minute. His spoken English, to put it politely, sucked.

Low was trying too hard and it showed. I really wish he'd stick to using Mandarin in Parliament and am certain he'd be far more commanding and effective in a language that he's comfortable with. I can listen with the greatest of pleasure to him speaking in Teochew and think to myself, 'More!' because his pronunciation, his delivery, flows and sounds so natural. But not in English, I'm sorry to have to say.

This has irritated me for years. I simply cannot understand why he does not take full advantage of his excellent command of Mandarin and force PAP to respond, in stumbling Mandarin, on his terms instead of getting caught tongue-tied and looking foolish whenever LHL (of all people) fires off a quick English one-liner at him.

Using Mandarin is one sure way of putting LKY in his place too and making him sound like an amateur. Low's brain 'thinks' in Chinese, Lee's in English and it is obvious that neither is 100% comfortable when addressed in a non-native tongue. Both mentally translate before formulating a response and it is that slight hesitation that can be used to advantage over an opponent. By insisting on using a weapon with which he is unskilled, Low has already conceded the high ground even before a shot has been fired.

End of rant.

Anonymous said...

disagree with runroad.

Speak in mandarin and you get immediately cut off form the English channel TV news and newspapers.

Low needs to connect with the English speaking crowd too, and I appplaud him for that effort.

Kaffein said...

I like his speech. He had touched on a good couple of points and also put forward suggestions. Not sure if they are workable.

But then it's just a speech if there is no sizeable opposition to challenge the PAP government, then it's still a speech and nothing is done.


Anonymous said...

I complete disagree with Runroad. It is the substance and the message that speaks volumes. Speaking in Mandarin or other dialects may not allow the English-speaking public access to his speech. Mr. Low's command of the language has improved somewhat and I give him credit. He should be the one paid millions instead of those sleeping in Parliament, who does not have to go that extra mile on behalf of their constituencies. These are the yes men going through the motions of the debate. Singapore will be better for it if we have more MP's like Low.

Anonymous said...

IMHO, Lim Swee Say is an even worst english speaker.

Lim Leng Hiong said...

"I beg to disagree, LLH. There was nothing wrong with the content of Low's speech but his earnest sing-song delivery, the unnatural cadences and inflections, the strange pauses at just fractionally the wrong moment all made the listening experience unbearable for me and I clicked him off after less than 1 minute. His spoken English, to put it politely, sucked." - Runroad

Well, he has a Chinese accent, if that's what you mean.

That's OK for me; our standards may differ because we are in different industries. Where I come from many speakers speak in sentence fragments or can't even pronounce words leaving the audience straining to understand; inflections or accent doesn't even enter into it.

By contrast MP Low's English is already very good. While I agree that his delivery can be more compelling, the content is always more important to me. I prefer clear, sharp and to the point.

Anonymous said...

read between the lines. this push for productivity is an indirect way of saying you guys are not earning enough to keep up with the Joneses.

no doubt, the rising cost of living is the cause for this productivity drive

the real issue here is where does the buck stops? if they keep pushing or raising the standard or quality of living(for themselves or for the elites), you bottom feeders will have to follow suit or die...sooner or later.

so instead of arguing along the same line as them, you should be asking....what am i working towards? heaven or hell?

do you want more duxton or will a bhutan shack be enough?

who makes the decision here?

they make the decision but it is your lusts that do the talking!!

Anonymous said...

those who have been around for the last 3 decades are probably aware of how our food courts have transformed over the years.

30 years ago, downtown food courts were more like today's hdb upmarket kopi tiam standard.

visit the latest food court joint at 313 sumerset and you will have to be impressed by how far we have come.

the quality of staple food, decor and ambiance is a class of its own.

you can't but be impressed when pretty china dolls on segway wheels come and attend to your .... thirst.

very nice but at what costs?

just work harder and pay more lah!!!

James said...

Hi Lucky,

I recall you wrote several posts showing how other countries similar to Singapore (ie no natural resources) do not have the problems (eg widening income gap) we currently face. Could you point me to those posts please? I am trying to convince someone that there are better solutions out there than what our current government has to offer.

Many thanks.

Kojakbt said...

You guys might be interested to know that we are probably the only oddball country among the 1st world nations not to consider min wage requirements for our citizens:

Anonymous said...

The debate on 'Productivity' is a valid one. But LHL and PAP are using it to distract from key issues, namely:

1. unprecedented income gap
2. no end in rise in cost of living (or lack of social safety nets)
3. the failed foreign-not-talent policy
4. billions lost through Temasek and GIC

PAP is framing the debate the way it wants. So do not be blind sided by them.

Anonymous said...

Mr Lucky

Pls lah. Dun drag "productivity" into the argument.
Otherwise you will have the MP Ong Ah Heng response. Fire old folks and replace them with more efficient workers.

Lets cut the BS (and assorted myths) and just focus on the rights of Singaporeans to reasonably paid & decent jobs.

Seriously how about organising a fund raiser for the opposition parties?

LuckySingaporean said...

anon 20:36,

Yes, you're right this productivity thing is all a distraction. It is put up by the PAP as a prerequisite to solving the other problems. Why should we improve productivity to moderate the massive influx of foreign workers. They should fix it because it is crazy - it is causing the income gap to balloon Singaporeans to sink to poverty and cost of living to rise.

My posting is about productivity not because it is the key to fixining all our problems but because the PAP has been blaming the fall on productivity on workers and businesses when their badly conceived policies are the main cause.

Whether productivity goes up, they better make sure quality of life goes up for Singaporeans or they are going to lose a few GRCs.

Anonymous said...

Low Thia Kiang is right. The solution is to remove all levies including maid levy. This is an indirect taxes on Singaporeans and is distorting the economy. It is an excellent idea. The reason why the pap is reluctant to adopt it is because 1. it is not their idea. They always quietly steal other's idea a few years down the road. They have stolen many of Dr Chee's ideas. So meanwhile Singaporeans paid the price for this dastardly behaviour.
2. they are addicted to the $4 billion collected a year from these levies.
This evil pap government is all about revenue enhancements from the masses. They just love to squeeze the masses. They are just a bunch of pathetic and frustrated souls who have to take out their unfulfilled sexual desires due to the high standards imposed by LKY's wife.

Kojakbt said...

This is taken from wikipedia. It shows that we're the only oddball among the 28 so called advanced economies not to have any min wage requirements:

* Australia - 543.78 Australian dollars per week; set federally by the Australian Fair Pay Commission[4]
* Austria - the accepted unofficial annual minimum wage is €12,000 to €14,000[4]
* Belgium - €1,387.49 a month for workers 21 years of age and over; €1,424.31 a month for workers 21 and a half years of age, with six months of service; €1,440.67 a month for workers 22 years of age, with 12 months of service; coupled with extensive social benefits[4][7] ... See More
* Canada - set by each province and territory; ranges from C$8.00 to C$10.00 per hour
* Taiwan - NT$17,280 a month; NT$104 per hour[4]
* Denmark - negotiated between unions and employer associations; 100.65 kroner, according to the terms of the country's largest collective bargaining agreement, negotiated in the spring of 2008 and covering almost the entire industrial sector[4]
* Finland - the law requires all employers, including nonunionized ones, to pay minimum wages agreed to in collective bargaining agreements; almost all workers are covered under such arrangements[4]
* France - €8.82 per hour; €1,337.70 per month for 151.67 hours worked (or 7 hours every weekday of the month)[19]
* Germany - for construction workers, electrical workers, janitors, roofers, painters, and letter carriers; set by collective bargaining agreements in other sectors of the economy and enforceable by law[4]
* Greece - €680.59 a month[22]
* Hong Kong - bill for city-wide minimum wage introduced[25]
* Iceland - minimum wages are negotiated in various collectively bargained agreements and applied automatically to all employees in those occupations, regardless of union membership; while the agreements can be either industry- or sector-wide, and in some cases firm-specific, the minimum wage levels are occupation-specific[4]
* Ireland - €8.65 per hour[27]
* Israel - approximately 47.5 percent of the average wage, or 3,850 Israeli new sheqel per month[4][29]
* Italy - instead set through collective bargaining agreements on a sector-by-sector basis[4]
* Japan - ranges from 618 Japanese yen to 739 yen per hour; set on a prefectural and industry basis[4]
* South Korea - 3,770 South Korean won per hour; reviewed annually[4]
* Luxembourg - €1,570.28 per month for unqualified workers over 18; €1,256.22 for those aged 17–18; €1,177.71 for those aged 15–17; €1,884.34 for qualified workers[33]
* Netherlands - €1,398.60 per month, €322.75 per week and €64.55 per day for persons 23 and older; between 30-85% of this amount for persons aged 15–22[36]
* New Zealand - NZ$12.75 per hour for workers 18 years old or older, and NZ$10.20 per hour for those aged 16 or 17 or in training; there is no statutory minimum wage for employees who are under 16 years old[37]
* Norway - wages normally fall within a national scale negotiated by labor, employers, and local governments[4]
* Portugal - €470 per month for full-time workers, rural workers, and domestic employees ages 18 and older[4][43]
* Singapore - no laws or regulations[4]
* Spain - €633.30 per month[47]
* Sweden - set by annual collective bargaining contracts[4]
* Switzerland - a majority of the voluntary collective bargaining agreements contain clauses on minimum compensation, ranging from 2,200 to 4,200 francs per month for unskilled workers and from 2,800 to 5,300 francs per month for skilled employees[4]
* United Kingdom - £5.80 per hour (aged 22 and older), £4.83 per hour (aged 18–21) or £3.57 per hour (under 18 and finished compulsory education)[50]
* United States - the federal minimum wage is US$7.25 per hour; states may also set a minimum, in which case the higher of the two is controlling

Every advanced nations cares for their citizens. Singapore seems to be the odd one out.

Anonymous said...

We have WIS, isn't it better than minimum wage.

Anonymous said...

Yup, I was shocked to hear LSS repeating his CBF tagline on the radio!

I am leaving this sinking ship, after I vote one last time against its management.

Anonymous said...

Vote wisely. Your flats depend on it!

Anonymous said...

How to believe in "Productivity" when our population will soon be increased to 6.5 millions?????

Anonymous said...

it's surprising how productivity has gripped me fairly recently.

you will be surprised how many companies employ people who spend most of their time doing ctrl-c ctrl-v. and then using their eyes to run through things line by line to "super double/triple/quad check", etc.

so then you go in and tell them, hey, you know what, perhaps you can download a program that helps you. perhaps you can get a custom app to achieve that.

the response is usually: no budget, IT dept blah blah, dun rock the boat, etc.

this is the singaporean mentality. we are brought up knowing that if we work seriously hard enough, chao mug the ten-year series, we will ace the exams. just work seriously rock hard, almost knocking the head hard against the wall, follow the rules and examples, then we will prosper.

All that has changed with the knowledge economy brought on by technology.

i believe that the gen x'ers have the ability to adapt and make changes. their downfall is but the fat middle mgt who talk about the glorious days of the typewriter. they are the people who print out emails and have secretaries dictate them. or worse, they record their responses and let their secretaries type out the emails.

we need to seriously work smarter, and not just ctrl-c ctrl-v. however, that's exactly what we are hired for, and companies feel better seeing a headcount, and feel seriously happy seeing them lingering in the office at 9pm, feeling that "they've got their monies worth".

Anonymous said...

Only by correcting our capital-labour ratio (turnng it back to normal), then productivity can be raised, social problems can be ameliorated. Thus, i support LTK's call to abolish levy and rely more on quota instead.

This productivity issue was raised only after they have brought in the foreign workers. they have implemented an unprecedented unproven policy on a massive scale not unlike the investments in US and Suzhou in the early part. and when that turned out bad, the blame is assigned to lazy daft singaporeans. a chicken or egg situation, if they never implemented that policy, we would never have become unproductive to that extent. between the lines i could read the ploy, the levy was a red herring (and a highly profitable one too) to distract the issue; the bottomline is they do not want to reduce the FTs. do not be naive to think they never tot about the quota angle, we are not dealing with dummies you know; the quota is exactly what they do not want.

Anonymous said...

Productivity as defined by the SIN Leaders carries no positive connotation. It only means workers have to work harder, longer with less pay.
Singaporeans have been through it many times already and the vicious cycle is getting bigger.
Only way to break and stop the cycle is to go slow with work.

Anonymous said...

We migh not have a mimimum wage policy but we do have a maximum wage policy..for the ministers. whose productivity level , given the the fact we have so many ministers (buy one get three expensive one, PM + 2 SM and 1 MM) must be extremely low

Anonymous said...

Sad that our MPs are in denial. Low is spot on. PAP screwed up big time and now we get the blame. The MPs are save, lets allow foriegners in as Ministers and MPs and then they will feel insecure

Anonymous said...

they will be more convincing in their productivity drive if not for the rewards which were much more apparent for the drivers than for the workers who washes their luxury sedans.

does remind me of preachers who have the easy job of talking(creative regurgitation) their way to wealth while the followers did all the dirty work in hope of striking it big someday.

Anonymous said...


Don't be vain. Address the content, not the delivery. Is this a speech contest?

Nonetheless, he needs lessons.

Anonymous said...

Read yesterday's newspaper - a bricklayer in Australia earns more than a graduate in Sg! And there is such a thing called professional bricklayer in Australia! I don't know what to be shocked - the fact that our graduates are so lowly paid, or the fact that it is possible to have a career as a professional bricklayer. In Sg, he would have found himself replaced by gazillion cheap Bangadesh workers in a heartbeat.

Anonymous said...

Anonymous said...

When is election?

Scroll down the above link and check out when the page was last updated.

Anonymous said...

Hi Lucky

Provocative and insightful blog here.

I'd like to add that the productivity argument is just a smokescreen -- the real problem is the lack of focus on high-value goods or services, a refusal to think different. No amount of cheap labour will help Singapore compete even with its SE neighbors, leave alone US or Europe.

The govt, in its eagerness to maintain massive growth rates, is unwilling to change focus because that would most certainly slow things down, since making a mark for high-quality products or services is a long-term affair.

Anonymous said...

Businesses only want to profit.

Improving productivity involves infrastructure and process improvements. The best workers and the best technology is a waste of money and time if the processes and infrastructure is not there. This involves substantial investment and skill on part of business leaders.

It's much easier to use cheap labour to improve profit margins than to increase productivity. Luckily, they are easy to import.

Cheap labour is a competing strategy to improving productivity. Unless wages go up, you can forget about productivity improvements.

That said, a large part of the decrease in productivity in Singapore could very well be due to the economic crisis. Product is not moving when Americans don't buy. I will not be surprised to see some (temporary, but unlikely to be sustained) improvement in productivity once the economy picks up regardless of what happens. The PAP will congratulate themselves for their own brilliance in solving the problem and sweep the election! After that, we will forget that productivity was even an issue to begin with :p

Anonymous said...

Anon 22:17,

"Low Thia Kiang is right. The solution is to remove all levies including maid levy. This is an indirect taxes on Singaporeans and is distorting the economy."

LKY used to say that our female Singaporeans would end up working as maids in other countries if Singapore fails. Funny, that the government makes money through levies out of these phillipina maids.

PAPieslied2me said...

These are the kind of leaders we have. Sigh! They use their mind in the service of their dicks rather than in the service of their hearts. We have cease to seen as "persons" by the PAPies. We're just another "tool" in the supply chain. Just a means to an end. But not the end itself.

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