I wrote about this in 2007 (let me try to find the post...) when profits as a share of GDP rose to the highest level in history. In March 2010, Slyvia Lim spoke about it in parliament[Link] when she argued that GDP growth must benefit Singaporeans. What is the selling point of a system for ordinary citizens when most GDP growth generated goes to profits of companies and ordinary citizens have to bear the brunt of cost increases resulting from the growth?
How did all this happen? In the past few decades, the govt had a policy of trying to keep wages way below productivity so that the per unit labor cost goes down. For a long time the Singapore workforce was ranked number 1[Link] and has been the key pillar of Singapore's competitiveness and success. However, the govt never got away from economy dependent on lower wages for growth and in the past few years seek to perpetuate this by importing cheaper labor from overseas. At the same time, they cut corporate taxes while raising regressive taxes such as GST. Our income inequality (measured by GINI) is now the highest in the developed world. The inequality is further compounded by govt policies that shift as much healthcare and retirement burden to ordinary citizens as possible. The Singapore govt share of healthcare cost is the lowest among all developed countries.
We are supposed to be a developed country but the quality of life of ordinary Singaporeans is nowhere near that of the citizens in other 1st world countries even as our per capita income make it look like most of us should be going to Europe for the school holidays. The GDP number has become quite meaningless to ordinary Singaporeans because their lives are not getting better. Most of it goes to profits of corporations, owned by a handful of shareholders. Increasingly, it is no longer sufficient for ordinary Singaporeans to try to work hard to overcome their economic situation...and for small unfortunate number that forms the ultra-underclass in Singapore, they are caught in a poverty trap that they can never get out of.
World country, but not First World wages? [Link]
By Sue-Ann Chia, Senior Political Correspondent
THE recession is over but bosses may not be heaving a sigh of relief. A new challenge is looming: rising wage bills.
From June, bosses will no longer enjoy any wage subsidy from the Jobs Credit scheme.
From July, they will have to fork out a higher levy for foreign workers, or pay more to hire local workers as the inflow of foreigners starts to slow.
From September, they will have to put in a higher contribution to their workers' Central Provident Fund (CPF) accounts.
And if that does not pack enough of a whammy, they also have to heed the national call to boost productivity and pay packages.
Poor employers, some would say, as they seem to be under attack on several fronts to raise wages.
But think of it the other way: Could it be payback time?
For years, companies have creamed off a larger share of economic gains - larger than those in other developed countries or industrialising economies in Asia.
As a result, workers get a slice of Singapore's gross domestic product (GDP) that is considered unusually small compared with their counterparts' share in those countries.
Workers' wages account for less than half of Singapore's GDP. In contrast, wages take up more than half of GDP in developed countries.
This means that Singapore may have achieved one of the highest per capita GDPs - at $51,656 last year - but the superlative showing may not reflect the wealth of workers or benefit them as much.
It has led some analysts to wonder if Singapore is a First World economy with what is closer to a Third World wage structure.
'Factually, our wage levels are much higher than Third World (economies'). Otherwise, so many foreign workers would not be flooding into Singapore,' notes economist Manu Bhaskaran from Centennial Asia Advisors.
'The problem is not our wage levels, which are reasonably high, but whether they are commensurate with our per capita GDP level.'
So are wage levels keeping pace with economic growth? Or is Singapore's low wage share of GDP an indication that workers have been losing out?