Sunday, February 24, 2013

The road to higher quality of life and a stronger nation...

The Worker's Party released its Population Blue Paper yesterday proposing an alternative approach to PAP\s Population White Paper. Based on the WP's approach our population size will be in the region of 5.8M in 2030 from today's 5.3M.  You can read the Blue Paper here.

Parts of the proposal was attack by PAP ministers during the parliament debate:

"The Workers Party's proposal to stop taking in additional foreign workers until 2020 is drastic and very risky, Second Minister for Trade and Industry S. Iswaran told Parliament on Thursday.
It will speed up business closures and cause Singaporeans to lose their jobs. The economy could spiral downward, and result in a loss of the country's reputation in the business and investor community."
-  BT Report on the Parliament Debate[Link
The argument that a freeze in the influx of foreigners will cause business closures is absurd. When businesses cannot get new workers easily, they may not be able to expand as quickly as before but why would they close existing business that is profitable and has already workers. By allowing easy access to foreign workers in the past, we saw the economy over-heating during periods of expansion. Rentals and other business costs shoots up and wages come under pressure and businesses demand even more cheaper foreign labor to stay profitable. Singaporeans have seen all the deleterious effects of cost of living shooting up and wages falling behind - for this reason, Singaporeans find strong economic growth painful rather than beneficial.

As for the "loss of the country;s reputation",  I think you should ask what we have promised businesses coming here. Right up to the late 80s early 1990s, Singapore attracted foreign investments because Singaporeans were the number 1 workforce in the world i.e. they came here primarily to hire Singaporeans.  The world changed when China was plugged into the world trade in the late 90s.  At that time, there were choices to be made on how to restructure the economy, how to be less dependent on FDI and  we will compete in the world. We are here today because the PAP chose to open the floodgates to foreign labor to keep the FDI coming. None of our competitors took the same path, at least not in the same extreme way it was done by the PAP - these along with financial sector deregulation are simple brute force approaches that our competitors chose not to adopt due to foreseeable problems for its citizens in the longer term.  When Minister S. Iswaran spoke about the "loss of  the country's reputation", it is our reputation to allow businesses to easily hire  workers from anywhere they want, retrench them easily, minimal regulation to protect workers' rights, pro-business govt controlled unions and extremely business friendly policies. All this builds up in cycle of rising dependence on FDI and foreign workers. The question for Singaporeans is whether we want to go further down this path and worsen the problems of income inequality, declining quality of life, structural unemployment, stagnant wages and poverty.

"The bottom line is that Singapore can survive economically, even prosper, without further large increases in foreign labour and immigration. A reduction in both will also deliver compensating benefits, such as lower housing costs, higher domestic consumption, lower income inequality and a less congested, more environmentally friendly city whose residents may even be willing to have more children."
 - Professor Linda Lim,  the Stephen M. Ross School of Business at the University of Michigan in the United States [Article Below]

The Worker's Party Blue Paper was quickly attacked by the business lobby.

"With no growth in foreign workers, the impact on the economy and Singapore's competitiveness would be disastrous. The livelihood and well-being of Singaporeans will be compromised,"
- SBF [Link]

None of our economic competitors compete with us by importing foreign labor on such a massive scale so why do we have to resort to such extreme policies for so long? The demand by businesses for foreign workers is unquenchable. When a business becomes more competitive by hiring foreigners, its competitors have to do the same in order to compete. As more foreigners come, the pressure on our infrastructure will increase and we need more foreign workers to come to build the new infrastructure. Unless there is a freeze or severe reduction, the cycle can never be broken and the dependence of our economy on foreigners will keep growing to a point we will not have any control. As for the point that well being of Singaporeans will be compromised,  let me asked what happened to the well being of Singaporeans in the last 10 years?  If the well-being of Singaporeans has not been hurt, you think you can get thousands of Singaporeans to stand in the rain demanding change from the govt on 16 Feb 2013 at Hong Lim Park. Doubling of the cost of housing, stagnant wages caused by the foreign influx does not hurt the well-being of Singaporeans?  The SBF is so obsessed with protecting interest of its members, it has become blind to the plight of Singaporeans.Throughout the last 10 years, the SBF was perfectly alright with Singaporean workers’ well being compromised so long as .its members benefited from govt policy ..for them to say they are worried about us when their real intention is to protect the short term interest of its members is pure hypocrisy.

There is constant rhetoric from the PAP that the WP's proposal to freeze the number of foreign will stall the badly needed build up of housing and transport infrastructure.  If you read the WP's Blue Paper, it proposes not just a simple freeze in the foreign labor force, but a reallocation to sectors that need them the most such as construction from sectors where jobs are taken away from Singaporeans - this will reduce the stress on our infrastructure faster than adding 90K more each year to our population as proposed in the White Paper. If you analyse what the PAP has done last year, the measures including raising the levies of Work Permit holders for lower-skilled workers and raising the salary criteria for Employment Pass actually tightened the influx of low skilled workers to construction jobs that Singaporeans don't take and kept the influx of foreign PMETs  that compete for the same jobs as Singaporeans.

We know that alternative approaches exist and can work because many countries have found alternative approaches that work - these include big and small countries with low fertility (almost all developed countries have this problem) in Asia and Europe, with or without natural resources, all competing in the same global market place as Singapore. The PAP approach cannot work for the simple reason that the majority of Singaporeans understand clearly the deleterious outcomes and will stop it in 2016 or earlier before we get to 2030.

"Of course we do acknowledge that the businesses do need to adjust and as in any economic restructuring there will be certain pains and there will be certain businesses that can restructure to meet this new environment. There will be certain businesses that are very dependent on cheap foreign manpower and they cannot survive.

"I think this is an adjustment that Singapore will sooner or later go through and we are asking for an alternative - to look at the scenario, what happens under this proposal, what is the eventual population target and then we have to look at what we have to do to help these companies make that bridge if we believe that it is important for us to have a sustainable Singapore. Then we will all have to work together to look at how to help the companies, who can adapt to this environment over a period of time. It can also be through policies, it may not be only through manpower numbers, because there are a lot of things hurting companies."
- Non-Constituency Member of Parliament, Yee Jenn Jong

The real choices are for us to make the change now or to go down the further on the trajectory proposed by the White Paper which will result in  even more disruptive changes when the dependency on foreigner workers increases further and ordinary Singaporeans force a change through the ballot box because they can no longer accept the outcomes.  Singaporeans have no illusions that changes now will come without pain to anyone but its is better to do it now than to pay a bigger price latter on. The PAP can continue to sell its White Paper, day in, day out on the papers and TV media that it controls can keep telling us the virtues of its approach to our problems. But all the talk and all the propaganda cannot overcome what ordinary Singaporeans know from what they actually experience in their lives...that is the ultimate truth for Singaporeans .

Can slower growth lead to a stronger nation?

Feb 22, 2013


Reducing Singapore's dependence on foreigners won't affect living standards if productivity and wages rise.

By Linda Lim For The Straits Times

THE current debate about Singapore's population policy seems to assume that fewer foreign workers and lower immigration levels will hurt economic growth and businesses - and thus Singaporeans as well.

Other affluent economies with low fertility, ageing demographics and small populations have managed to achieve continued if modest improvements in living standards without importing large numbers of foreign labour and talent. There is no reason why Singapore cannot do the same, by borrowing from technological and business process innovations that are already implemented elsewhere.

Higher productivity (more output per worker) can substitute for more workers in achieving a particular gross domestic product growth rate.

Lower aggregate growth is not just inevitable for a mature economy, given diminishing marginal returns to added inputs of labour and capital. It may also be desirable, when real income (discounting for inflation) and total well-being (reduced congestion, environmental degradation, income inequality, social unease) are considered.

Locals fuel the economy

ECONOMICALLY sustainable activities that may generate lower growth but employ a higher ratio of Singaporeans will also contribute to higher wage and domestic shares of GDP (Singapore's are currently among the lowest in the world). Simply put, a higher proportion of a given dollar of GDP will accrue to Singaporeans, so local living standards can be maintained or increased with slower growth.

Policy instruments to achieve this could include: investment incentives tied to the hiring and training of Singaporeans, and awarding work permits and employment passes only after a process ascertaining that there are no qualified Singaporeans for the jobs (standard practice in the United States).

Higher wages would encourage employers to improve productivity and attract more Singaporeans into particular jobs, giving both an incentive to invest in upgraded skills (since there will be a higher income payoff).

Businesses that cannot afford the higher wages would exit, releasing workers for those businesses that remain. A reduction in demand would alleviate any labour shortage. Fewer foreign workers would also ease pressures on the housing market and on commercial rents, so businesses may benefit from lower or more slowly rising rents even as they pay out higher wages.

Reduced foreign capital inflows to purchase property, and other investments, would mitigate asset inflation and Singdollar appreciation, thus helping to maintain cost competitiveness.

Higher wages with higher productivity together with moderating rents do not necessarily mean higher costs. But if they do, these are costs Singapore's consumers will have to pay. As consumers are also workers, their real incomes may increase with higher salaries, lower rents and mortgage payments. If those enjoying higher wages are Singaporeans (rather than foreigners with higher savings rates and remittance outflows), the multiplier impact of their local spending will be greater - their higher costs are other Singaporeans' higher income, most of which is spent in Singapore.

Better productivity, different mindsets

MANY high-income economies have trodden this path of increasing productivity before Singapore.

However, emulating their market-derived solutions requires mindset and values shifts among Singaporeans. Consider three sectors in Singapore that are labour-intensive, and usually considered low-wage, low-skilled and low-productivity jobs that "Singaporeans don't want to do".

First, the construction industry: in no other high-income country is this associated almost exclusively with foreign labour from neighbouring countries.

In the US, this is a high-wage, high-skill, capital-intensive industry employing mostly unionised native workers, with high safety standards, sophisticated equipment and processes. Construction workers earn at least twice the median national wage in the US state I live in; their hourly wage is probably three times higher.

Some Singaporeans would be willing to work in this sector if adequately compensated, while construction firms would employ them at high wages if productivity was sufficiently high.

Second is the food and beverage (F&B) industry. In even high-immigrant big cities and on the coasts of the US, most restaurant workers are Americans. They include students or mature individuals (mothers, retirees) working part-time for extra income or social interaction, as well as seasoned professionals for whom this is a full-time, long-term career. Skills in conversing, understanding customers, knowledge of the menu and wine list are required and rewarded, with tips that average 20 per cent of the bill and can be much higher. There is a strong monetary incentive to develop skills and even a personal brand, and aspiring job candidates often queue up for months and even bid (pay) for the privilege of waiting tables at expensive restaurants. In the kitchen, much food preparation has been automated and outsourced to specialist food services such as Sysco.

In Singapore, the use of temporary foreign workers and the standardised service charge has kept wages and upward mobility low, thus discouraging the participation of Singaporeans in this sector.
Third is the domestic service industry of household help, care for children, the elderly and disabled.

This is a heterogeneous sector, but nowhere in the rich world is the dominant mode of operation that of the individual maid bound to a single individual or household. Rather, professional services of house maintenance, cleaning, food preparation and delivery, child and elder care and transport are the norm, compensated at hourly rates many times the minimum wage. Many self-employed workers in this sector simultaneously serve multiple clients, some for many years at a stretch or to work part-time, while private enterprises employing such workers provide a range of customised services.

Many offering child and elder-care services are personally dedicated to helping others, or are training for careers in teaching or nursing. Foreign workers in both this sector and F&B are usually new long-term immigrants, not temporary guest workers, so integration into the majority society is only a matter of time.

Improving wages, status

IN ALL three sectors, much higher wages would both attract more workers and encourage investments in higher productivity methods.

But there is also a mindset shift required, which is the social status and value collectively ascribed to such occupations.

In the US, social barriers are highly permeable and there is respect for hard work, enterprise and professionalism even in "blue collar" or manual service occupations, helped by the fact that they may pay better than many "white collar" jobs.

A social egalitarian ethic in Europe, and national group solidarity in Japan, both regions with limited income inequality, fulfil the same role. More money alone cannot compensate for lack of respect, which in Singapore is inordinately directed by and towards those with academically based credentials and professional achievement.

This analysis could be extended to many other occupations, such as highly compensated "skilled trades", and personal services (such as the beauty and wellness industry), which are particularly attractive to self-employed entrepreneurs.

Many solutions are possible but businesses will be motivated to innovate only if the easy alternative of importing low-skilled, low-wage foreign labour is restricted. Innovations could be accelerated by temporary public subsidies that would not cost more than the investments in the housing and transport infrastructure required to accommodate a larger population.

Slower growth, stronger nation

THE situation at the higher end of the labour market is more complex, given the global or regional role many companies fulfil from their Singapore base and the geographically mobile talent that they may require.

Employment passes should be flexibly awarded according to the need and value to the nation of a particular company. Businesses should professionalise human resource practices to maximise recruitment of Singaporeans, for example through school or university partnerships and campus recruitment efforts.

The bottom line is that Singapore can survive economically, even prosper, without further large increases in foreign labour and immigration. A reduction in both will also deliver compensating benefits, such as lower housing costs, higher domestic consumption, lower income inequality and a less congested, more environmentally friendly city whose residents may even be willing to have more children.

Businesses and people can adjust to slower labour growth as they do in other countries. The nation - which is more than its GDP - will be the stronger for it.

The writer, a Singaporean, is professor of strategy at
 the Stephen M. Ross School of Business at the University of Michigan in the United States.

Saturday, February 23, 2013

Frontline Connects《前线开讲》: Whitepaper on Population

If you have been away for 2 months and have not kept up with what has happened in Singapore and you get back to watch this show on Channel 8 yesterday , you will get the impression that most people in Singapore support the White Paper. The programme started by saying that the White Paper by the govt has created plenty of "interest" among Singaporeans. It does not say anything about the anger it has caused and not a word about the biggest protest in Singapore for several decades against the White Paper.  They showed a segment in which every man and woman t hey interviewed on the street before the show supported the White Paper. The panel consisted of members who generally supported the White Paper with some  concerns such as transport and housing that the govt has already admitted are problems.

Good old fashion propaganda.

The one thing they cannot control unless they cheated was the live online poll that asked the question:

"If there is a reduction the number of foreigners , will you accept a slowdown in the economy?"  : Vote Yes or No.

92.5% voted "yes" and 7.5% voted "no".

After the result of the poll was announced, Grace Fu did an incredible thing. She reinterpreted the question to mean : "If there is a reduction in the growth in number of foreigners in our population , will you accept a slowdown in the economy?" and concluded t he poll showed that most people agree with the White Paper which proposes a growth in foreign workforce smaller than that of recent years.

Amazing. If most people had voted "no" y ou can retain the original question and say the people agree to growth in the foreign workforce as proposed by the White Paper in exchange for economic growth. So whether they answered "Yes" or "No", by reinterpreting the question you can choose to conclude that most people agree with the White Paper.

I guess being a minister is not easy because it takes a lot of effort to block out genuine feedback and reinterpret opposing opinions. Of course with an elitist system that build Ivory Towers higher than the Empire State Building, understanding what is happening on the ground is difficult. Pain and frustration is just an abstraction one person away - you may not be able to understand it even if you sit next to the person or talk to him everyday.  Empathy is not so easy...and especially difficult if your mind is cluttered with ideology.

A few days ago, it was report that our income inequality has risen to the highest level (GINI, OECD scale) ever.

"For the lowest 20th percentile of employed residents, their real gross monthly income rose 0.1 per cent each year from 2002 to 2012 and 2.2 per cent a year from 1996 to 2002." -Incomes at bottom continue to rise, says Chan Chun Sing

It is incredible denial when a minister says "incomes at the bottom continue to rise" when it has risen an imperceptible 0.1% a year for a decade - if a worker earns $800 a month we are talking about an increase of $0.80 per year. Anyone one else looking at the same numbers will be shocked and asking why the income of 1 in 5 Singaporean workers has been stagnant for 1 decade and what can be done about it - most normal people will say this is not an acceptable outcome and drastic action must be taken. But the minister who is the highest paid minister in the world among his peers doing the same job looks at the same data and has a completely different interpretation.

Singapore is now the 6th most expensive city in the world. It is a really bad place to be earning a low income but we have 450,000 workers with income below $1500 a month and 300,000 earning less than $1000 a month based on data from the CPF Board. How did things get so bad? Year after year they deny there is a real problem and refuse to make fundamental changes to the system. ..that is why we are in such bad state today.

Friday, February 22, 2013

The truth about the Silver Tsunami and Supporting our elderly....

During his speech at Hong Lim Park on 16 Feb 2013, a very energized Leong Sze Hian lambasted the White Paper for its claim that the large foreign influx is needed to support the elderly in Singapore so that they can have a better life:

"I tell you that the very basis of the white paper is wrong. Because it says the population is aging, people are not producing babies that is why we need immigration. You know what’s the problem? In the developed countries they have this problem, why? They have pensions, cost government money. Do you have pensions?
Is your CPF your own money?
In the developed countries, they have universal healthcare. Do you have universal healthcare?
The development counties have welfare, do you have welfare?
So what is the problem with the population aging when the government is not spending any money on the aging population?"
- From The Online Citizen[Link]
Under the PAP system, the elderly takes care of themselves with whatever money that have saved up while working and the amount they have accumulated in their CPF. When they retire, they have no income unless they are among the minority who have done so well  that they have sizable investments and assets that yield a good return. But for most people, all they have are their savings and CPF to live on when they retire. Their biggest concern is the rise in the cost of living and cost of medical care.

"According to a latest study by HSBC, the citizens of this country, which has one of the highest per capita incomes in the world, face the grim prospect of running out of their savings almost halfway through retirement as the high cost of living and increased life expectancy eats into their nest egg.

Singapore has gradually moved up human resources firm Mercer's global rankings of the world's most expensive cities, moving to sixth place in 2012 from eighth in 2011 and eleventh in 2010." - CNBC Report 
The real problem with retirement is the rising cost of living. So what has driven up the cost of living? One of the factors is overcrowding caused by the high foreign influx - this high population density pushes up the cost of everything from housing to rentals to the cost of private transport. The PAP proposal to import more people in the coming years is will hurt the large number of Singaporeans who are retiring as part of  Silver Tsunami. The White Paper claims that more foreigners and a higher living density will lead to better quality of life is not . Actually I don't have to waste any more bandwidth to explain this, because we already see many of our elderly right now suffering from the high cost of living resulting from PAP policies.

When people are hurt by the consequences of the PAP policy, what is actually on the mind of the PAP leadership when people fall into hardship? Suppose due to high inflation rate of 4.5%, you are a retiree finding it hard to cope in the 6th most expensive city in the world because as a wage earner during your working life you earned nowhere near the 6th highest salaries in the world for your profession - this is true for many today who will retire as part of the Silver Tsunami because we have the 2nd largest income gap (sometimes largest) in developed world and a 3rd world wage structure..,..much of this due to the policies of the PAP...suppose you seek help when you find you can't cope through no fault of your own. 

I would like thank, PAP member Victor Lye, for his frank and honest Facebook posting of what he thinks when people come to him for help during MPS. In case you don't know who Victor Lye is, he is a  member of the PAP tasked to win back Aljunied GRC[his impressive resume, a speech he gave].  He is the head of PAP's Bedok Punggol branch. I truly appreciate Victor Lye's honesty given the White Paper's hazy unsubstantiated promise of "better support and better quality of life" for elderly Singaporeans if only we allow the foreign influx to continue.

Here is what Victor Lye said:

PAP member Victor Lye did not sugar coat or fudge what he really believed to make it acceptable to ordinary Singaporeans.  Please read what he wrote a few times so that you understand clearly what he means. Whatever the consequences of PAP's economic policies, at the end of the day, you are responsible for your own retirement. If your financial situation makes it hard for you to stay in high cost Singapore, then you should adapt to that situation by moving out. The PAP is not going to hand out "goodies" because it cannot "afford" it. So you're are very much on your own...if you have a HDB flat, sign up for the lease-buy-back to get some money from it - when you leave this world, the bulk of what you worked for goes back to the govt and you leave nothing for your children. This is the reality right now when our old age support ratio(OASR) is near historic high at 9.8 (it will decline towards 2030) and the govt surplus is $5B. There is little govt support now and there will be little govt support for those retiring in 2030 under the present system regardless of OASR so the argument that we need to bring in foreigners to support our elderly is bogus.

That the PAP does not believe  in the increased sharing of financial burden of caring for the old is clear over the years - if you still believe the PAP's rhetoric of being compassionate and caring towards the old because you see our PM giving out a few ang pows to the old during Chinese New Year...good luck to you.  In the past, when the cost of living was contained....  Singaporeans could pay off  housing loans within 10 years and accumulate CPF funds and savings for retirement  so they bought into this idea that everyone should takes care of their own retirement with money they earned while working. The conditions under which this philosophy was accepted by ordinary people was never preserved. After the financial burden of caring for the elderly was shifted to individuals and their children (by way of Maintenance of Parents Act),  we saw, as a result of PAP's economic policies, the huge rise in cost of living, stagnant wages, structural unemployment , income gap, rising cost of medical care etc that hurts the financial ability of Singaporeans to retire. The pro-business policy of allowing cheaper foreign labor resulted in a wealth transfer from wage earners to corporations. The PAP is now pushing for a continuation of the current economic model and policies.

In the coming decades, more Singaporeans will reach retirement age without the financial ability to retire comfortably due to our 3rd world wage structure and high cost of living - a consequence of PAP policies. But like Victor Lye so honestly explained, the PAP view is that those who are not rich should adjust to a lower a quality of life and if necessary, leave the country to stay in a cheaper place. This is the only way to be consistent with PAP's ideology and its resultant policies. We are told often the PAP approach is the best for us and is the only way to sustain our nation. If you choose to accept this, the outcome is all laid out as Victor Lye has honestly described. If you choose not to accept this, you cannot squeeze an alternative from the PAP because such a solution is likely to run counter to their ideology and the PAP leadership will never believe it can work even if there is overwhelming evidence to support it. For this reason, the PAP has lost its ability to solve problems faced by Singaporeans. As the problems mount, the PAP solution is actually a non-solution, they will simply tell Singaporeans to live with it and solve their own problems. 

Singaporeans can dream of fairer wages for their hard work, a proper retirement, better quality of life with less stress, affordable heath care and housing, higher equality, ...but year after year, the problems that Singaporeans face just get worse despite paying our political leaders the highest salaries in the world to solve these problems for us..not only are they not solving these problems, they are starting to sell us ideas that will clearly make all these problems worse and packaging them as solutions to our problems. If the PAP has other overriding considerations such as the perpetual need to attract foreign capital, generate economic growth and they really have no fundamentally different ideas of how to run this place other that those they have executed, it is better for them not to fudge the outcomes and create false expectations. That many Singaporeans face the risk of a poorer quality of life because the PAP does what it believe is the best way to sustain this city-state, should be honestly presented to us instead of a fairy tale rising quality of life that we will never experience. The PAP often does this to sell its policies and when Singaporeans experience the opposite trust is eroded. 

When the PAP started importing foreigners, they sold the policy by telling us that foreigners are here "to create better job opportunities for Singaporeans", Singaporean workers experienced the opposite of this. There has been intense competition for jobs and downward pressure on their wages. We are now told the proposal in the White Paper will elevate the quality of life and provide support for our elderly. We know this is not true - quality of life will decline in an overcrowded Singapore and our elderly will suffer due to the high cost of living. If the PAP proposal in the White Paper is purely to sustain economic growth because ideologically the PAP believes things can never be better with slower economic growth, as proposed by WP, and that whatever quality of life we achieve in 2030 even if it is bad, is still better that something we can achieve with slower growth then they should be honest enough to say it so we can get to the real policy tradeoff and debate it. Painting a fairy tale that every knows is not true to sugar coat the proposal simply enrages Singaporeans and make them question the integrity of the govt. 

Wednesday, February 20, 2013

Busting the myths about welfare states...

"The transformation from farming societies to industrial societies was accomplished with a high degree of equality not only with regard to income and wealth, but also in everyday life and in the workplace. The barriers between workers and managers are low. Consensus is the leitmotif. The labour force is actively engaged in innovation and efforts to enhance productivity. Why? Because there is a fairly even distribution of the fruits."  - Article Below on Denmark.

Welfare is not always good or always bad but it has been a dirty word in Singapore since our ex-Minister Mentor rose to power and led us based on his hard truths. My view is it is best to have an economy that pays people well for the work they do and there is fair distribution of wealth ...and welfare restricted to those who are sick, disabled, poor and elderly...the most vulnerable in our society. Unfortunately, we have the largest income gap (sometimes 2nd largest) among developed countries and many work full time and cannot make ends meet. The situation is so bad, even the PAP resort to the handouts in the form of workfare to help keep 400,000 Singaporeans and families afloat.  Although Workfare is a form of help for those who really need it, it helps to prolong this highly unequal system and avoid fundamental changes.

"Apparently the welfare system encourages people to start new enterprises and not the other way around or at least does not constitute a barrier for doing so. It is easy to get started and there are few psychological inhibitions; the Danes actually do it.

However, they do not seem able to turn new born enterprises into sustainable, growing enterprises. There may be many reasons for this, but a limited market combined with inhibitions about entering foreign markets may be one of them. High taxes underpinning the welfare system may be another factor preventing growth through limiting capital. Business organisations hammer away at this point, but there is little evidence to substantiate it at the moment."

The PAP has kept taxes for the wealthiest citizens and corporations low. The low taxes and the corresponding low social spending in a country where inequality is very high has deepened the effects of inequality,   They have told us this low social spending and low progressive tax model is the best way to grow our economy. Many Singaporeans have come to accept this as the gospel truth - among developed countries,  Singaporeans pay the most out of our pockets when we get sick, we spend the least on the most vulnerable, the poor and elderly, in our society.  If what the PAP has been telling us is true, Denmark should have a sickly and weak economy because it spends so much on welfare and taxes are high. But this is not true, Denmark has a vibrant innovative and productive economy and great homegrown companies such as Novo (world's most sustainable company) and Lego.

"China entered the global economy, labour arbitrage undermined Sweden's investment goods industry. A switch into other economic and industrial sectors was required. It was done faster than for similarly structured but larger countries such as Germany and Japan."

When China entered the global economy with its cheap labor, Scandinavian countries successfully restructured their economies rather than compete head on using cheap imported labor.

"Second, the Danes want to keep the welfare society. Over the years several political parties have offered lower taxes, but this does not strike a chord with the voters who smell the quid pro quo: lower welfare - and they do not want that."

They have also successfully reverse their low birth rates to a level closer to replacement level TFR.

While we cannot simply imitate these countries, we cannot always believe there is only one narrow road without any other viable options. The Danes have done things that are often the reverse of what in done in Singapore and achieved dramatic results. We cannot say we have nothing to learn from them and that the hard truths of one man and strict ideology of one party lead us to the best outcomes for our society.

Busting myths about welfare states

Four Nordic countries, with Denmark in the lead, are showing that the social welfare system should not be vilified

Byjoergen oerstroem moelle

Staying afloat: The district of Nyhavn in Copenhagen; the Danish policy is to use social welfare to keep citizens inside society by offering a decent living standard through income transfers which gobbles up a sizeable amount of money but brings along a higher degree of social stability. - PHOTO: AFP

MOST of Europe and the US struggle to sort out the mess created by the 2008 financial crisis while watching in half-disbelief as four Nordic countries (Denmark, Sweden, Norway, and Finland) sail through the storm in good order.

Circumstances may have favoured them. Norway is an oil exporting country. Denmark is self-sufficient in energy. Sweden had its crisis in the early 1990s. Finland managed to restructure the economy with strenuous efforts after the shock when the Soviet Union collapsed.

All four have small populations making restructuring easier. When China entered the global economy, labour arbitrage undermined Sweden's investment goods industry. A switch into other economic and industrial sectors was required. It was done faster than for similarly structured but larger countries such as Germany and Japan.

These Nordic countries are historically homogenous, firmly anchored in the Protestant religion connoting certain ethical values influencing work ethics and mutual trust. Only recently has immigration taught them that the world is multicultural and it is not without struggle that they face integration of people with another culture than their own.

The transformation from farming societies to industrial societies was accomplished with a high degree of equality not only with regard to income and wealth, but also in everyday life and in the workplace. The barriers between workers and managers are low. Consensus is the leitmotif. The labour force is actively engaged in innovation and efforts to enhance productivity. Why? Because there is a fairly even distribution of the fruits.

Gender equality is high with participation of women in the workforce almost at the same level as for men. Add free tuition at universities plus generous grants to students (one per cent of GDP is used to support 287,000 students) and talent is rarely wasted because of gender, race, or lack of money. Equality has grown out of history, traditions, and cultural patterns over decades and is not easy to imitate elsewhere.

Social transaction costs - the costs of running a country or society - is often perceived as the public sector's share of GDP. This is misleading to say the least. It is a choice whether these activities are offered by the public sector or private businesses.

The US devotes 16 per cent of GDP to the health sector; Denmark 10 per cent. Is the US health system more cost-effective than the Danish system? A comparison made some years ago shows that publicly mandated social expenditure accounts for 20 per cent of GDP for the US and 24 per cent for Denmark with few people disputing that the Danish system reaches out to a larger share of population.

The main difference may be found in the attitude towards those citizens not capable or willing to take part in the productive part of society. The Danish policy is to use social welfare to keep them inside society by offering a decent living standard through income transfers. That gobbles up a sizeable amount of money, but brings along a higher degree of social stability with low enforcement costs. The US approach tends to turn them into outcasts leading to high enforcement costs. The US has 265 people per lawyer; Denmark 1,135. The US spends about US$70 billion on jails (0.5 per cent of GDP) and 7.3 million people are under correctional supervision, equal to more than 3 per cent of the adult population.

From 1980 to 2012, higher education costs in California fell 13 per cent calculated in constant prices while expenditures to prisons and associated corrective systems went up 436 per cent. California spends more on prisons than on its higher education system. Danish total expenditure for the legal system including prisons and associated corrective institutions is US$0.5 billion (0.2 per cent of GDP) with 4,100 persons in jail.

All comparisons are at best open for interpretation but evidence seems sufficiently solid to warrant the conclusions that overall it may be cheaper to run Denmark than the US, measured as share of GDP. And this only incorporates direct visible expenditure not taking into account negative effects from a recalcitrant or even hostile section of the population incurring security costs for business and individuals.

The social welfare system has been vilified and accused of making people less interested in initiatives, starting new enterprise and displaying entrepreneurship. A Danish study from 2011 reveals that 12 per cent of all Danish enterprises are less than one year old, among the highest for OECD countries. But the share of all enterprises growing to more than 10 employees over two years are below the OECD average albeit higher than for Sweden and Norway.

Apparently the welfare system encourages people to start new enterprises and not the other way around or at least does not constitute a barrier for doing so. It is easy to get started and there are few psychological inhibitions; the Danes actually do it.

However, they do not seem able to turn new born enterprises into sustainable, growing enterprises. There may be many reasons for this, but a limited market combined with inhibitions about entering foreign markets may be one of them. High taxes underpinning the welfare system may be another factor preventing growth through limiting capital. Business organisations hammer away at this point, but there is little evidence to substantiate it at the moment.

Learning society

In Denmark, people learn from their time in the kindergarten to almost to the time they die. Danes have a learning society. The kindergartens with an overwhelming share of children enrolled may be the crucial factor. Children are supervised by trained teachers. They learn to be creative, to use their imagination, they learn to learn, and to work in teams. They grow into human beings. It is a costly system financed by the public sector, but the investment may be one of the most profitable undertaken by any society.

After school, when the Danes enter the workforce in whatever capacity, they join lifelong learning.

The European Lifelong Learning Index comprises a total of 36 indicators. In addition to the main index, there is a sub-index for each of the four learning dimensions:

"Learning to know" looks at traditional formal education;

"Learning to do" covers vocational and job-related training;

"Learning to live together" summarises informal social learning activities during leisure time; and

"Learning to be" refers to independent learning for the sake of personal development and well-being.

Denmark scores highest in almost every category, edged out by Sweden only in the area of continuing education on the job. Denmark is top among EU with 28 per cent of Danes between 30 and 64 years of age participating in some kind of learning activity over the preceding four weeks. About 0.42 per cent of GDP goes into life-long learning compared to 0.05 per cent for the US.

The much lauded flexicurity in the labour market is anchored in life-long learning combined with generous unemployment allowances paving the way for enterprises to adjust the workforce without much restriction (unemployment rate 5.7 per cent). Many observers take it for granted that a welfare system is synonymous with an inflexible labour market. The Danish system shows it is the other way round with a genuinely flexible labour market where life-long learning channels unemployed people back to work, but in other functions than those lost to foreign competitors.

The international debate must not be allowed to overlook the debate inside Denmark. The rest of the world may fall into a swoon, but the Danes are not carried away; they voice scepticism and criticism looking for weaknesses, flaws, and shortcomings.

The Danes find the model exorbitantly expensive with half of GDP going into the public sector and total taxes running at 48 per cent of GDP. Nevertheless the public sector manages to run a decent budget deficit (3.9 per cent of GDP) and debt/GDP ratio is at the low end among OECD countries.

The question is whether such a large public sector is sustainable. Employment in the private sector generating the wealth to keep society running is falling. The response is interesting.

More for less

First, the administrative part of the public sector has been modernised and made more efficient. The number of bureaucrats can be estimated to 20 per cent of publicly employed people. Some 80 per cent perform services in demand by the rest of society. More for less has been achieved by a variety of means. The basic administrative framework for local communities has been recast over the last decade.

Second, the Danes want to keep the welfare society. Over the years several political parties have offered lower taxes, but this does not strike a chord with the voters who smell the quid pro quo: lower welfare - and they do not want that. But they are ready to trim the welfare benefits to preserve the core functions. From a record 60 per cent of GDP, the share of the public sector has fallen to 52 per cent. A consensus is growing that the limits for how much the productive part of society can shoulder has been reached.

Going back five or 10 years and mass media reports were about social losers and how they were let down. Today, the attention is about whether society does too much to help those not really wanting to help themselves. If a seminal shift occurs, the welfare system will become less generous.

Third, the Danes are a bit slow on the uptake, but it has gradually dawned upon them that the survival of the welfare state depends on the ability to turn welfare activities into export industries. Hitherto the angle has been to provide services to the Danish society.

Unless the Danes can combine high quality, but expensive welfare benefits to their own citizens with a flourishing export business of the same services, it is highly doubtful that such a costly creature can survive the onslaught of a comparatively low growth pattern.

But if successful, it will be one of the masterstrokes in economic adaptation and position Denmark and the other Nordic countries in an enviable situation generating money by exporting welfare services channelling those money back into keeping the system going.

The writer is visiting senior research fellow, Institute of Southeast Asian Studies, Singapore, and adjunct professor, Copenhagen Business School and Singapore Management University

Xenophobia label used to attack opponents of bad policies.....

Above is BBC's coverage of the protest at Hong Lim. The first part discusses the trade-off for Singaporeans and how the low TFR has led to the need for immigrants in our country. Everyone that spoke missed the point that the foreign influx is far larger than what is needed to compensate for low TFR - we had influx upwards of 100+K per year which is many times higher than the number needed to compensate for our low birth rate. But what I find interesting is the discussion on xenophobia towards the end of the programme. A foreigner, Simon Littlewood, who lived in Singapore for 20 years said:

"Well I have lived there(Singapore) for 20 years now. I think it would be unfortunate to exaggerate what is going on. Well having said that, I was the subject of a xenophobic tirade for the first time ever in Singapore a few months ago which gave me a sense of feeling (?)...wealthy foreigners are extremely visible in Singapore. Despite Singapore's per capita income being among the highest in the world, there is a significant percentage of Singaporean households that earn very little money and I can understand how this sense of displacement must be difficult. But the fact is the system in Singapore by the PAP is based on the notion that if you make Singapore a welcoming place for wealthy corporations and foreigners by taxing them and taking their money you can provide an environment which is beneficial for all. Unfortunately, that foreign money has led to extreme growth in cost...that hurts the society"....

For those of us who are against xenophobia, we are dismayed that it has surfaced in the past few years. Singaporeans, being the children and grandchildren of immigrants, are generally not xenophobic and we have welcome foreigners in the past when they came in at a sustainable rate. B ad policies in recent years have led to negative effects that have caused Singaporeans to be angry. Many have directed this anger at govt policies that they feel should be changed. Unfortunately, the mainstream media, the PAP and staunch PAP supporters have often pinned this term "xenophobic" on opponents of PAP policies. The latest episode is the accusation that WP's Low Thia Kiang had incited xenophobia by speaking up against the White Paper.

But read and think about what Simon Littlewood said in the BBC interview. What has caused the rising sense of insecurity and displacement among Singaporeans? It is easy for those of us who live in financial security and in comfort to tell others to behave better and not misdirect their anger at foreigners who are just here to better their own lives and support their families back home. I personally have not felt any threat to my job and my financial security so it is easy for me not to harbor any negative feelings, But put yourself in the shoes of Singaporeans struggling under intense competition with wages depressed by foreign workers willing to take the same job at a lower pay...and the breadwinner who lost his job due to his age to younger imported workers. We should spare some thought for those who have suffered and to label their feeling of insecurity and anger as xenophobia ...and their cries for help and frustration as xenophobic is arrogant and simplistic. For those who have implemented or supported these extreme policies that has pushed a large segment of the population to the edge to now stick ugly labels and demand acceptance is just irresponsible, insensitive and shameful.

Monday, February 18, 2013

Promises not backed by action.......

"I am concerned about less-skilled Singaporeans, whose jobs and wages are under pressure. I worry for older Singaporeans too, living by themselves and having to provide for their medical and daily expenses. I am troubled that a terrorist attack will sow suspicion and discord among Singaporeans. We must respond boldly and creatively to these opportunities and challenges, expand our horizons and aim high. We will continue to restructure our economy to make it more productive and resilient. We should make our society more vibrant and cohesive. And our young must be imbued with the same can-do, never-say-die Singapore spirit that has brought us here"

– Prime Minister Lee Hsien Loong, his letter to Singaporeans, PAP Manifesto for General Election 2006.

"Starting with today’s Singapore, we can transform it, improve it, make it much, much better.” - PM Lee, Saturday 16 Feb 2013.

"The direction is very clear, the Singapore Government will always give priority to Singaporeans' interest," - PM  Lee, during the White Paper debate[Link].

During GE2006, PM Lee wrote a letter attached to PAP Manifesto stating his concern for the old and poor and the desire of his govt to "restructure our economy to make it more productive". 

Once he received a strong mandate with 66.6% of the votes going to PAP, the first few things he did were to increase the GST and increase the pay of ministers and top civil servants. In the next few years we saw the floodgates open for foreign workers and productivity sinking.

Not only did he not restructure economy as he promised, he step on the accelerator to go faster in the same old direction. Dependence on foreign workers rose, productivity fell and wages of the poor whom he said he was concerned about became stagnant or fell in the next few years. Cost of living rose hurting the poor and elderly. 

During the White Paper debate, he told Singaporeans that the proposed plan to increase the population was for their benefit and their quality of life would rise in the coming years. He also said the interests of Singaporeans would be top priority for his govt.

The Prime Minister can say what he wants in order to get Singaporeans, especially those with poor memories, to buy into his White Paper but Singaporeans find it increasingly difficult to believe what he says because he has not delivered on his past promises. 

Leong Sze Hian's Speech at Hong Lim Park 16 Feb 2013

Leong Sze Hian spoke about the effects of past immigration policy giving us  statistics and numbers to ponder about.  The cold hard numbers tell us that we cannot trust the White Paper's claim that the planned  foreign labor influx will lead to better wages, job opportunities and better quality of life for Singaporeans.  Equally interesting is the response from the crowd as he spoke.....

Sunday, February 17, 2013

Protest at Hong Lim Park 16 Feb 2013

Since this blog started, it has tracked most of the protests held at Hong Lim Park. I  have always wondered how far Singaporeans have to be "pushed" before they start to protest.  Yesterday thousands of Singaporeans braved the rain to participate in a protest against the White Paper.

The passing of the White Paper has hit a raw nerve among ordinary Singaporeans. Speaking to a number of protesters yesterday, I sensed this "enough is enough", "this was shafted down our throats" feeling of frustration among the protesters.

The speeches at the protest touched on the need to restructure our economy, to preserve our identity and to address the real problems faced by Singaporeans. While many of the views are similar to what has been expressed by the opposition in parliament and numerous bloggers on the Internet, the interactive response from the large crowd gives us a feel of how strongly they   oppose various parts of the White Paper.

By now the White Paper has been largely discredited with its numerous flaws and unsubstantiated claims that increasing the population will lead to higher quality of life and better job opportunities for Singaporeans. Ordinary Singaporeans now have  a good understanding of the outcomes of PAP's immigration policies of the last 15 years after their first hand experience of the net result of these policies. They are not just opposing the White Paper but what the PAP has done for the last decade. Many of the deleterious effects of past policies such widening income gap, low wages, low productivity, rising cost of living, middle class squeeze and declining quality of life are now better understood by ordinary Singaporeans. For this reason, Singaporeans do not want the govt to along the same path of growing the economy by importing people. PAP's policies, if anything looks like it is built on a fallacy that govt needs only to do what businesses want to benefit ordinary citizens - trickle down economics does not work when you have a large income gap and it is never going to work in a country with the 2nd highest (sometimes highest) income gap among developed countries...where the benefits of growth goes to a small number at the top and the negative effects spread to everyone in society.

WP's Low Thia Khiang said in parliament that the proposal in the White Paper will send our country on a "path of no return". If we go along this path, foreigners will dominate a larger segment of our economy and society displacing Singaporeans. The dependence on foreigners will keep growing and at some point we will not be able to turn back, we will not have enough control of our economy to shape the future for our children and our grandchildren.

"Lets not forget the economy exists to serve the people not the people the economy"
- Speaker Jeannette Chong-Aruldoss

.The fear of permanent displacement far exceeds the fear of a temporary slowdown that might have occur if we choose to restructure the economy.  The PAP has lost precious time since GE2011 to get us back on the right path. It now tells us that it wants to double down on policies that have failed to deliver a better quality of life for Singaporeans. It is no surprise that Singaporeans are enraged by the White Paper.

The White Paper has more or less killed the fledgling National Conversation.  What is the point of a conversation when something so major is pushed through parliament and endorsed with so little consultation with the public.

Thursday, February 14, 2013

S. Korea; : Growing the economy through innovation and productivity....

Due to low fertility rate of 1.2 and a generation of baby boomers born around 1960s, the S. Korean society is one of the fastest ageing in the world. So far the S. Korean govt has not resorted to massive immigration and opening the floodgates to cheaper foreign labor. Businesses without access to cheap foreign labor have to increase productivity by investing in automation, improving its businesses processes and innovation.

Despite mounting pressure from businesses demanding cheap foreign labor from Philippines  China and India, the S. Korean leaders did not succumb to pressure to implement pro-business policies to allow businesses to import cheap labor to boost their profits. The S. Korean economy did not sink from the lack of labor force growth instead flourished with improvements in labor productivity and the innovation of home grown industries.  We sometimes forget that S. Korea is a relatively small country with a population of 50M given its cultural influence and industrial giants like Samsung. The policy choices made by S. Korea are hardly unique. Smaller countries like Finland and Denmark (5.5m population) with ageing population chose to focus on maximizing the talents of their indigenous population and growth through productivity. The PAP claims we need to import foreigners to care for old (support ratio argument). The aged in these countries are well taken care of without the need for massive import of people ...did our massive import of people in the last decade help to secure a comfortable life for our elderly? No, our many of our old folks are working at an age when they should be retired and struggling with poor health because there is little help for them from the state.

The White Paper "projects" a 45% foreigner population and this % is  higher if you count foreigners convert ed to citizens - the people born and raised in Singapore will probably drop to below 50%.

To see how extreme the PAP policies have been and will continue to be with the White Paper,  we take a look at S. Korea’s plan for 2030:

"With one of the world’s fastest-aging populations, South Korea has gone from a country where labor was the only abundant resource to one seeking staff to help run the plants and farms of Asia’s fourth-largest economy. While neighboring Japan has largely rejected imported labor as a solution to its aging workforce, South Korea is beginning to accept it. Immigrants have risen sevenfold since 2000, to 2.8 percent of the population, and could make up more than 6 percent by 2030, the government said." Bloomberg Report [Link]

Yes, a dynamic vibrant world beating S, Korean economy that presently has 2.8% foreigners will increase it to 6% by 2030. By keep its labor force tight, and not yielding to pressure from businesses for cheap foreign labor, S. Korea had been able to build on its first economic miracle to create a 2nd carried by the cultural creativity of  Gangnam Style and technological innovation in Samsung's Note II. Singaporeans today are told there is no alternative but to continue with with old policies of growth by importing labor. Our business lobbies, the various chambers of commerce, echo the threats of businesses to leave or close down unless they are given access to foreign labor - the ;last 15 years of pro-business policy of opening the floodgates to foreign labor has made our businesses more dependent on foreign labor. Unless we take bold steps to break out of this vicious cycle now the damage we bring to ourselves will be irreparable.

Wednesday, February 13, 2013

White Paper Passed : Roadmap to an unwanted destination....

Happy Lunar New Year.

I'm sure many of you had this experience when you visited friends and relatives  this week - a large group of people gather to talk about various issues, catch up on each others' lives and at some point someone brings up the population white paper and the torrent of negative views about it pours out and keep going until someone reminds everyone else that it is Chinese New Year and we shouldn't be so angry. I haven't met anyone who is positive about the White Paper. Never in my life have I seen such an overwhelmingly negative reaction to a govt proposal. Every single opposition MP in parliament voted against it and all NMPs present during voting, except Eugene Tan who abstained, voted against it.

But he urged the public to not just understand the details of the White Paper but also the government’s aim in putting it out, which is “to help Singaporeans have a better life for the future in the best way possible"

- Straits Times Report[Link]

"Perhaps now right-minded Singaporeans might get over that emotional hump and the 6.9 million figure and take the White Paper at face value for what it is trying to do"

- Straits Times Report [Link]

The MSM  urges Singaporeans to get over their "emotional hump"and PM Lee urges Singaporeans to try to understand what the White Paper sets out to achieve which is a better life for Singaporeans. At the end of all the debate and discussion, the PAP and our PM say they have the right rational answer and Singaporeans are viewing the White Paper in an emotional manner failing to see that it is a plan that will improve the lives of Singaporeans and bring about a brighter future for Singaporeans. Actually nothing can be futher from the truth. If you speak to ordinary Singaporeans, they have followed this issue very closely and have good grasp of the trade offs and understand there is no perfect solution. The reason for the anger is not irrationality but the proposal of the PAP to double down on a strategy that has not delivered. Singaporeans are all too familiar with the kind of GDP growth achieve through population growth - they have live through the period when our population grew from 3M to 5.3M. They understand the economic implications of growing the economy by importing labor. It is not just the strains on our infrastructure that is felt in recent years but the deep economic effects such as stagnant wages, widening income inequality, structural unemployment,  rising poverty and increase in cost of living. There is overwhelming evidence that if we continue to go along this path, despite the promises of better infrastructure, life will get worse for most Singaporeans. Today we have 400,000 Singaporean workers whose wages have been depressed to the point that they depend on Workfare to survive.

The anger among Singaporeans does not come from failure to understand what the White Paper aims to achieve but from an understanding of the negative outcomes we will get from what is proposed in the White Paper.

"Don't be so gung-ho about slower growth rate" - Minister Tan Chuan Jin
If you take your time to read the speeches by PAP MPs and ministers during the White Paper debate, you will find the one clear ideological belief that stands out is that we need faster economic growth to achieve a better quality of life for Singaporeans. The PAP believes we need to have this growth for the lives of Singaporeans to improve. For this reason, the proposal by the Workers' Party to freeze foreign workers at today's level, aim for slower growth of 1% and allow the economy and businesses to restructure, was attacked by PAP MPs.

If you examine the economic growth of the last 10 years achieved through population expansion, you find that most of the benefits goes to a small concentrated number at the top while those at the bottom suffered from the negative effects of this growth. If you examine the economic data of the last 3 years, you see the negative effects seeping into the middle class [Link] which is now under pressure. If we continue along the same path of growth by importing labor, we will not achieve the outcome of better lives for Singaporeans.

Through its thick ideological lens, the PAP has failed to see the real problems faced by our society. If they wanted to improve our lives why did they not have a White Paper on how to narrow the income gap, a White Paper on keeping medical care cost affordable or a White Paper on how to care for our seniors and ensure they can retire gracefully.

If the proposals in the White Paper is followed, our problems will grow and become even more unsolvable. Our economy that is now over-dependent on foreign labor will become even more dependent on foreign labor. The income gap will rise further and the quality of life of Singaporeans will decline in an irreversible manner. Our common identity will be threatened and so will our future.  I believe Singaporeans are right to oppose the White Paper and many have been mobilised from the sidelines to speak up for what they believe is right. The White Paper debate has allowed many Singaporeans to clearly understand the PAP govt's position and its assumptions ...much of this goes against the experience they have been through in the last decade and Singaporeans know it will take us to a future we do not want for ourselves and our children.

Thursday, February 07, 2013

Population White Paper : An Epic Failure at all levels....

One academic pointed out that the entire white paper has no reference section to show the research the paper is based on - even a student thesis needs to substantiate its findings with existing research.  I will tell you why this is the case later on. The paper set the wrong priorities putting GDP growth not the well being of Singaporeans as key  targets.

It then goes on to use  our low TFR and support ratios for the old as justifications for importing foreigners and converting many to PRs and citizens. The white paper has left out our non-resident workforce to show that our OASR (Old age support ratiio is falling. But this is not true once we include the current level of the non-resident workforce - the OASR goes up to 9.8 way above the average among OECD countries. We have already expanded our population so much in the last 10 years with new citizens and the expansion of the non-resident workforce. This expansion is far in excess (by 5-8 times) of what we can achieve if our TFR is maintained at the replacement level of 2.1 i,e. we have already overcompensated for our low fertility of the past....if TFR is the real reason we can just stop importing people for the next 10 years because we have already over-compensated for it.

The white paper also makes ridiculous assertions that the plan will "strengthen the Singaporean core" by shrinking it down to 55% (which includes newly imported citizens) and that the foreign influx is to  improve our quality of life as the density of people increases. We are among the most densest cities in the world. The cost of living has escalated as demand for land pushes housing and rental costs up. The govt claims it can expand infrastructure quickly for housing and transport doing what it failed to do in the past. But quality living is not just about housing and transport...the more people you have, the higher pressure on space will affect many aspects of our urban life: from how many children people choose to have, to how often they can play their favorite sports and how they socialize with friends and family.

"Studies have also suggested a correlation between population density and fertility rate.[8][9][10] Hong Kong and Singapore have the third and fourth-highest population densities in the world. This may account for their very low birth rates despite high economic freedom. By contrast, the United States ranks 180 out of 241 countries and dependencies by population density" - Wikipedia [Link].

"The empirical evidence presented reveals that persistent regional variations in fertility exist within a country and that regional total fertility rates are n
negatively related to regional population density." -  Research Paper[Link]

Research shows that increasing living density will decrease the TFR of a society so importing people at artificially high rates will worsen our TFR and should never be suggested as a solution. Our TFR has decreased steadily as our population density rose as seen from the findings of the NSP population paper, yet the white paper proposes to put us in this vicious cycle that will shrink the Singaporeans core and eventually destroy our identity.

While the white paper claims that the large foreign influx will lead to creation of jobs opportunities,  Singaporeans have experienced the opposite of this. In the early 90s and throughout the 80s, the labor market was tight and Singaporeans workers were in high demand. This led to higher wages, better benefits  and demand for older workers who had opportunities during the economic upswings when the labor market became even tighter. Today as the workforce expanded with the foreign influx we see a lack of job security, serious structural unemployment among older workers, stagnant wages, 3rd world wage structure and higher competition for job openings. The high foreign influx has hurt the Singaporean worker in the last decade and nobody can believe the rosy scenario that things will improve for our workers if only the PAP govt is allowed to import more people - it has become ludicrous to make such claims.

If this proposal harms Singaporeans, why does the PAP govt insist on pushing in through?

There is only one real reason

Since the mid-90s, Singapore has evolved what is known euphemistically as an "open" economy. It is a combination of low corporate taxes, less financial sector regulation, less restrictive labor laws, less protection for workers, etc.  Businesses escaping the regulated environment back in their home countries came here for the "open" environment where they can escape high taxes and tight labor regulation. In the past, businesses came primarily for our local human resource - Singapore's number one workforce in the world. But in the last decade, we attracted business that came because they were able to hire liberally from anywhere in the world and not because they want to build their expansion on the skills of the Singaporean workforce. The existence and expansion of these businesses that hired foreign labor curtailed and stifled those that build on the strengths and training of the Singaporean workforce. Now we have an economy that grows by taking in foreign labor - one that depend on suppression of wages not on advancing the skills and wages of Singaporeans.

These businesses now lobby for higher growth in our labor force at rate not necessary in any other developed country. Our GDP will grow along with the problems of widening income gap, rising cost of living and stagnant wages. The PAP has presented this white paper distorting the facts, obscuring the dire consequences and painted a fairy tale of rising quality of life and ever expanding economic opportunities for Singaporeans. For the last decade they have repeated this claim that foreigners are here to create jobs for Singaporeans and PAP policies have improved the lives of Singaporeans. Today there is an expanding underclass, rising income gap and Singaporeans especially older PMETs find it harder than ever before  to secure jobs that keep up with the rising cost of living  .

To show their unhappiness with the high foreign influx and overcrowding, Singaporeans sent a number of strong signals to the govt. The last one was in the Punggol East by-election. With these strong signals, Singaporeans had hoped the PAP would re-balance its policies to benefit ordinary Singaporeans and seek out a more sustainable path to a brighter future for all. Instead of doing this, the PAP govt slapped us all with its white paper that proposed going along the same trajectory as we have done in the last decade - a trajectory that will certainly cause Singaporean families to struggle harder and our society's problems to expand.

This white paper, when passed, will symbolize the failure of a leadership to change its disastrous course. It is also a demonstrate a failure of leadership to understand the problems faced by the people. It is a failure to put the people on top of all other priorities. With this white paper, more people will lose trust in the PAP.  The leadership has failed to create a vision we can all buy in and insists on going in a direction strongly resisted by the people.

Monday, February 04, 2013

Letter from SBF shows divergent interests of some in the business community...

The 6.9M by 2030 population projection has caused widespread consternation among ordinary Singaporeans. Their lives have been adversely affected in so many ways for the last decade by  the high influx of foreigners. No other developed country has legally allowed such a high influx per capita into their country even when they are blessed with land and natural resources because such approaches have many disadvantages such as causing the income gap to increase as wealth transfer takes place from ordinary workers to businesses, in particular, big businesses. Over the last decade we saw the level of profits as a % of our GDP grow to record levels and while the wages of many workers has been stagnant.

"'Despite total population projected to reach 6.9 million by 2030, Singapore businesses will be impacted by slower workforce growth from 2013 to 2020 at only half of the average growth rate compared with the past three decades.

From 2020 to 2030, workforce growth is projected to decrease even further. This will constrain businesses and limit growth. It will have devastating consequences for many companies.

- Singapore Business Federation (SBF) Statement.

The SBF is now saying even 6.9M people is not enough. Businesses need more to guarantee they thrive. But every where else in the developed world businesses have learned to live with slower rates of population growth - they grow by innovation and using existing resources more efficiently by improving productivity. However, years of liberal labor policies that open the floodgates to cheap foreign labor, has caused our businesses to become highly dependent on the 3rd world for labor. Even the white paper  which is considered extreme by so many is not  enough to satisfy the business community here.

While I'm not one bit surprise, the SBF has again lobbied for its own interests, it tells us the interests of Singapore businesses have become divergent from that of ordinary Singaporeans. They want wages to be as low as possible to increase profits,  and Singaporean workers will only benefit if we have a model of growth that elevates real wages. The PAP govt has already given too much to businesses through years of pro-business policies allowing them to have the lowest taxes in the developed world, lowest protection and benefits for workers among developed countries, easy access to cheap foreign labor, no independent unions etc. We ended up with a large income gap and a 3rd world wages structure that is now causing the ordinary people to turn their backs on the PAP govt.  After pandering to their every demand in the past, the PAP govt now finds that even small tweaks in policies is faced with stiff resistance.

No economy can grow forever, no unsustainable model can keep going without breaking. The longer we kick the can down the road, the more divergent the interests will be and the harder it is to transform and restructure the economy. There are things have to be done now to benefit ordinary Singaporeans otherwise the PAP will face  rising rejection of its system.
Statement  by SBF on Population White Paper

01 February 2013, The Business Times -[Link]

THE Singapore Business Federation acknowledges the importance of the Population White Paper's projections for the medium to long-term growth of Singapore. A shrinking and ageing workforce amid the backdrop of a stagnant Total Fertility Rate (TRF) will have serious implications for businesses and the economy. It is vital that Singapore achieves consensus and lends support to these important issues.

Despite total population projected to reach 6.9 million by 2030, Singapore businesses will be impacted by slower workforce growth from 2013 to 2020 at only half of the average growth rate compared with the past three decades.

From 2020 to 2030, workforce growth is projected to decrease even further. This will constrain businesses and limit growth. It will have devastating consequences for many companies.

As the number of Singaporeans in Professional, Managerial, Executive and Technical (PMET) jobs increase, there will be a shortage of local non-PMETs.

Many industries cannot be manned by mainly PMETs. For example, retail, food-and-beverage outlets and hotels will continue to need a large number of lower-skilled workers.

Currently, these sectors already cannot attract enough locals. In the future, the situation will be worse. Those establishments which cannot adjust will close. Jobs will be lost. Those who can survive will face tight labour supply and high labour costs. Singaporeans should be prepared for higher costs of such domestic services and lower service quality levels.

Moderate GDP growth of 3 to 4 per cent from 2013 to 2020 hinges on productivity growth of 2 to 3 per cent. There is risk that this growth will not be achievable if productivity cannot be improved from current levels.

Consequently, there is a danger of Singapore descending into a period of weak anaemic growth. This will have repercussions on wages, employment and Singapore's attractiveness as an international business destination.

Singapore's appeal as an efficient and attractive tourist destination will also be compromised. In such a scenario, we can lose our confidence as a dynamic city.

Mr Ho Meng Kit, CEO of SBF, said: "The reduction in workforce growth has very serious consequences for businesses. Some Singaporeans do not realise its impact but are seized with the prospect of an overcrowded island with 6.9 million people. We must explain to Singaporeans that many businesses will be in jeopardy if they cannot adjust to this demographic tsunami that will hit us.

"If businesses go under, jobs will be lost, Singaporeans will be affected. If businesses cannot raise productivity and sustain profits, they cannot afford to pay Singaporeans higher salaries.

"The population projections in the Population White Paper are already tough for companies. It is unthinkable if Singaporeans choose to further limit immigration and the number of foreign workers. This will damage our competitiveness and Singapore will lose its shine. We do not want to see our children working overseas because there are no more good opportunities here."

Providing an SME perspective, Mr Lawrence Leow, chairman of the SBF-led SME Committee, said: "The population paper has painted the harsh realities of Singapore's population statistics and their implications. Unfortunately, it is the SMEs that will be hardest hit.

"SMEs currently employ some 70 per cent of the local workforce. They are more than economic contributors as their sustained presence has (an) impact on the lives of Singaporeans. Many SMEs operate as subcontractors or across labour-dependent service sectors. The shift towards two-thirds of local workforce to PMET jobs and only one-third to non-PMET jobs is unimaginable for many SMEs' business model.

"A lot of SMEs whose operations cannot be moved offshore will be rendered out of business.

"This, in turn, has an even wider implication as many multinational corporations (MNCs) here rely on SMEs for services and as part of their supply chain. The net effect is that many more jobs could be lost. We urge the government to delay further tightening of foreign workers restrictions until there is clear evidence of small businesses succeeding in business restructuring and productivity increment