February 2, 2010 by eakky
By Eugene Yeo, Consultant Editor
Low wages
Singapore has a GDP (PPP) per capita
higher than Switzerland, but our wages are way below the Swiss.
High cost of living
Singapore was ranked the second most expensive place to live in
after Tokyo, surpassing Hong Kong for the first time. Let us
compare the food prices in Singapore and other developed countries
since food is a basic necessity. In the UBS
study, a basket of 39 food items is put together and weighted
mainly according to Western European consumption habits. The
average worldwide cost of the basket is USD385. Singapore workers have to work harder to earn the
same amount of money and save for a longer period to purchase the
same product. In 1991, then Prime Minister Goh Chok Tong promised
Singaporeans that we will be able to achieve the “Swiss standard of
living” within a decade. Like Singapore, the Russians has a low
wage and domestic purchasing power .
State-sponsored repression
Conclusion
What started out as a “Swiss dream” is fast becoming a “Russian”
nightmare. Isn’t it strange that Singapore, with one of the highest
GDP (PPP) per capita in the world has a
standard of living closer to Russia than Switzerland? How is it
possible that the state is flushed with cash and yet ordinary
Singaporeans have a domestic purchasing power comparable to the
Russians and way far behind the Swiss? What went wrong? Are
Singaporeans getting a fair deal from their government? Why are we
paupers in a first world economy?
Until the global financial turmoil last year, Singapore has
enjoyed 10 years of continuous growth of more than 5% per day. The
Singapore government has always used GDP
growth as a basis for citizens to appraise its own performance.
Even a variable portion of their multi-million salaries is pegged
to the GDP.
Singapore’s GDP figures are indeed
impressive: Singapore is ranked third in the world by the World
Our income gap, as measured by the Gini Coefficient, is the
highest among the twenty most developed economies, comparable with
the Philipines, Nigeria and Nicaragua. (source: wikipedia) This
means that the gains we have made as a nation from years of
economic growth are not distributed evenly across the population. A
minority becomes richer, but the rest are not better off. Some even
become poorer.
Influx of foreigners
When MM Lee said recently that foreigners are vital to our
economy, he was not exaggerating. Foreigners contribute to almost
one third of our workforce. Our economy will collapse without them.
In the past, foreign workers in Singapore consisted chiefly of the
low unskilled blue collar workers and the highly skilled white
collar professionals. The former do not compete directly with
locals as they worked mostly in industries shunned by Singaporeans
while the latter helps to add value to our economy and create more
jobs in the process. However in recent years, we are seeing more
semi-skilled foreigners entering our labor market. Not only are
they competing directly with Singaporeans for jobs, they also have
a certain degree of spending prowess which compounds the problem of
inflation.
These foreigners took up many jobs which can otherwise be filled
by locals such as engineers, mid-level managers, and
administrators, leading inevitably to stagnation or even decline in
overall wages. Of course the widespread use of foreigners help to
bring labor costs down collectively, contributing to GDP in the process. While other countries are exploring
ways to improve productivity, Singapore continue to take the easy
way out by importing foreigners en masse to pop up its economy.
High prices of public housing
Over 85% of Singaporeans live in high-rise public housing built
by the government. Though they are meant to be cheap and affordable
to the masses, recent price hikes has priced ordinary Singapore
workers out of the market. In the 1980s, a new four room flat in
Bishan cost about $60,000 while the median pay of a fresh graduate
is about $1,500. A young couple paying a monthly mortage of $1,000
will be able to repay the entire housing loan in 5 years time.
Today, a new four room flat under the Design, Built and Order
scheme in Bishan cost around $600,000. The median pay of a graduate
is only $2,500. How much will a couple need to pay a month in order
to service a thirty year loan?
The high cost of public housing means that families have to save
more to finance the bank loans which translates to less cash for
domestic consumption in the purchase of non-essential goods and
services. It is little wonder that Singapore’s domestic purchase
power is the least among the Asian Tigers in the UBS study. We are “paupers” compared to the Taiwanese,
Hong Kongers and Koreans because we are unable and unwilling to
spend as much as them.
The monopoly enjoyed by the HDB enables
them to set prices arbitrarily though the new flats are pegged to
the resale markets. There is no incentive
