HI folks,
Came across an interesting abstract from an online magazine, the
Quarterly Literary Review Singapore (October 2003 edition). I've
cut and pasted it below for our collective edification.
It brings together evidence which appears to me to strongly
demonstrate the self-serving nature of government policies in this
day and age, and how this often involves screwing the people
over.
Of course, we know all this, but I'm just putting forward more hard
evidence. I'm particularly impressed by the fact that the original
writer managed to find a report (which of course the Straits Times
never told us about) from investment bank UBS Warburg and
follow-ups from local financial institutions that criticise the CPF
cuts and GST hikes as ineffective and possibly corruptly motivated
or instigated.
There's compelling evidence about how the CPF cuts were encouraged
by foreign MNCs trying to exploit us.
For brevity's sake, I've edited out parts of the article that
discuss foreign governments or are just a bit long winded. Which is
not to say that these bits are not informative or useful, just that
I don't want to post too long an article. Those of you who wish to
read the full article for yourself can access it at:
http://www.qlrs.com/issues/oct2003/editorial/ev3n1.html
--------------------------
[quote begins]
symptomatic of a wider movement in governments that care less about
their people than about their corporates and elites.
(section edited out - discussion of US politics)
Consider the latest round of CPF cuts announced in August and
implemented this month. The stated purpose of the cuts is to keep
Singapore competitive as a business location vis-à-vis countries
such as China and India.
(edited)
Here's a research report
on the economic outlook for Singapore in the fourth quarter of
2003, by Swiss banking group UBS:
Another factor that needs to be considered are the recent changes
to the CPF scheme to ensure competitive labour costs. Assuming that
loss in long-term savings in household incomes is met entirely by a
commensurate reduction in household consumption, the impact is
likely to be significant [...] At the same time, we are uncertain
whether these moves will create jobs or even stabilise the labour
market. Our understanding is that these changes have been
introduced mainly to retain competitiveness vis-à-vis China and
India. However, we estimate that wage differentials with these
countries are too significant to be altered by the proposed
changes. As regards other countries, relative unit labour costs
suggest that Singapore is already quite competitive and therefore,
incremental gains are likely to be limited.
To these developments, we can add the government's steadfastness to
go ahead with the pending 1% increase in GST in 2004. Assuming that
the household sector alone bears this increase, we estimate it
would imply a transfer of around S$350m from the household to the
government sector. While this amounts to only 0.5% of overall
consumption expenditure in Singapore, the point to note is that it
further suppresses an
already low consumption to GDP ratio of around 40%.
UBS's opinion is clearly that both policies may do Singapore more
harm than good; in fact, they subtitled the CPF cut as a "problem".
Local stockbroking house GK Goh, who issued a report the day after
the announcement of the CPF changes, on 29th August, was more
pointed on the directions that these implied:
...wages account for
20-30% of total business costs. Thus far, the burden of keeping
Singapore competitive has fallen on workers. So the question is
whether future changes will extend to the other 70-80% of business
costs, which include numerous government fees and levies. At this
juncture, it seems that the government has yet to demonstrate its
willingness to make the same sacrifices that it is now asking of
its citizens.
On the same day, Jake van der Kamp of the South China Morning Post
practically laughed in Singaporeans' faces:
There will be a transfer of wealth from the people who worked for
it to the multinational corporations (MNCs). This could be
excusable if these MNCs then invested the money back in Singapore
but the difficulty is capital investment in Singapore is dropping
faster than a rock in freefall and has never been lower than it is
now, relative to the size of the economy. The MNCs are mostly in
exit mode now. They will not put the money back into
Singapore.
The foreign angle could be an especially touchy one at this point.
Another correspondent of mine asked if the general reaction was
xenophobic in any way. I said no, there was plenty enough to be
unhappy about in what is really a domestic issue, that of the
contract between the government and the people. From a personal
perspective, I'm pissed that I've put in a lot of effort into
developing and running a company that has turned profitable and
created jobs for Singaporeans and the government gives me a pay cut
"in the interests of saving jobs". That these cuts are meant to
save money for foreign MNCs who are generally perceived to be in
take-the-money-and-run mode, which would represent a transfer of
wealth from Singapore nationals to foreign interests. That the recommendation for these
cuts for the local labour force comes from a foreign consultancy
that has polled expats who are unaffected by the cuts but stand to
gain from higher bonuses that come with a healthier bottomline, in
other words another transfer of wealth from Singapore nationals to
foreign nationals. That the civil servants who have gone along with
this scheme are relatively unaffected as the Admin Service accrues
pensions outside of the CPF, and it was shortly after announced
that the civil service will get another half-month bonus this year
on top of what they had got last year [...] If the foreign
angle comes in at all, it's only because that's the sweet spot I'd
like to be in: to be foreign talent living and working in
Singapore.
*
The best analogy for Singapore's foreign talent situation, to my
mind, is the English Premier League. Before Johnny Bosman
challenged the UEFA transfer system in European Union courts,
English football clubs could only field a maximum of three foreign
players a team. After Bosman, there was no limitation to the number
of foreigners who could be fielded so long as they held an EU
passport. English teams began recruiting more and more foreign
players. Today, it's not uncommon to find English football clubs
taking to the field with no English players in the starting XI. The
standard of play in Stamford Bridge, Highbury and the Riverside has
improved, but lots of young English players coming up through the
academies only get to play in reserve teams, because it's so much
easier to buy an accomplished player from overseas than to blood
your own youth team. There's nothing morally wrong with this, of
course, but then England now has to deal with its national team
having only one really good striker, one striker with promise, one
passably good midfielder, only one left-footed player, and lots of
dross.
[quote ends]
