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UBS Study:
Singaporeans are as poor as the Russians and our neighbours in Kuala
Lumpur
*An analysis of the UBS study:
Singapore has the lowest wages and domestic
purchasing power among the Asian Tigers
- By Eugene Yeo, Consultant Editor
The worldwide study conducted and released by UBS lately, titled ?Price
and Earnings 2009″ has some unflattering results for Singapore . (download
the study here) While our economy has the highest GDP (PPP) per capita in
Asia at $49,288 according to a World Bank report (source: Wikipedia), our
people do not enjoy a quality of life which commensurate with it.
Though we are technically a developed first world country, some economic
indictators as shown by the UBS study suggested that Singaporeans are not
that better off than those in Third World countries..
Low wages
Singapore has a GDP (PPP) per capita higher than Switzerland , but our
wages are way below the Swiss.
The UBS study found that employees in Copenhagen , Zurich , Geneva and New
York have the highest gross earnings. With its extremely high gross wages
and comparatively low tax rates, Switzerland is a very employee-friendly
country. The net wages used have been deducted for taxes and social
security.
Zurich and Geneva have wage indices (gross) of 119.8 and 107.5
respectively. In contrast, Singapore has a wage index of only 31.3,
comparable with Moscow (30.9), Tallinn (28.7) and Johannesburg (26.7)
In the Asia-Pacific region, it is exceeded by Tokyo (83.0), Sydney (74.1),
Auckland (44.1), Hong Kong (42.3), Taipei (35.5) and Seoul (32.3) Low
domestic purchasing power Where does an average income buy the most
products and services? Wages alone do not determine the standard of living
in a particular city or country.
A better way to measure prosperity is to divide the average annual salary
by the total price of a selected basket of goods and services (as used in
the UBS study). This tells us how much purchasing power local wages.
Again, Zurich (106.9), Sydney (95.9) and Luxembourg (95.4) topped the
list?. Its citizens have the highest domestic purchasing power.
Singaporeans have a low purchasing power of only 39.9, comparable to Kuala
Lumpur (39.5), Warsaw (34.0) and Bogota (33.7).
Other countries in the Asia-Pacific region which are ahead of us are Tokyo
(82.2), Auckland (68.9), Taipei (58.9), Hong Kong (58.1) and Seoul (57.4).
In other words, though the cost of living is higher in Tokyo , the average
Japanese has a domestic purchasing power more than twice that of an
average Singaporean. Though Malaysia is still a developing country and has
a GDP (PPP) per capita of only $14,215, less than 3 times of ours, the
ordinary Malaysian citizen has about the same domestic purchasing power as
the Singaporean.
Low relative purchasing power of wages
This is calculated in the UBS study by using a specific, highly uniform
product that is available everywhere in the same quality, and then
calculate how long an employee has to work to afford it in each city. For
the purpose of this article, the iPod nano (with 8 GB of storage) is used.
An average wage earner is Zurich and New York can buy a nano from an Apple
store after nine hours of work. A Singapore worker will have to work three
times longer after 27.5 hours. The figures for selected Asia-Pacific
cities are as follows: Sydney (9.5 hrs), Tokyo (12hrs), Auckland (16hrs),
Hong Kong (19hrs), Seoul (22hrs) and Taipei (23.5hrs). Again we came in
last among the 4 Asian Tigers.
Long working hours
People work an average of 1,902 hours per year in the surveyed cities, but
they work much longer in Asian and Middle Eastern cities, averaging 2,119
and 2,063 per year respectively.
European cities had the lowest working hours per year. A global comparison
showed the people in Lyon and Paris spend the least amount of time at
work:
1,582 and 1,594 hours respectively.
Singaporeans spent on average 2,088 hours at work per year with 11 days of
vacation.
This is less than Hong Kong (2,295) and Seoul (2,312), but more than Tokyo
(1,997), Taipei (2,074), Sydney (1,747) and Auckland (1,884).
Singaporeans also took the least number of holidays after Hong Kongers (10
days/year).
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. In Asia, Tokyo topped the list
with an index of 124.7, followed by Hong Kong (96.5), Singapore (89.4),
Seoul (89.0), Taipei (67.9) and Sydney (66.3)
Conclusion
The high cost of living coupled with low wages and domestic purchasing
power condemns the average Singapore worker to an ignonimous, monotonus
and stressful working life. 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.
Ten years later, we have a living standard which is closer to Russia than
Switzerland . Like Singapore , the Russians has a low wage and domestic
purchasing power and Russia , especially the city of Moscow , has one of the
highest cost of living in the world.
In the next part of this article, we shall examine the uncanny
similiarities between life in Singapore and Russia after the
disintegration of the Soviet Union .
When Mr Goh Chok Tong became the second Prime Minister of Singapore in the
1990s, he promised Singaporeans that we will attain the ?Swiss standard of
living? within a decade. In 2001, during the National Day Rally, Mr Goh
said:
?I was also quietly satisfied that we realized our vision of reaching the
1984 Swiss standard of living last year.?
Have we really achieved the Swiss standard of living?
Though, we do not have economic indicators for Switzerland in 1984, we
have the figures in 2009 and it appears that Singapore is heading towards
a Russian standard of living, rather than Switzerland ?s.
Let us compare the indices for each category:
Singapore Moscow Zurich
Wage level: 31.3 30.9 119.8
Domestic purchasing power: 39.9 49.4 106.9
Working time to puy iPod nano: 27.5 36.0 9.0
Price of services: 72.5 65.0 110.9
As the above figures have shown, the Singapore worker has more in common
with the Russian worker than a Swiss worker.
Like the Russian worker, the Singapore worker has low wages and domestic
purchasing power which is aggravated by the relatively high cost of living
in their respective countries. In fact, the Russian worker has a higher
domestic purchasing power than the Singaporean worker though his wage is
slightly lower. And don?t forget Russia is a vast country. If one cannot
survive in Moscow , they can move to the countryside where cost of living
is lower. There is nowhere for Singaporeans to move to.
A greying population
Both Russia and Singapore have suffered from low birth rates though the
latter is making the numbers up through mass immigration.
Russia ?s population growth is almost stagnant at -0.085% in 2008. Its
population could drop by as much as one third by 2050 if current trends
does not improve.
Singapore will have about a quarter of its population above the age of 65
by the year 2030. A greying population is expected to place heavier burden
on the younger population to keep the economy going. With no social safety
net to speak of, the Russian worker will have to support th emselves in
their golden years. Many of them become addicted to vodkha which results
in a higher mortality rate than the European average.
The Singapore worker is not in a better position either. Their CPFs will
not be enough to support their retirement needs as most of it is tied up
in mortage loans to finance over-priced HDB flats. The government has
encouraged Singaporeans to work beyond the age of 80.
Parliamentarians recently consider passing a bill to legislate that
children take care of their aged parents.
With a high cost of living and declining wages, the future of Singaporeans
is becoming as bleak as the Russian winter.
A modern serfdom
Not surprisingly, the economies of both Singapore and Russia are dominated
by state-linked companies.
In the aftermath of the Soviet Union ?s disintegration in 1991, many
Russian politicians and crooks made use of the economic turmoil then to
purchase national companies and assets at bargain prices. These are the
oligarchs who soon become the new aristocracy of Russia . The politicians
at the Kremlin maintained their tight-fisted control of Russia with the
financial backing of the oligarchs.
Like Singapore , Russia has one of the highest income gap between the poor
and the rich in the modern world. Ordinary Russians are being enslaved in
a modern serfdom to contribute to the state while getting very little in
return..
Both states are very rich while its people have to slog daily to earn a
pittance at work in order to keep themselves afloat.
Russia has Gazprom, Singapore has Temasek Holdings. The former obtain its
funds from sale of natural gas which Russia has in abundance; the latter
accumulated funds from years of budget surpluses. Neither channel their
returns back to the people.
Russia is now returning to back to tsarist era where its people are
nothing more than serfs toiling the fields for others. Ordinary Russians
do not benefit from their country?s economic boom whose riches are
plundered largely by corrupt oligarchs and politicians.
Singaporeans are not too far off from the Russians. The state is very rich
and powerful, the politicians are the highest paid in t he world, rich
businessmen well connected to the elite dominate much of the economy
together with gigantic state-linked companies and sovereign wealth funds
but the people are poor, miserable and powerless.
State-sponsored repression
Though Russia and Singapore are supposedly democracies, both are
authoritarian governments with little tolerance for political dissent.
In Russia , political dissidents are kidnapped and murdered. Singapore ?s
opposition politicians who dare to seek the truth are sued till bankrupt
and barred from participating in elections. Repressive laws are put in
place in both countries to curtail freedom of speech, assemblies, and
other forms of civil liberties.
The mainstream media are muzzled and becomes nothing more than mouthpieces
of the regimes.
Russia ?s United Democratic Party is the dominant party in the Russian Duma
as in the People?s Action Party in Singapore . The Russian Prime Minister,
Vladimir Putin was Russia ?s ex-President for two terms and he is now
mulling a bid for the Presidency again when his current term
expires.Singapore?s two former Prime Ministers have remained in the
present Cabinet with the portfolios of Senior Minister and Minister
Mentor . Their exact responsibilities are not outlined.
Conclusion
With so much in common between them, it is no wonder that Singapore ?s
state-linked companies are flocking to Russia to explore opportunities of
collaboration..
Not only are our standards of living becoming more and more like Russia ,
there is an insidious ?Russification? of our economy and politics as well.
What started out as a ?Swiss dream? is fast becoming a ?Russian? nightmare
under continued PAP hegemony.
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
Bank in terms of GDP (PPP) per capita ($49,288). (source: wikipedia)
[PPP = Purchasing Power Parity, GDP at PPP per capita refers to the value
of all final goods and services produced within a nation in a given year
divided by the average population for the same year] Only Norway and
Luxembourg are ranked higher than Singapore . The United States ,
Switzerland , Hong Kong , Sweden , Austria , Iceland and Holland are the other
countries within the top ten.
In a way, our economy?s sterling performance is a vindication of the
government?s ?growth at all cost? economic policy. Singapore has a first
world developed modern economy. GDP growth is usually translated somewhat
to a better quality of life for the citizens, but not exactly in Singapore
?s case.
If we study the indices such as wage level, domestic purchase power and
spending power as shown in the UBS study, we will realize that we are
ranked way below the developed economies. 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.
According to a NUS study completed last year, lifetime income inequality
has been increasing rapidly especially after the Asian financial crisis.
In fact, despite the substantial growth of the economy, the lower income
quantile has seen a drop in their real lifetime income. (source: NUS
SCAPE)
In a way, we are ?paupers? compared to our counterparts in other first
world economies? Singaporeans have lower spending power, they are likely
to work longer hours and even then, many may not save enough for their
retirement. Why is this so?.
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.
Government dominance of domestic economy
The economy of Singapore is a highly developed state capitalist mixed
economy. While government intervention in the market is kept to a minimum,
the state controls and owns firms that comprise at least 60 per cent of
the GDP through state-linked companies such as DBS and Capitaland and its
two giant sovereign wealth funds, GIC and Temasek Holdings.
The government is also the largest employer, giving it leverage over the
wages of ordinary Singaporeans who are employed in the civil service.
State-linked companies stifle entrepreneurship and retards the growth of
small and medium enterprises. Singapore has the lowest number of
entrepreneurs and local startups among the four Asian Tigers. The state?s
only legal trade union, NTUC, controls all facets of the domestic economy
from supermarkets, pharmacy chains, medical clinics, food courts,
insurance, taxis and even the undertaker business.
Singapore workers have their natural rights forfeited under the government
?s ?tripartite? arrangement which is strongly pro-business.
Strikes and protests are outlawed. Ordinary workers have few official
channels to turn to for seeking redress or settling labor disputes.
The government?s overwhelming dominance of the domestic economy leads
indirectly to a passive, subservient and risk-adverse citizenry who
prefers to earn a low, but fixed, regular income as employees rather than
strike it out on their own as bosses.
The brightest college graduates either pursue a professional degree such
as medicine and law or take up attractive government sc holarships to
serve in the civil service upon graduation. Very few Singaporeans aspire
to be businessmen, scientists or innovators.
As a result, the population lacks initiative, motivation and creativity,
becoming overly dependent on the nanny state to guide, manage and control
the economy which also partly explains why Singapore produces less
millionaires than Hong Kong and Taiwan . (source: asiaone )
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 t hem to set prices arbitrarily
though the new flats are pegged to the resale markets. There is no
incentive to lower the price because there are no competitors. In a
completely free market, HDB will be competing against smaller private
firms to build flats at a cheaper price to serve the needs of the buyers
who are mainly from the middle and lower income group, thereby bringing
down prices considerably.
Lack of social safety net
The Central Provident Fund (CPF) scheme was originally introduced to
ensure that Singaporeans have sufficient funds to serve their retirement
needs.
However, recent studies have shown that most Singaporeans have
insufficient funds left in their CPF.
In the government?s CPF Life brochure, it claims that CPF is inadequate to
provide a lifelong income to the elderly because they are living longer.
(source: MOM) This is only one of the reasons. A more important cause lies
in the exorbitant HDB prices which tie up the CPF funds.
Most Singaporeans finance the purchase of HDB flats through their CPF
which has become a basic necessity in Singapore since there is no
hinterland to retreat to like in Hong Kong . The government parcels out
state land to HDB which built the flats to be sold to its citizens. The
selling price is not determined by market forces, but is set by entirely
by the government. Nobody knows the cost of the land and building the
flats. Is it reasonable for a new 4 room HDB flat to fetch more than
$300,000 and still considered ?affordable?? Though healthcare costs reman
heavily subsidized in Singapore , citizens are expected to foot part of the
medical bill from their own pockets. A single hospitalization is enough to
wipe out one?s lifelong savings. F aced with a grim and uncertain future,
Singaporeans have to save more than they can spend, contributing to our
low spending power.
Conclusion
Every elected government of the day has an implicit ?social contract? with
the voters. Citizens vote for a government to take care of their
interests.
To many, this means a roof over their heads, a decent standard of living
and provision of basic medical services.
Singapore has one of the highest GDP per capita in the world, but are we
living the lives of people in a first world economy? Has the government
fulfilled its ?social contract? to us?
The UBS study has once again exposed the inherent fallacy in the
government?s argument that unbridled economic growth will bring prosperity
to all Singaporeans.
Besides the high cost of living, all of Singapore ?s other economic indices
are far away from those of first world countries including our closest
competitors in Asia ? Hong Kong , South Korea and Taiwan . In fact we are
closer to the Russian than the Swiss standard of living.
Singaporeans are ?rich? as defined by the assets we possessed ? 90% of
Singaporeans ?own? their homes, but in name only as most of the households
are mired in debts due to borrowing from the banks to finance their
mortages. As a result, we have little disposable income to spare ? ?asset
rich, but cash-poor?.
With no social safety net to speak of, many Singaporeans cannot afford to
retire. They have work well into their twilight years till the day they
die. Is this the kind of future you want for yourself and your family?
Many developed countries now realize that the obsession with GDP growth
does not necessarily bring happiness and well-being to its people. In
fact, high GDP growth has a propensity to cause inflation, rising cost of
living, longer working hours and greater stress level for the working
population and does not always lead to wealth creation or distribution to
the lower income group.
The Sustainable Development Commission in U.K. is now advocating ?
prosperity without growth? to the government in order to engineer a
rethink of its economic policies from one which is mainly econometric to
one which is more humanistic.
A recent study published by the New Economics Foundation shows that the
happiest people on Earth are not from countries with the highest GDP per
capital. Costa Rica , with a GDP a quarter of the United States , has the
highest G lobal Happiness Index in the world.
As we stand in a pivotal moment of our history, Singaporeans must decide
whether it is worthwhile to continue pursuing high momentum growth at all
cost at the expense of the quality of life or refocusing its energy to
really achieving ?happiness and prosperity? for everybody albeit with less
impressive GDP figures.
There is an old Chinese adage: ?Resting is merely a preparation to walk
the longer journey ahead?. We have come a long way as a young nation and
there are still many years ahead of us. What do we really want to achieve
together as a people, a community and a nation? Have we lived up to the
aspirations of the National Pledge to ?build a democratic societ y, based
on justice and equality?? Are we brothers and sisters or are we simply ?
digits? in the economic machinery which makes up Singapore INC?
A country is not a corporation. Neither are its people shareholders. A
nation deprived of purpose, ideals and vision will never survive the test
of time. We need to look beyond economic indices and nurture a sense of
belonging, pride and patriotism among Singaporeans. This will only be
brought about by a government which truly respect and care for its people.
This transmission has been issued by a member of the UOB Kay Hian
Group for the information of the addressee only and should not be
reproduced and/or distributed to any other person. Each page attached
hereto must be read in conjunction with any disclaimer which forms
part of it. Unless otherwise stated, this transmission is neither an
offer nor the solicitation of an offer to sell or purchase any
investment. Its comments are based on information obtained from
sources believed to be reliable but UOB Kay Hian Group makes no
representations and accepts no responsibility or liability as to its
completeness or accuracy.
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UBS Study:
Singaporeans are as poor as the Russians and our neighbours in Kuala
Lumpur
*An analysis of the UBS study:
Singapore has the lowest wages and domestic
purchasing power among the Asian Tigers
- By Eugene Yeo, Consultant Editor
The worldwide study conducted and released by UBS lately, titled ?Price
and Earnings 2009″ has some unflattering results for Singapore . (download
the study here) While our economy has the highest GDP (PPP) per capita in
Asia at $49,288 according to a World Bank report (source: Wikipedia), our
people do not enjoy a quality of life which commensurate with it.
Though we are technically a developed first world country, some economic
indictators as shown by the UBS study suggested that Singaporeans are not
that better off than those in Third World countries..
Low wages
Singapore has a GDP (PPP) per capita higher than Switzerland , but our
wages are way below the Swiss.
The UBS study found that employees in Copenhagen , Zurich , Geneva and New
York have the highest gross earnings. With its extremely high gross wages
and comparatively low tax rates, Switzerland is a very employee-friendly
country. The net wages used have been deducted for taxes and social
security.
Zurich and Geneva have wage indices (gross) of 119.8 and 107.5
respectively. In contrast, Singapore has a wage index of only 31.3,
comparable with Moscow (30.9), Tallinn (28.7) and Johannesburg (26.7)
In the Asia-Pacific region, it is exceeded by Tokyo (83.0), Sydney (74.1),
Auckland (44.1), Hong Kong (42.3), Taipei (35.5) and Seoul (32.3) Low
domestic purchasing power Where does an average income buy the most
products and services? Wages alone do not determine the standard of living
in a particular city or country.
A better way to measure prosperity is to divide the average annual salary
by the total price of a selected basket of goods and services (as used in
the UBS study). This tells us how much purchasing power local wages.
Again, Zurich (106.9), Sydney (95.9) and Luxembourg (95.4) topped the
list?. Its citizens have the highest domestic purchasing power.
Singaporeans have a low purchasing power of only 39.9, comparable to Kuala
Lumpur (39.5), Warsaw (34.0) and Bogota (33.7).
Other countries in the Asia-Pacific region which are ahead of us are Tokyo
(82.2), Auckland (68.9), Taipei (58.9), Hong Kong (58.1) and Seoul (57.4).
In other words, though the cost of living is higher in Tokyo , the average
Japanese has a domestic purchasing power more than twice that of an
average Singaporean. Though Malaysia is still a developing country and has
a GDP (PPP) per capita of only $14,215, less than 3 times of ours, the
ordinary Malaysian citizen has about the same domestic purchasing power as
the Singaporean.
Low relative purchasing power of wages
This is calculated in the UBS study by using a specific, highly uniform
product that is available everywhere in the same quality, and then
calculate how long an employee has to work to afford it in each city. For
the purpose of this article, the iPod nano (with 8 GB of storage) is used.
An average wage earner is Zurich and New York can buy a nano from an Apple
store after nine hours of work. A Singapore worker will have to work three
times longer after 27.5 hours. The figures for selected Asia-Pacific
cities are as follows: Sydney (9.5 hrs), Tokyo (12hrs), Auckland (16hrs),
Hong Kong (19hrs), Seoul (22hrs) and Taipei (23.5hrs). Again we came in
last among the 4 Asian Tigers.
Long working hours
People work an average of 1,902 hours per year in the surveyed cities, but
they work much longer in Asian and Middle Eastern cities, averaging 2,119
and 2,063 per year respectively.
European cities had the lowest working hours per year. A global comparison
showed the people in Lyon and Paris spend the least amount of time at
work:
1,582 and 1,594 hours respectively.
Singaporeans spent on average 2,088 hours at work per year with 11 days of
vacation.
This is less than Hong Kong (2,295) and Seoul (2,312), but more than Tokyo
(1,997), Taipei (2,074), Sydney (1,747) and Auckland (1,884).
Singaporeans also took the least number of holidays after Hong Kongers (10
days/year).
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. In Asia, Tokyo topped the list
with an index of 124.7, followed by Hong Kong (96.5), Singapore (89.4),
Seoul (89.0), Taipei (67.9) and Sydney (66.3)
Conclusion
The high cost of living coupled with low wages and domestic purchasing
power condemns the average Singapore worker to an ignonimous, monotonus
and stressful working life. 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.
Ten years later, we have a living standard which is closer to Russia than
Switzerland . Like Singapore , the Russians has a low wage and domestic
purchasing power and Russia , especially the city of Moscow , has one of the
highest cost of living in the world.
In the next part of this article, we shall examine the uncanny
similiarities between life in Singapore and Russia after the
disintegration of the Soviet Union .
When Mr Goh Chok Tong became the second Prime Minister of Singapore in the
1990s, he promised Singaporeans that we will attain the ?Swiss standard of
living? within a decade. In 2001, during the National Day Rally, Mr Goh
said:
?I was also quietly satisfied that we realized our vision of reaching the
1984 Swiss standard of living last year.?
Have we really achieved the Swiss standard of living?
Though, we do not have economic indicators for Switzerland in 1984, we
have the figures in 2009 and it appears that Singapore is heading towards
a Russian standard of living, rather than Switzerland ?s.
Let us compare the indices for each category:
Singapore Moscow Zurich
Wage level: 31.3 30.9 119.8
Domestic purchasing power: 39.9 49.4 106.9
Working time to puy iPod nano: 27.5 36.0 9.0
Price of services: 72.5 65.0 110.9
As the above figures have shown, the Singapore worker has more in common
with the Russian worker than a Swiss worker.
Like the Russian worker, the Singapore worker has low wages and domestic
purchasing power which is aggravated by the relatively high cost of living
in their respective countries. In fact, the Russian worker has a higher
domestic purchasing power than the Singaporean worker though his wage is
slightly lower. And don?t forget Russia is a vast country. If one cannot
survive in Moscow , they can move to the countryside where cost of living
is lower. There is nowhere for Singaporeans to move to.
A greying population
Both Russia and Singapore have suffered from low birth rates though the
latter is making the numbers up through mass immigration.
Russia ?s population growth is almost stagnant at -0.085% in 2008. Its
population could drop by as much as one third by 2050 if current trends
does not improve.
Singapore will have about a quarter of its population above the age of 65
by the year 2030. A greying population is expected to place heavier burden
on the younger population to keep the economy going. With no social safety
net to speak of, the Russian worker will have to support th emselves in
their golden years. Many of them become addicted to vodkha which results
in a higher mortality rate than the European average.
The Singapore worker is not in a better position either. Their CPFs will
not be enough to support their retirement needs as most of it is tied up
in mortage loans to finance over-priced HDB flats. The government has
encouraged Singaporeans to work beyond the age of 80.
Parliamentarians recently consider passing a bill to legislate that
children take care of their aged parents.
With a high cost of living and declining wages, the future of Singaporeans
is becoming as bleak as the Russian winter.
A modern serfdom
Not surprisingly, the economies of both Singapore and Russia are dominated
by state-linked companies.
In the aftermath of the Soviet Union ?s disintegration in 1991, many
Russian politicians and crooks made use of the economic turmoil then to
purchase national companies and assets at bargain prices. These are the
oligarchs who soon become the new aristocracy of Russia . The politicians
at the Kremlin maintained their tight-fisted control of Russia with the
financial backing of the oligarchs.
Like Singapore , Russia has one of the highest income gap between the poor
and the rich in the modern world. Ordinary Russians are being enslaved in
a modern serfdom to contribute to the state while getting very little in
return..
Both states are very rich while its people have to slog daily to earn a
pittance at work in order to keep themselves afloat.
Russia has Gazprom, Singapore has Temasek Holdings. The former obtain its
funds from sale of natural gas which Russia has in abundance; the latter
accumulated funds from years of budget surpluses. Neither channel their
returns back to the people.
Russia is now returning to back to tsarist era where its people are
nothing more than serfs toiling the fields for others. Ordinary Russians
do not benefit from their country?s economic boom whose riches are
plundered largely by corrupt oligarchs and politicians.
Singaporeans are not too far off from the Russians. The state is very rich
and powerful, the politicians are the highest paid in t he world, rich
businessmen well connected to the elite dominate much of the economy
together with gigantic state-linked companies and sovereign wealth funds
but the people are poor, miserable and powerless.
State-sponsored repression
Though Russia and Singapore are supposedly democracies, both are
authoritarian governments with little tolerance for political dissent.
In Russia , political dissidents are kidnapped and murdered. Singapore ?s
opposition politicians who dare to seek the truth are sued till bankrupt
and barred from participating in elections. Repressive laws are put in
place in both countries to curtail freedom of speech, assemblies, and
other forms of civil liberties.
The mainstream media are muzzled and becomes nothing more than mouthpieces
of the regimes.
Russia ?s United Democratic Party is the dominant party in the Russian Duma
as in the People?s Action Party in Singapore . The Russian Prime Minister,
Vladimir Putin was Russia ?s ex-President for two terms and he is now
mulling a bid for the Presidency again when his current term
expires.Singapore?s two former Prime Ministers have remained in the
present Cabinet with the portfolios of Senior Minister and Minister
Mentor . Their exact responsibilities are not outlined.
Conclusion
With so much in common between them, it is no wonder that Singapore ?s
state-linked companies are flocking to Russia to explore opportunities of
collaboration..
Not only are our standards of living becoming more and more like Russia ,
there is an insidious ?Russification? of our economy and politics as well.
What started out as a ?Swiss dream? is fast becoming a ?Russian? nightmare
under continued PAP hegemony.
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
Bank in terms of GDP (PPP) per capita ($49,288). (source: wikipedia)
[PPP = Purchasing Power Parity, GDP at PPP per capita refers to the value
of all final goods and services produced within a nation in a given year
divided by the average population for the same year] Only Norway and
Luxembourg are ranked higher than Singapore . The United States ,
Switzerland , Hong Kong , Sweden , Austria , Iceland and Holland are the other
countries within the top ten.
In a way, our economy?s sterling performance is a vindication of the
government?s ?growth at all cost? economic policy. Singapore has a first
world developed modern economy. GDP growth is usually translated somewhat
to a better quality of life for the citizens, but not exactly in Singapore
?s case.
If we study the indices such as wage level, domestic purchase power and
spending power as shown in the UBS study, we will realize that we are
ranked way below the developed economies. 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.
According to a NUS study completed last year, lifetime income inequality
has been increasing rapidly especially after the Asian financial crisis.
In fact, despite the substantial growth of the economy, the lower income
quantile has seen a drop in their real lifetime income. (source: NUS
SCAPE)
In a way, we are ?paupers? compared to our counterparts in other first
world economies? Singaporeans have lower spending power, they are likely
to work longer hours and even then, many may not save enough for their
retirement. Why is this so?.
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.
Government dominance of domestic economy
The economy of Singapore is a highly developed state capitalist mixed
economy. While government intervention in the market is kept to a minimum,
the state controls and owns firms that comprise at least 60 per cent of
the GDP through state-linked companies such as DBS and Capitaland and its
two giant sovereign wealth funds, GIC and Temasek Holdings.
The government is also the largest employer, giving it leverage over the
wages of ordinary Singaporeans who are employed in the civil service.
State-linked companies stifle entrepreneurship and retards the growth of
small and medium enterprises. Singapore has the lowest number of
entrepreneurs and local startups among the four Asian Tigers. The state?s
only legal trade union, NTUC, controls all facets of the domestic economy
from supermarkets, pharmacy chains, medical clinics, food courts,
insurance, taxis and even the undertaker business.
Singapore workers have their natural rights forfeited under the government
?s ?tripartite? arrangement which is strongly pro-business.
Strikes and protests are outlawed. Ordinary workers have few official
channels to turn to for seeking redress or settling labor disputes.
The government?s overwhelming dominance of the domestic economy leads
indirectly to a passive, subservient and risk-adverse citizenry who
prefers to earn a low, but fixed, regular income as employees rather than
strike it out on their own as bosses.
The brightest college graduates either pursue a professional degree such
as medicine and law or take up attractive government sc holarships to
serve in the civil service upon graduation. Very few Singaporeans aspire
to be businessmen, scientists or innovators.
As a result, the population lacks initiative, motivation and creativity,
becoming overly dependent on the nanny state to guide, manage and control
the economy which also partly explains why Singapore produces less
millionaires than Hong Kong and Taiwan . (source: asiaone )
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 t hem to set prices arbitrarily
though the new flats are pegged to the resale markets. There is no
incentive to lower the price because there are no competitors. In a
completely free market, HDB will be competing against smaller private
firms to build flats at a cheaper price to serve the needs of the buyers
who are mainly from the middle and lower income group, thereby bringing
down prices considerably.
Lack of social safety net
The Central Provident Fund (CPF) scheme was originally introduced to
ensure that Singaporeans have sufficient funds to serve their retirement
needs.
However, recent studies have shown that most Singaporeans have
insufficient funds left in their CPF.
In the government?s CPF Life brochure, it claims that CPF is inadequate to
provide a lifelong income to the elderly because they are living longer.
(source: MOM) This is only one of the reasons. A more important cause lies
in the exorbitant HDB prices which tie up the CPF funds.
Most Singaporeans finance the purchase of HDB flats through their CPF
which has become a basic necessity in Singapore since there is no
hinterland to retreat to like in Hong Kong . The government parcels out
state land to HDB which built the flats to be sold to its citizens. The
selling price is not determined by market forces, but is set by entirely
by the government. Nobody knows the cost of the land and building the
flats. Is it reasonable for a new 4 room HDB flat to fetch more than
$300,000 and still considered ?affordable?? Though healthcare costs reman
heavily subsidized in Singapore , citizens are expected to foot part of the
medical bill from their own pockets. A single hospitalization is enough to
wipe out one?s lifelong savings. F aced with a grim and uncertain future,
Singaporeans have to save more than they can spend, contributing to our
low spending power.
Conclusion
Every elected government of the day has an implicit ?social contract? with
the voters. Citizens vote for a government to take care of their
interests.
To many, this means a roof over their heads, a decent standard of living
and provision of basic medical services.
Singapore has one of the highest GDP per capita in the world, but are we
living the lives of people in a first world economy? Has the government
fulfilled its ?social contract? to us?
The UBS study has once again exposed the inherent fallacy in the
government?s argument that unbridled economic growth will bring prosperity
to all Singaporeans.
Besides the high cost of living, all of Singapore ?s other economic indices
are far away from those of first world countries including our closest
competitors in Asia ? Hong Kong , South Korea and Taiwan . In fact we are
closer to the Russian than the Swiss standard of living.
Singaporeans are ?rich? as defined by the assets we possessed ? 90% of
Singaporeans ?own? their homes, but in name only as most of the households
are mired in debts due to borrowing from the banks to finance their
mortages. As a result, we have little disposable income to spare ? ?asset
rich, but cash-poor?.
With no social safety net to speak of, many Singaporeans cannot afford to
retire. They have work well into their twilight years till the day they
die. Is this the kind of future you want for yourself and your family?
Many developed countries now realize that the obsession with GDP growth
does not necessarily bring happiness and well-being to its people. In
fact, high GDP growth has a propensity to cause inflation, rising cost of
living, longer working hours and greater stress level for the working
population and does not always lead to wealth creation or distribution to
the lower income group.
The Sustainable Development Commission in U.K. is now advocating ?
prosperity without growth? to the government in order to engineer a
rethink of its economic policies from one which is mainly econometric to
one which is more humanistic.
A recent study published by the New Economics Foundation shows that the
happiest people on Earth are not from countries with the highest GDP per
capital. Costa Rica , with a GDP a quarter of the United States , has the
highest G lobal Happiness Index in the world.
As we stand in a pivotal moment of our history, Singaporeans must decide
whether it is worthwhile to continue pursuing high momentum growth at all
cost at the expense of the quality of life or refocusing its energy to
really achieving ?happiness and prosperity? for everybody albeit with less
impressive GDP figures.
There is an old Chinese adage: ?Resting is merely a preparation to walk
the longer journey ahead?. We have come a long way as a young nation and
there are still many years ahead of us. What do we really want to achieve
together as a people, a community and a nation? Have we lived up to the
aspirations of the National Pledge to ?build a democratic societ y, based
on justice and equality?? Are we brothers and sisters or are we simply ?
digits? in the economic machinery which makes up Singapore INC?
A country is not a corporation. Neither are its people shareholders. A
nation deprived of purpose, ideals and vision will never survive the test
of time. We need to look beyond economic indices and nurture a sense of
belonging, pride and patriotism among Singaporeans. This will only be
brought about by a government which truly respect and care for its people.
This transmission has been issued by a member of the UOB Kay Hian
Group for the information of the addressee only and should not be
reproduced and/or distributed to any other person. Each page attached
hereto must be read in conjunction with any disclaimer which forms
part of it. Unless otherwise stated, this transmission is neither an
offer nor the solicitation of an offer to sell or purchase any
investment. Its comments are based on information obtained from
sources believed to be reliable but UOB Kay Hian Group makes no
representations and accepts no responsibility or liability as to its
completeness or accuracy.
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We knew! We know and we all will always know better than fucking UBS or UN or even the million dollar PAP bastards.
