https://www.theedgesingapore.com/ne...oney-cheap-labour-and-cheap-energy-ravi-menon
The era of cheap money, cheap labour and cheap energy is over, and Singapore must get used to higher prices as new cost structures emerge, says Ravi Menon, managing director of the Monetary Authority of Singapore (MAS).
“There has been too much borrowing, too much inequality and too much carbon emissions globally. Interest rates are not going back to the zero lower bound that we have seen in the last two decades. The cost of borrowing will be higher, more reflective of time horizons and risk premiums,” says Menon at the launch of his book, The Singapore Synthesis: Innovation, Inclusion, Inspiration.
Menon is the Institute of Policy Studies’ ninth S R Nathan Fellow for the Study of Singapore. His book collects the four IPS-Nathan Lectures he delivered in July 2021.
Speaking on Aug 23 at the Lee Kuan Yew School of Public Policy in the National University of Singapore, Menon says Singapore faces a shrinking labour force, extended progressive wages for more sectors of the economy, and higher qualifying salaries for non-resident workers. “We can no longer rely on cheap labour to power our economy and society; and we should not, as we forge a more inclusive society.”
In addition, the cost of energy can only go up as Singapore joins the world “in a race against time” to cap global warming. This is a noble endeavour that may cost more in the short term, says Menon.
See also: Singapore all-items CPI up 7.0% in July; MAS Core Inflation up by 4.8% y-o-y
“It is not a bad thing that money, labour, and energy are being priced to better reflect their relative scarcities. The economy needs to adjust to these new cost structures. The most effective way is through pervasive innovation and skills upgrading as the basis for higher productivity and wages across the board,” he adds.
Inclusivity as a hallmark
Inclusion must be the hallmark of Singapore society, says Menon. “To stay cohesive as one people, we must be a place where everyone has an opportunity to move up in life and everyone is treated with dignity and respect. We must lift our low-wage workers, sustain median wage growth, temper wealth inequality and promote income mobility.”
Good jobs and rising wages, rather than high taxes and widespread transfers, will improve Singapore’s social inclusion, says Menon. “We need safety nets for a basic level of support through some form of minimum wage and an enhanced workfare income supplement. We need a trampoline to help those who have lost their jobs bounce back through re-employment support. We need escalators to enable people to move up a trajectory of rising wages.”
The era of cheap money, cheap labour and cheap energy is over, and Singapore must get used to higher prices as new cost structures emerge, says Ravi Menon, managing director of the Monetary Authority of Singapore (MAS).
“There has been too much borrowing, too much inequality and too much carbon emissions globally. Interest rates are not going back to the zero lower bound that we have seen in the last two decades. The cost of borrowing will be higher, more reflective of time horizons and risk premiums,” says Menon at the launch of his book, The Singapore Synthesis: Innovation, Inclusion, Inspiration.
Menon is the Institute of Policy Studies’ ninth S R Nathan Fellow for the Study of Singapore. His book collects the four IPS-Nathan Lectures he delivered in July 2021.
Speaking on Aug 23 at the Lee Kuan Yew School of Public Policy in the National University of Singapore, Menon says Singapore faces a shrinking labour force, extended progressive wages for more sectors of the economy, and higher qualifying salaries for non-resident workers. “We can no longer rely on cheap labour to power our economy and society; and we should not, as we forge a more inclusive society.”
In addition, the cost of energy can only go up as Singapore joins the world “in a race against time” to cap global warming. This is a noble endeavour that may cost more in the short term, says Menon.
See also: Singapore all-items CPI up 7.0% in July; MAS Core Inflation up by 4.8% y-o-y
“It is not a bad thing that money, labour, and energy are being priced to better reflect their relative scarcities. The economy needs to adjust to these new cost structures. The most effective way is through pervasive innovation and skills upgrading as the basis for higher productivity and wages across the board,” he adds.
Inclusivity as a hallmark
Inclusion must be the hallmark of Singapore society, says Menon. “To stay cohesive as one people, we must be a place where everyone has an opportunity to move up in life and everyone is treated with dignity and respect. We must lift our low-wage workers, sustain median wage growth, temper wealth inequality and promote income mobility.”
Good jobs and rising wages, rather than high taxes and widespread transfers, will improve Singapore’s social inclusion, says Menon. “We need safety nets for a basic level of support through some form of minimum wage and an enhanced workfare income supplement. We need a trampoline to help those who have lost their jobs bounce back through re-employment support. We need escalators to enable people to move up a trajectory of rising wages.”
