Another massive rent-hike and another cheap local eatery out of business. The government has made a point of telling us that while cost of living may be expensive for expatriates, things are still very affordable for the so-called “average local” – but this logic is problematic. Firstly because it is the cheap local eateries that cannot afford to carry on in high-cost Singapore, but also because the distinction between expat and local cost of living depends on a very narrow world view. With an eye on income inequality more generally, it seems clear that businesses catering to the lower cost “average local” market are the ones being squeezed out, and the less well off are the ones suffering.
Tag Archives: Policy
The question of whether or not foreign workers in Singapore suffer systemic abuses continues to attract government denials and rebuttals, but to many observers the answer has long been settled with an obvious and resounding yes. In recent years Singapore has twice been rocked by apparently disgruntled workers, firstly with the SMRT bus drivers strike, and secondly the Little India riots. The plight of SMRT’s Chinese drivers was well documented in the months after they refused to work, but as the government continues to deny such realities in the wake of last year’s riots, it seems clear that crucial lessons have not been learned. As long as such problems go ignored, denied and unresolved, relations between foreign workers and locals are likely to be volatile.
Take a few eggs with peanut oil to fry them, add some chopped fresh tomatoes and mix it all up. Serve alongside a bowl of white rice and wash it down with orange juice. Is this the expatriate lifestyle Finance Minister Tharman had in mind when rebutting the Economist Intelligence Unit’s finding that Singapore is now the most expensive city in the world? Because all those items are included in the shopping basket used by the EIU to assess cost of living globally – including the frying pan you cook it in and the dishwashing liquid you use to clean up afterwards. So it seems unlikely that Tharman was correct when he said the survey does not accurately reflect the cost of living for locals.
My initial reaction on hearing that Gilbert Goh had planned to carry out the burning of an effigy of transport minister Lui Tuck Yew was shock and disappointment. There’s got to be a better way to express one’s dissatisfaction with the government and their increasingly authoritarian system. A pile of ashes is not going to contribute much to nation building, not least if it distracts from much more important questions around an economic model of state control in key industries that leaves citizens short-changed. I’m still glad that the act didn’t go ahead, but when The Online Citizen reported that the government had gone so far in 2008 as explicitly stating that burning of effigies would be legal at Hong Lim Park, it became clear that there is another side to this story.
If you could leave Singapore, would you? For many Singaporeans, especially from the younger generations, the answer apparently is yes, in large numbers. This doesn’t seem sustainable, not least because the brightest individuals with the most to contribute will inevitably find emigration overseas easiest. While the negative effects of a so-called brain drain on Singapore’s economic strength will take years to manifest, the bad news is that this trend has already been going on for years. We may be suffering the results already.
This is part two of my year in review, you can read part one on justice here. 2013 has seen significant changes in Singapore, some real and some illusionary. Ironically the changes which were hardest to believe were often the ones most hyped up by the government and their supporters, whereas the most significant and regressive changes were downplayed as if they were of no significance whatsoever. Perhaps most interesting however were the number of cases where the government said one thing, and then did almost exactly the opposite. Let’s take a look at a few.
The biggest u-turn this year, in fact the most significant explicit policy change overall was probably the government’s decision to renege on “light touch” regulation of the internet with the introduction in May of burdensome licensing requirements for loosely defined “news websites”. Despite a large public relations effort to downplay the impact of the new regulations, government claims that changes were required to synchronise rules for online media with those for mainstream media did little to dispel fears that this was a thinly veiled attempt to chill freedom of speech. The Economist described the change as “draconian“, Reporters Without Borders (RSF) called government justifications “utterly absurd“. Many expect Singapore to fall further down RSF’s annual press rankings next year, the city-state already languishes at 149, one place below Russia.
One of the hotter policy topics this year has been the structure of Singapore’s public transport operators. With two state linked companies enjoying a cozy duopoly, the government’s plans to inject some competition into the market by tendering certain routes to private operators were warmly received. Hopes for market principles to take hold in centrally planned Singapore were however dashed when the government did a u-turn and awarded the first such tender to the state linked parent company of an existing operator. Neglecting to award the tender to a true new entrant was a missed opportunity to introduce new ideas into a transport sector which while high profitable, has a growing reputation for poor service standards.
From maintaining an existing monopoly to creating a new one, this time in telecoms. The IDA did a u-turn in allowing state controlled Singtel to buy out previously independent fiber broadband network builder OpenNet through its wholly owned business trust NetLink, giving Singtel a monopoly over the next generation broadband network in the process. At the same time Singtel won a four-year extension on its mandatory divestment of NetLink, a move that is predicted to entrench their incumbent monopoly power, and which drew stinging criticism from industry players.
The most recent and probably most superficially annoying u-turn of the year came just last week on the “do not call” registry. After years of planning the government pulled the plug on key features of the scheme just days before it was due to go live in an all too predictable sop to business interests. Consumers can unfortunately expect to continue receiving unsolicited messages after the registry goes live in January.
Any government u-turns missing? Speak up in the comments if you can think of any others.
I originally wrote the below article as an exclusive for The Online Citizen under the title “False dichotomy of Singapore’s options”. I am reproducing it here with their permission.
Calvin Cheng’s recent article for Yahoo on the fate of immigration policy in the wake of the Little India riots is thought-provoking if not a little condescending. In it he juxtaposes the current plan for a population of 6.9 million, driven by the population white paper, with his own “Plan B” – a vision of Singapore with almost no immigration. In framing the debate thus, Calvin presents a false dichotomy between ultra-liberal and ultra-conservative immigration and it should be obvious that there is a third way, a more sustainable “Plan C” which balances the demographic challenges facing Singapore in coming years, with a more productive economic model less reliant on foreign workers who are often exploited.
The problem with the white paper
Calvin claims to have “seen the statistics, the facts” and states that current immigration policy is “anchored on irrefutable facts and figures”. In the context of his article, it is clear that he is referring to the population white paper and the path it lays out towards a population of 6.9 million. Yet both Calvin and the white paper make the same very peculiar mistake, and their conclusions are anything but irrefutable. The supposed link between demographics and the need for immigration relied on by both is actually extremely weak, and the “facts and figures” in the white paper make this point very clear. While it may be true that without immigration Singapore faces a shrinking citizen workforce, the demographic trends charted in the white paper state that this will not happen until 2020. So the “bleak” future described by Calvin is actually quite a long way off, and cannot be seen as a valid justification for the policy of today which he nonetheless supports. Furthermore, there is still no obvious reason why Singapore’s population should need to increase as dramatically as planned. To offset a shrinkage, one obviously only needs to add enough resources to maintain things at their current level, and for this reason the case for 6.9 million was never supported by the demographics arguments made out in the white paper. To put it simply, there is almost no correlation between the demographic challenges upcoming and the immigration policies concocted in response. This weak link between policy and its justification leaves many sceptical as to the real motives behind this most controversial of government schemes.
The problem with plan B
The plan B Calvin describes as an alternative to the population white paper appears to be not much more than a practically zero immigration straw man argument which almost no one has previously spoken for. It describes a relatively unpleasant vision for the future with Singaporeans working in construction, as well as doing “all the other manual work” now done by foreign labourers, and is a plan we are informed comes with “painful” social costs. We are warned that bus fares would have to increase if Singaporeans are to work as drivers, yet does anyone remember fares going down as Chinese drivers have been hired in increasing numbers? Conversely, no mention is made of the jobs Singaporeans do not shun, such as working as cabin crew for Singapore Airlines, but which are done increasingly by immigrants as locals are discriminated against by government-owned companies in the local labour market.
Clearly this Plan B is extremely flawed. Dependent as it is on apparently negligible levels of immigration, it is one which has apparently been plucked from the opposite end of the policy spectrum from the white paper and has been garnished with various unpalatables in the hope that Singaporeans will reject it in favour of current policy. Yet the false dichotomy presented between these two options of extremely high and extremely low immigration should be obvious. Clearly, there is a third path, one with some immigration required for example in construction as well as to offset demographic changes, but not so much that Singapore’s population balloons unsustainably towards seven (or even eight) million.
Plan C for Calvin Cheng
A more moderate and balanced immigration plan C can be characterised with a simple phrase – “steady state normality”. Steady state means we don’t need to keep growing the population indefinitely into the future, a more sustainable idea might be to plan for overall population numbers to remain steady in the long-term, and the current population can become the “new normal”.
The first immediate outcome of not endlessly inflating the population is that we do not need to continually import more construction workers to build more houses for more people. While today there may be a shortage of housing which needs to be addressed, in the long-term this need should tail off. A similar argument can be made for malls and MRT lines if not perhaps for hospitals in an ageing nation. In planning for steady state normality therefore we effectively pull the plug on some of the biggest drivers of immigration, hopefully alleviating some of the major social costs at the same time.
The flip side to not continuing to pump up the population is that the economic balloon called Singapore Inc will also not be inflated. Yet apart from government ministers with GDP linked bonuses, it is not clear who really loses out in that case. Singapore is already an extremely rich country, in GDP terms one of the richest in the world, but it is also one with an extremely unequal distribution of wealth. The challenge for Singapore today should be much less about making the pie bigger, and much more about sharing it more equally. There are obvious ways to achieve this, many of which are unrelated to immigration, but one idea would be to bring back estate duty which may have the added benefit of encouraging a few Ferrari driving wealth managers off the overcrowded roads.
In fact, if we accept a long-term steady state population plan, many of the concerns raised in Calvin’s article are diminished or removed. There won’t for example be lower tax revenues, certainly not while the local workforce continues to grow until 2020, and not after 2020 either, because we should allow some immigration to make up the difference. Even if there were a smaller tax base, the difference is likely to be tiny compared to the billions in surpluses typically collected every year, and would be further offset by a proposed estate tax. Obviously then there would also be no need to dip into the reserves.
Surely there are gaps and flaws in this plan C, but it is just a starting point. The most important thing to bear in mind is that current policy together with Calvin’s plan B represent an obvious false dichotomy which should be rejected. There are other more sustainable options available to us, which chart a path somewhere between those extremes of very low and very high immigration. I don’t claim any unique insight into exactly where that path should lead, but it is a direction that should definitely be explored.
I originally wrote the below article as an exclusive for The Online Citizen. I am reproducing it here with their permission.
Launched and promoted to great fanfare by the ruling party, the progressive wage model looks good as a press release, but is hamstrung by the twin flaws of obviousness and impossibility. Obviousness, in the sense that it describes a relatively straightforward career progression ladder that employees should be encouraged to climb toward greater salaries – an idea that many would suggest does not require a million dollar minister to think up. But also the impossibility of the system is glaring, because there appears to be no way to actually require employers to give their staff the chance to climb this skills ladder. In fact, one look at an example “wage ladder” reveals another truth which should have been obvious – a company staffed with employees who have all reached the highest rung would be very “top-heavy” and probably unsustainable as a business.
Updated: The editors at TRE pointed out quite rightly that the increase in the number of foreign workers coming to Singapore is on target this year to be less than in previous years. Whether this “reduction in the increase” represents a tightening rather than a “slower loosening” is debatable. The chart below appears to show that the overall trend is mostly unchanged. However, the most important questions still remain. In light of increasing unemployment and decreasing wages, can the government be said to have delivered policy results that benefit Singaporeans? Despite lots of noise around a “tight labour market”, it would appear not.
Government claims to have been tightening on foreign labour could never be reconciled with a population white paper that laid out a path to GDP growth through massive immigration. As I wrote at that time, propaganda rather than policy changes appeared to be driving the debate. The truth – that the government is not tightening the inflow of foreign workers – has recently been revealed by three pieces of information released by the government itself. These revelations leave many in government with some explaining to do – why so much focus on the problems associated with a labour shortage when one does not appear to exist. On the contrary, the problems caused by an over abundance of cheap foreign labour – stagnant wages and increasing unemployment – are very much still present and, if anything, worsening.
Singapore’s handsomely remunerated law-makers have on occasion claimed to be so busy running the country that they couldn’t pause even to hold elections. If this is true, one wonders where their hours are spent. Revelations today hint that writing legislation is not the answer. A look at the wording of the Building and Construction Industry Security of Payment Act indicates that significant tracts of that document appear to have been taken, almost word for word, from Australian legislation of the same name. Legislation first passed into law in New South Wales five years before it hit Singapore’s statute books. Is this a case of “plagiarism in parliament” or is there a more innocent explanation?