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The Singaporean workforce

In 1994, Nobel laureate for Economics, Paul Krugman, published a provocative article, “The Myth of Asia’s Miracle”. He noted that the Singapore economy was no different from the Soviet economy of the 50s and 60s. The Soviet economy expanded very fast for a long period but then growth eventually slowed to a trickle as it was unsustainable. Although economists did not predict it, the Soviet Union eventually disintegrated. The comparison implies that Singapore’s growth is merely a case of perspiration rather than inspiration and just like the Soviet Union’s, would run out sooner or later. This riled the PAP leadership especially LKY, who took to bashing Krugman whenever he had the opportunity, but began constantly talking about productivity.

Back in the 50s and early 60s, the Soviet Union’s growth was phenomenal, at roughly three times that of the US. At that rate, the Soviet economy could outstrip that of the US by the 70s. There was a real concern that a “collectivist authoritarian state” was better at achieving growth than free-market democracies. This was made more worrying when the Soviets launched the Sputnik and were leading in the space race. Khrushchev even pounded his shoe on the U.N. podium and declared: ”We will bury you!”, which was an economic rather than a military boast. However, upon careful study of the Soviet economy the only thing surprising about it was there was nothing surprising. All the growth could be accounted for by the labour and capital that were mobilized. There was no hint of superior productivity. The Soviet Union was very good at mobilizing resources, period. Sooner or later, diminishing returns will set in and the growth would peter off. True enough, growth eventually slowed down considerably and the Soviet Union disintegrated.

According to economists, advanced developed economies are able to sustain growth because of technological advancement which results in improvements in productivity rather than just increasing of inputs of labour and capital. In the Singapore experience, according to Krugman, the increase in growth is due to the increase of labour and capital only. Almost none of it is due to an increase in productivity. Sooner or later, growth would taper off as the labour force cannot keep growing year after year and diminishing returns on capital would set in.

Krugman isn’t the only economist who has this view. Back in 1984, a Harvard graduate student, Yang Tsao, did a study on Singapore’s growth and similarly concluded that it was mainly due to increase in inputs, but not many people took note of it. About eight years later, a very promising growth economist, Alwyn Young, wrote an article “A Tale of Two Cities” in which he compared the productivity of Hong Kong and Singapore. He found that Singapore poured in much more workers and especially capital, into its economy and yet their growth rates were not very dis-similar. He too concluded that the growth of the Singapore economy was due to increasing input rather than productivity. In other words, Hong Kong achieved roughy the same results with much less increase in resources.

Not surprisingly, Singapore loyalists shot back at its critics. Two years after Krugman’s article, Dr Goh Keng Swee, no less, and Dr Linda Low, Associate Professor of Economics at NUS, published an academic paper, “Beyond ‘Miracles’ and Total Factor Productivity: The Singapore Experience”, to debunk Krugman. They noted that during the initial years after Independence there were similarities to the Soviet model of the 50s and 60s as the focus then was to mobilize resources rather than improving productivity. However, after the late 70s, Singapore began its industrial revolution and transited from low-value industries to high-value and high-tech industries, the workforce became more educated, more emphasis was accorded to training, R&D and technological advancement, and productivity improved. Indeed from 1986 to 1994, productivity increased 2.6 percent and this increase in productivity alone accounted for 30 percent of the GDP growth in that eight years. In their conclusion, they noted that Singapore appears to have reached a matured growth stage and according to the New Growth Theory, should be “poised for increased returns to scale and accelerated growth” and envisions joining the ranks of first-league industrial developed countries. As for the comparison with Hong Kong, they noted that it is not appropriate. Crucially, Singapore is a State while Hong Kong is a city and therefore a chunk of the former’s capital expenditure goes towards not only economic but social objectives as well. As such, it is not fair to compare the productivity of their respective capital.

So, who is right?

In 2010, LKY ruefully lamented: ”We’ve grown in the last five years by just importing labour”. Indeed, not only cheap foreign workers, but foreign PMETs, new PRs and new citizens. We have also grown by just pouring more capital into the economy. Since Dr Goh and Dr Low wrote their paper, the downtown skyline of Singapore has been transformed, Sentosa has become an exclusive residence for the rich and a gambling haven, the North-East, Circle and Downtown MRT lines have been added, with each subsequent line being more expensive to build, the KPE has been dug and runs beneath the newly built Marina Barrage, the artificial behemoth of a garden, Gardens by the Bay has been erected, Terminal 3 and 4 have been commissioned and in the meanwhile, construction is in progress for Terminal 5, the mega mall called Jewel has opened to much fanfare in 2019 but has since become a white elephant (hopefully, post-Covid19, the crowd will return), Keppel Port has been de-commissioned and is shifting to the new mega port at Tuas, the list goes on. And yet, growth in the last two decades has not been high, perhaps just about justify the massive input of labour and capital as well as new foreign and local private investments. Is there any hint of superior productivity?

Someone once remarked: “What’s wrong with growth with more inputs?” The country may be richer but there are cost, not least of which is over-crowding, social friction, rise in the cost of living and increasing inequality. Even an increasing accumulation of capital will eventually face diminishing returns. Given our small geographical size, continual increase in inputs for growth cannot last very long. Growth eventually has to be borne by increasing productivity.

So, I believe Krugman and company is right. The PAP has created a Singaporean workforce that has not become any more creative, entrepreneurial or motivated, but rather, is narrow-minded, lacks initiative but good at following instructions, and on the side, looking out for rent-seeking opportunities. You can’t fault the Singaporean because he is shaped by the environment, which the PAP has created with its policies; he is merely adapting to it.

 

Foong Swee Fong

 

 

yyy
READER COMMENTS BELOW

16 Responses to “The Singaporean workforce”

  • its time and place:

    //What’s wrong with growth with more inputs?//

    yar lor. convid99 loves more inputs (especially more inputs in the form of human nos and the more the merrier closely packed like 10m open-leg (or 9.9m ?) ???? call it natural & scientific limit (or physical limit or whatnot) ???

    //And yet, growth in the last two decades has not been high, perhaps just about justify the massive input of labour and capital as well as new foreign and local private investments. Is there any hint of superior productivity?//

    hahaha. everything has its time and place ??? now build as many buildings & infrastructure as possible (a “stable cosmopolitan” environment) to attract the able & rich to park their wealth here while sinkie land still can until it cannot take anymore lor (with its eventual consequences) ??

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  • Temusik Patriot:

    Stick & carrot…couple it with the SIEGE menatality & FEAR factor people will turn into sheeple easily CONtrolled

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  • you're right!:

    A very good article, food for thoughts!!
    Btw, after Sim Hong Woo, how many more Sims alike have the little red dot produced??….Zero!! kosong!!

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  • xoxo:

    Cant toally concur on inputs of factors of production.
    Just MORE N MORE TECHNOLOGY does not equate A BETTER OUTCOME.

    MAXIMUM PRODUCTIVITY MAY NOT BE OPTIMAL FOR THE ECONOMY, WHICH,ITSELF, SHUD BE FOR THE WELL-BEING OF SOCIETY.

    NOR MORE EXCESSIVE INPUTS OF unproductive LABOUR vs EFFICIENT LABOUR like the SG-WORKERS whose productivity was well-known n recognised worldwide by ORGANS SUCH AS ILO,BERI ETC.
    That was before good sgs got replaced via,daft FT POLICY.The rest ,like they say,is History!

    A good mix of LAND,LABOUR N CAPITAL( which technology shud be part of?) is crucial.

    Look,USA applies the highest level of technogy but,fot many years,USA has been in doldrums?

    Paul Krugman can have his opinions but didnt all First Worlds,including USA,went through the various stages of economic develipment from labour-intensive to caput(tech) intensive?

    Obviously,developing economies do and will ezpwrience faster rates of growths.
    To argue otherwise is erratic.

    Having said that,Sg is importing Fake Talents with lower n lower productivity than the SGS they came to replace!

    Can LHL say not?

    Just PLOT PRODUCTIVITY ON Y AXIS AND NUMBER OF FTs on X Axis and see for yoyrselves?

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  • Sh...:

    Want changes in Singapore?
    Keep quiet and let the arrogant PAP continue their way.
    A watershed better than 2011 will happen in 2024!

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  • Dont trust PAP, SPH, MediaCorp:

    Who has been pushing up property prices?

    PAP stats say majority of the buyers are residents.

    About 20,000 new Singaporeans and 20,000 new PRs every year!

    A Taiwan tycoon based in Taiwan, a Singapore PR recently bought condo units worth a few hundred million dollars!

    its time and place:
    //What’s wrong with growth with more inputs?//

    yar lor. convid99 loves more inputs (especially more inputs in the form of human nos and the more the merrier closely packed like 10m open-leg (or 9.9m ?) ???? call it natural & scientific limit (or physical limit or whatnot) ???

    //And yet, growth in the last two decades has not been high, perhaps just about justify the massive input of labour and capital as well as new foreign and local private investments. Is there any hint of superior productivity?//

    hahaha. everything has its time and place ??? now build as many buildings & infrastructure as possible (a “stable cosmopolitan” environment) to attract the able & rich to park their wealth here while sinkie land still can until it cannot take anymore lor (with its eventual consequences) ??

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  • oxygen:

    @ FSF, PAPpypolitics/PAPpynomics knows very well that you CAN’T OPEN the economic space without parallel opening of the political space that generates the creativity and energy surge.

    The latter threatens the political longevity and hegemony of the incumbent politics. THEY WON’T TOLERATE any or smallest hint of dissidents mind thoughts even now.

    PAPpypolitics told us these – they are above the rule of law of doing what they like, never mind what the peasants think including the fake caricature of the Marxists Conspiracy among the known bent of capitalists detainees.

    PAPpynomics also told peasants this – what wrong with collecting more money from peasants?

    IT IS ONLY RATIONAL GREED UNLIMITED – never mind the embeded STUPIDITY UNLIMITED THERE IN AS WELL.

    Imagine this kindergarten level economic rationality in evidence of reality – IF YOU ENGAGED IN SUCH RENT-SEEKING BEHAVIOR (of renting out your spare room to foreign labor) sure in generate some income for the landlord BUT THE ECONOMISTS WILL ASK YOU THIS BRAIN-FARKED QUESTION – HOW DOES THAT CREATE JOBS AND GROWTH IN THE ECONOMY?

    And if PAPpynomics gets even more stupid than this and reply (imagine this actual happening) that we build more housing and artificial beauties, it creates more jobs for imported foreign labor and displacing locals but still generate GDP growth via construction activities/retail food consumption (just like Changi Jewel), the economists are all going to fiack them brain dead with this question -

    HOW ARE YOU GOING TO ADD MORE AND MORE FOREIGN POPULATION AND CREATE AN EVER BIGGER AND BIGGER “eat-and-sh*t” economy with ever saturating smaller and smaller available land spaces without generating inflation and falling living standards?

    PAPpolitics best reply then? We increase OUR PAY.

    For the dumb peasants, MORE SATURATION UNTIL THE PANDEMIC SWEPT THROUGH AND HUNDREDS OF THOUSAND OF FOREIGN WORKERS TRAPPED IN UNHYGENIC DORM ACCOMMODATION READY FOR the pandemic INFECTION AND SPREAD TO THE REST!!

    SUDDENLY, everyone is jobless in the lockdown and all staring at the wisdom of PAPpypolitics/PAPpynomics ‘s masterpiece of economic genius of rent-seeking POPULATION RECYCLING ECONOMICS.

    I say LEE-jiapore is near the end of the economic survival rope. The pandemic won’t go away, a whole middle class will get wiped out. The lower stratum reduced to street begging and robbery.

    THE NATURAL ARISTOCRATS WILL BE SMIRKING peasants and laughing it out loud at the drama show.

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  • Says who?:

    Quote
    Someone once remarked: “What’s wrong with growth with more inputs?” The country may be richer but there are cost, not least of which is over-crowding, social friction, rise in the cost of living and increasing inequality. Even an increasing accumulation of capital will eventually face diminishing returns. Given our small geographical size, continual increase in inputs for growth cannot last very long. Growth eventually has to be borne by increasing productivity.
    Unquote
    The property market is giving good total returns in capital appreciation and rental yield.
    The pyramid is building up for the past 50 years, still going strong.
    Attract more FTs and migrant workers and foreign investors to grow the GDP.
    Build up or down to accommodate these people.
    Simply, charge people for creating social friction, PAP mouthpiece SPH Chua advocates we all speak up against racist people! The NP senior lecturer was racist or just expressing his preference publicly? We do not know his circumstances and what triggered that public argument that some take umbrage to.

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  • Chickens and eggs:

    If we are talking about productivity increase to increase pay, then employers will continue to pay less than $1,000 a month to cleaners and other low skilled workers because they can always import more foreign workers.
    How are Singaporean workers going to sustain a decent living with that type of pay?
    Someone once remarked, he is a heavy weight PAP Minister by the way, a Singaporean earning $1,000 a month can afford to buy a HDB flat!
    On the other hand, I notice public toilets in sports stadiums and food centres and wet markets are usually dirty, urinals and toilet bowls full of yellow dark stains while toilets in shopping malls are generally clean without ammonia smell.
    I do not think the cleaners at the stadiums are paid less than the cleaners at shopping malls.
    It is the attitude and management of the cleaners, not just training and equipment and accessories like brushes and bleaching solution.
    I saw a cleaner at a sports stadium pouring bleaching solution on the grooves of tiles and half hour later the smell of bleaching solution is still there. The cleaner did not even bother to wash away the bleaching solution on the floor.
    What if someone falls on the floor full of bleaching solution?

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  • The Singapore Workforce:

    First, the Singaporean workforce cannot compete with the North East Asian workforce.

    Second, the Singapore Workforce consist of many imports from backward thrid World whose productivity is low.

    As a results the gap widens further.

    It is committing suicide to national productivity and economy. Let’s wait and see in 20 years time.

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  • Sperm whale sauce:

    No, i insist on Cheapest labor. Why pay more for quality?

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  • xoxo:

    Time has passed and its time to TAKE STOCK OF THE FT POLICY 25 YEARS ON?

    THE FT POLICY NEEDS TO BE STUDIED FOR ITS REAL/ACTUAL CONTRIBUTION IN *CREATING MORE JOBS FOR SGS* AS CLAIMED BY THE GAHMEN.

    PRs are not CITIZENS OF SG,they are mere RESIDENTS.
    By virtue that the NUMBER OF PRs/FTs is rather HIGH as a proportion of TOTAL PMEs,it is imperative that we do a Study of their REAL CONTRIBUTION PER CAPITA OF SGS IN TERMS OF JOB CREATION.
    OR ,IS IT JOB DESTRUCTION FOR SGS rather?

    In any case,the FTs/PRs number is really HUGE AND MUST BE SEGREGATED from CITIZENS IN ALL OUR STATISTICS.

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  • TFR < 2 or < 1.5 or < 1.3:

    //PAP stats say majority of the buyers are residents.

    About 20,000 new Singaporeans and 20,000 new PRs every year!//

    aiyoh. white monkey idiots definition is like that lor – convert many PRs to sinkies and then convert non-PRs to PR and the cycle goes on and on lor ???
    how else does this square off with TFR < 2 or < 1.5 or < 1.3 ????

    https://www.channelnewsasia.com/news/singapore/singapore-total-fertility-rate-tfr-falls-historic-low-2020-baby-14288556

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  • AristoCATs - Double down ?:

    > In 2010, LKY ruefully lamented:
    ”We’ve grown in the last five years by just importing labour”
    -
    Well, PM Pink, bereft of million$ ideas,
    double-down with “Open Gate” policy.
    -
    More than 39% should know the Power of the Ballot Box !

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  • Avoid metatheory smokescreens:

    In 1988, HDB charged $80,000 for a 5-room flat. Within that same vicinity nowadays, a 5-room BTO flat costs $550,000 …. ie. a 600% inflation in 30 year period. But median salaries have not risen by more than 80% in all those 3 decades! A fresh graduate in computer science could get $2000 in the late eighties. How much are they getting today? $3,500 perhaps?

    The Sinchiapor economic problem is unchecked inflation on essential products and services: housing, medical, and education isn’t it? Middle class professional wages are not in tandem with living expenses in one of the world’s most expensive cities!
    The ugly culprit is the practice of unbridled crony capitalism and absence of transparency wrt CPF public funds – its juicy capital base heeheehee….. and secret undisclosable remunerations of the top guns of government… unholy mackerel!

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  • Who's leegal&natural autocrat?:

    “I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country.”

    -Thomas Jefferson

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