TR EMERITUS

From The Newsroom Team The Straits Times reported that Prime Minister Lee Hsien Loong’s choice of taking commercial flights while on overseas visits came in for praise by a South Korean official and the country’s best-selling national newspaper. (read article here) Mr Lee had arrived on a commercial flight at Incheon airport in Seoul and was waiting to check in for the flight to Jeju at Gimpo airport, Chosun Ilbo reported. He was asked by South Korean Finance Minister Yoon Jeung Hyun why he chose to fly commercial. ‘Why doesn’t the leader of an affluent country use a private or charter jet?’ he asked, noting that Singapore’s per capita GDP was about twice that of South Korea’s. Mr Lee said he did not think Singapore was an affluent country, the Korean daily reported. Isn't it an irony that the Prime Minister of a country which is non affluent by his own admission, is the highest paid leader in the world? Straits Times forgot to mention that huge gulf in salaries between leaders in both countries. South Korean President is paid 16 million wons a month or only S$18,340 (1 won = $0.000115) in comparison to Prime Minister's monthly salary of approximately $250,000. Given the "pittance" which the South Korea President is paid, it is not too much to entitle him to the use of a private jet a few times a year on his travels. The Straits Times has the knack of publishing selected news from foreign news agencies which are in favor of the PAP. It does not appear to be aware of the unflattering comparison of Singapore's leaders to the North Korean dictators made by another South Korean daily, Donga Ibo in the same period of time: In a scathing article titled "Few modern dictators have handed power to their sons", it contained the following reference to Singapore's own hereditary "succession": "Of the 258 dictators, 23 attempted to hand down power to their sons but only nine who got support from elite groups succeeded. Those who achieved hereditary succession of power in Asia include Chiang Kai-shek (1949-75) and Chiang Ching-kuo (1975-88) in Taiwan; Kim Il Sung (1948-94) and Kim Jong Il (1994-present) in North Korea; and Lee Kuan Yew (1956-2004) and Lee Hsien Loong (2004-present) in Singapore" (read full article here)  Read More →

By Edmund Khor, Guest Columnist The Ministerial Committee on Low Wage Workers released a progress report on 7 June claiming that low wage workers have seen increase in their wages, and income inequality has reduced (read article here) Wages increased? Not in real terms The media reported that the 20th percentile employed resident has seen a 9.2% increase in monthly wage from $1,200 in 2006 to $1,310 in 2008. In addition, the number of residents earning $1,200 or less has fallen from 360,000 in 2006 to below 300,000 in 2008. However, the reported monthly wages are in nominal terms, i.e. they are not adjusted for increases in the prices of goods and services over the two year period. The table below shows the inflation rate for general households as well as the various income groups for 2007 and 2008 calculated by the Department of Statistics.   Changes in CPI by Income Group1 (Percent Change over Corresponding Period of Previous Year)   Year General Households Income Group Lowest 20% Middle 60% Highest 20% 2007 2.1 2.0 2.0 2.3 2008 6.5 7.4 6.4 6.1 Over 2 years 8.7 9.5 8.5 8.5   We can see that the lowest 20% income group experienced the highest inflation rate of 9.5% over the two year period. It was due to the marked increases in consumer prices attributed primarily to higher costs of food, accommodation, electricity tariffs and health care, which have relatively higher weights in the expenditure for the low income group. Thus while an average low-wage workers may have seen their nominal wages increased by an average of 9.2% over the two year period, the increase is more than wiped out by the 9.5% increase in consumer prices. Low wage workers are in fact worse off in real income terms. Likewise the number of low-wage workers – defined as those who earned S$1,200 or less in gross monthly income – would show an increase if we adjust for the loss in purchasing power.     Income inequality is still high The report also claimed that Singapore has seen a reduction in income disparity, reflected by the drop in the Gini coefficient from 0.489 in 2007 to 0.481 in 2008 – the first decline in a decade. The Gini coefficient is even lower at 0.462, after adjusting for government benefits and taxes. While income inequality measured by Gini coefficient has shown a marginal drop of 0.008, it is still higher than the 0.476 registered in 2007, not to mention the 0.444 recorded in 2000 when the coefficient started trending up.   Woes of the Singaporean workers Unlike other developed countries, Singapore workers in lower-skilled jobs face competition from cheap foreign labour. As a result, their wages are being depressed and this resulted in a huge income disparity between the knowledge and the manual workers. For example, the construction sector in Singapore is totally addicted to unskilled foreign workers and labour productivity is closer to a third world country than a developed economy. Not all Singaporeans have the skills set or the desire to be a knowledge worker. While men in western countries can work as builders and earn decent wages to support their family, can our men do likewise? Furthermore, as the lower-skilled workers that rely on manual work get older they are not as productive as the younger ones and their earning power declines. Thus we have a group of helpless Singaporeans who just could not earn and save enough for their retirement. The PAP government claimed that the access to foreign workers have enabled our economy to remain competitive. It is because many companies use foreign workers to meet skill shortages or to lower costs to compete for business. The question we need to ask ourselves is how sensitive is the cost of doing business in Singapore to the wages of the lower-skilled workers. Except for labour-intensive manufacturing activities, the cost of operating a business in Singapore is more dependent on the salaries of the executives and professionals, land and rental costs, and taxes. The use of unskilled foreign workers also hinders the adoption of technology to improve productivity. The excessive supply of cheap labour has dampen the wage rate among lower income people and harm the productivity growth of the economy. It is thus questionable why the PAP government is still subsidising economic activities that rely on cheap foreign labour that Singapore do not have an economic advantage in and do not benefit the Singaporeans? Not to mention the overcrowding and other social costs. While the reliance on foreign workers to compete on cost could boost the economy in the short term, it is definitely not a long term solution for Singapore. Businesses need to learn to move up the value chain. We should not subsidise manual labour intensive activities that are no longer viable in Singapore. By continuing to depend on cheap foreign labour, we are just delaying the inevitable shake-up. What is needed? The sustainable solution for our poorly paid workers is higher wages and a more comprehensive social safety net, not impromptu handouts (that coincides with the election years). The 300,000 in the bottom 20 per cent of the wage earners should not be made to depend on the government for financial supplement. Singaporean workers have the rights to decent living wages to support their family. The opening of world trade is eliminating opportunities for production of labour-intensive tradable goods and services in high-income countries like Singapore. As more economies open up and compete with others, firms face pressure to keep costs down. To survive, they move to lower-cost countries, outsource jobs there, turn to technology or use a combination of these strategies. All of these trends depress wages of workers whose jobs can migrate easily to cheaper places or be replaced by technology. Thus the employment of the local lower-skilled workers must increasingly be in the non-tradable activities, e.g. services and construction. If cheap foreign workers drive down wages for such jobs too, a hapless underclass will inevitably emerge. We need tighter restrictions on the import of cheap foreign labour into domestic economic sectors (i.e. industries not in direct external competition), e.g. services. This would help to raise the living standards of our citizens in the lower rungs of the economic ladder, and at the same time minimise the effect on our cost competitiveness, if any. On the social safety net, Singapore’s current social security arrangement is characterised by near exclusive reliance on CPF, which only works when employability is not an issue. However, as we have witnessed in recent years, the Singapore economy has one of the most volatile growth rates in the world due to its specialisation. In addition, we have one of the fastest changing economies. Not only are industries left to global market forces, we have a situation of accelerated restructuring led by the government. The government chooses clusters and then directs and incentivises resources to move into these industries. In the process, it displaces workers from the other industries. Long term policy solutions Firstly, the only way that we are going to give a better life for the lower income group over the longer term is to recognise that certain jobs should be kept for lower-skilled Singaporeans. Low wage jobs exist in Singapore only because of the availability of cheap foreign labour. If employers are made to pay higher wages, they will be encouraged to invest in technology and in their workers to maximise their productivity. It may cost more, but we have people providing services at a more efficient level. Secondly, Singapore needs to implement a safety net that supports workers who fall off the labor-market trapeze - improving programs ranging from unemployment insurance to job retraining, health insurance, pensions, and right down to public assistance. While there will not be massive unemployment; there will be a massive transition. An effective safety net would ease the pain and, by so doing, speed up the adjustment. 1 http://www.singstat.gov.sg/news/news/cpi-jul-dec2008.pdf    Read More →

By Eugene Yeo It was reported in the Straits Times that Senior Minister Goh Chok Tong is on a four-day visit to Myanmar. His visit is at the invitation of General Thein Sein, Myanmar’s Prime Minister. (read article here) According to the Prime Minister's Office, Mr Goh’s trip will cover the cities of Yangon, Mandalay and Taunggyi, to better understand "developments" in other parts of Myanmar. He will also travel two hours by road and boat from Yangon to open a hospital in Kayin Chaung village. In all likelihood, SM Goh will be shown a grand Burmese "wayang kulit" and come away convinced that the country's military dictators are "developing" Burma for the good of its citizens. The old British administrative Yangon (formerly Rangoon), the imperial capital of the Konbaung dynasty in Mandalay and the hill-station outpost in Shan state, Taunggyi are one of the more "decent" cities in Burma. In fact, the three of them form a "tourist triangle" which together with Bagan, are the only cities open to foreigners on a tourist visa. The rest of the country is out of bounds to tourists. Even by ASEAN standards, Yangon and Mandalay lag far behind its sister cities in nearby Bangkok and Chiang Mai in terms of development. Yangon looks like Singapore in the 1960s with its low rise colonial era buildings, narrow alleys and shophouses. Mandalay is now getting a sleazy image with the influx of Chinese businessmen from Yunnan province opening KTV lounges, gambling dens and budget hotels in the old city center. Taunggyi is a pleasant, cool and rustic place at 2,000 feet above sea level. It will have great tourism potential if not for its somewhat precarious position near the drug towns of Mong An and Mong Tao. During my first trip to Burma as an undergraduate on a "humanitarian" project organized by the Singapore International Foundation, I was treated to a Burmese "wayang kulit" too. Our Burmese hosts were the most polite, friendly and obliging people I had ever met in my life. We were put up at a 4 star hotel and served palatable Chinese/Burmese cuisine everyday. We travelled by coach with the entourage being escorted by officials from the Ministry of Education at every stop. Of course, like SM Goh, we were brought to an orphanage in the suburbs where we did some "community" work and brainwashed with state propaganda, aka Burmese style, about the regime's "nation-building" efforts. (seriously, the Burmese still have a lot to learnt from SPH/PAP on how to spin a tale without being too obvious) My second trip to Burma was a real eye-opener. I signed up with a Christian-based charity in Mae Sot, Thailand which was funding Dr Cynthia Maung's Mae Tao clinic for Burmese refugees stranded along the Thai-Burma border. (read more here) Dr Cynthia Maung is an ethnic Karen, one of the many ethnic groups in Burma. The majority of the Karens are Christians in pre-dominantly Buddhist Burma. In 1988, following the military's crackdown on pro-democracy protests in Yangon, Dr Cynthia Maung fled with her family to Mae Sot, where she subsequently set up the Mae Tao clinic with help from foreign donors to provide basic healthcare to the Burmese refugees. The military junta had embarked on an ethnic cleansing campaign since 1962 to bring the various ethnic groups clamouring for independence under its direct control. According to the United Nations High Commission for Refugees, there are an estimated 150,000 refugees living in 11 camps along the 2,400 km long Thai-Burma border. Most of them are ethnic Karen and Karennei who were forcefully evicted from their villages by the military. Many were enslaved and forced to work as porters, laborers and even soldiers. The number of internally displaced people IDRs in Burma today remains unclear. During my stint at the refugee camp, I was attached to a mobile medical unit to provide medical services to IDRs scattered on both sides of the border which is porous and accessible at several crossings. Forced labor with workers chained by the legs paving roads, child soldiers with AK-47s slinged over their shoulders and amputees begging on the streets are a common sight on the Burmese side of the border. Stories of systematic torture, rape and executions were aplenty. Entire villages were emptied and razed to the ground with its male inhabitants forcefully conscripted into the army to fight the insurgents. General Thein Sein will never show SM Goh the harsh reality on the ground. He will be brought to where the Burmese want him to be and see. It is a shame that ASEAN is turning a blind eye to the lagest humanitarian crisis on the Thai-Burma border while continuing to cultivate business and political ties with the obnoxious military junta. As for Singapore, our government will continue to invest in the country to bring "development" to the blood-thirsty generals and its inner circle of cronies, leaving the rest of the populace improverished, hungry and deprived.  Read More →