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Singapore Democratic Party |
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Manifesto: The Economy It is a mistake to think that Singapore’s economic progress has flowed from the wells of PAP wisdom. It is often forgotten that under British rule, Singapore was already enjoying a standard of living unsurpassed in the region. Singapore’s development as an international trading centre (and hence its economy) began in 1819 with the arrival of Stamford Raffles and not in 1959 when the PAP came into power. In fact, under the PAP economic expansion has benefits the few who control economic production at the expense of the masses will are forced to work harder and harder just to ensure that their basic needs are met. What is needed is an economic system that works for the people, not vice versa. For this to happen, we need an economy in which the people can participate, one that the people, both employers and employees, truly own. In others words, a democratic economy. Material gain must have a collective social good. Gain for its own sake can be destructive to social processes and to the activities of a community. Social good can only come about when the people are not alienated from the decision-making process and when community bonds are strengthened instead of weakened. For this to happen in Singapore, reform is needed in the following areas: Immediate Term Many Singaporeans have been retrenched or have seen their wages cut because of the recession. Under the present system these workers have little financial protection when they are retrenched. Adding to the worsening situation is the PAP's ill-conceived foreign talent policy. To remedy the situation for the immediate term, the SDP proposes: Introduce a minimum wage The DOS has reported that while Singapore's GDP per capita income is $23,000, its wage structure is closer to that of the Third World. Such an economic arrangement is not good for long-term growth. Ensuring a minimum wage for the lowest of the low-skilled employee guarantees that prosperity is shared by all. Legislation is needed to prevent Singaporean workers from being exploited and ensure that employees be paid fair wages for their work commensurate with the cost of living. For a start, the minimum wage should be set at $5 per hour. Pay retrenchment entitlements Presently when a worker gets retrenched, he or she is left out in the cold with no financial protection. This cause severe strain on the entire family with serious social repercussions. Under the SDP proposal, the Government will pay all retrenched workers their full salary for the first six months. This amount would be reduced to 75 percent during the next six months, and further reduced to 50 percent in the third six months. Each worker will be allowed to reject only up to three job offers in the one-and-a-half years following which the retrenchment entitlement ceases. Such a scheme will provide workers a cushion when they are retrenched while at the same time encourage them to seek employment. Implement Singaporeans First Policy The PAP's foreign talent policy adds to the burden of Singaporeans by indiscriminately allowing foreigners to seek employment here. The SDP will push for a Singaporeans First Policy, which will insist that employers retrench foreign workers first and only lay off Singaporean workers as a last resort. In addition such a policy will require the Government and employers to employ foreigners only if locals cannot be found for the job. This will ensure that only qualified foreigners will be allowed into Singapore. Longer term Upgrade minds, not just skills It is not enough simply to expand and raise the educational level among the people in the hope that they will acquire the skills needed to make Singapore more attractive to foreign investors. Education in the broadest sense is distinct from schooling, or formal education. Schooling can produce very competent and even highly skilled workers. However, these individuals can still be inculcated with values that adhere to a system of unquestioning obedience in which diligence, perseverance, and orderliness are prized behavioural traits. Even academics in authoritarian systems who are utterly proficient in their areas of research can be socialised to become more obedient to the state rather than to exercise independent thought. Such a system inevitably produces workers who may perform competently when society is well organised and structured, but who will, when spontaneity and creativity is of the essence, find it difficult to exercise an independent and unfettered mind. In such a situation, the dearth of entrepreneurs results in a loss of economic competitiveness. Until recently, Singapore’s educational system has emphasised rote learning and has graded students almost entirely on their performance in year-end examinations. This has resulted in a workforce that has been adequately schooled but woefully undereducated to meet the needs of rapidly changing economic conditions. The government has belatedly realised that this form of schooling deprives society of entrepreneurial minds, resulting in the school curricula being revamped to teach students the importance of independent and analytical thinking. Will this work? Not if we consider the fact that education transcends the classroom and that learning to think critically must extend into the working world. At the moment, participation in the political process is conducted through government-approved channels such as the local media, feedback units, and residents’ committees. There exists little or no avenue whereby the people can organise themselves independently and exercise their franchise as citizens. Conformity has become second nature to the people. Because of this socio-political arrangement, productivity at the workplace is correspondingly affected. A worker’s level of productivity can be increased through compulsion and threats only to a degree. Beyond that, no amount of coercion can bring about higher-quality output. The less control an individual has over his or her environment, the more that individual retreats into alienation and disengagement. This sense of learned helplessness is anathema to resourcefulness, innovation, and productivity. The government is presently conducting another of its campaigns, this one targeted at upgrading workers’ skills. Without a concomitant upgrading of their minds, however, workers will continue to be put through a slavish, interminable loop of working harder and harder for smaller and smaller returns and will endure more and more economic insecurity. Education must not be reduced to a tool to serve the economy. Such a strategy will defeat the purpose that educational reform was meant to achieve. Instead, education must be coupled with societal conditions that allow the people to exercise their skills in the most productive way, in the workplace as well as in school. For this to happen, the political system must undergo an overhaul, the subject of discussion in the next section. Democratise the economy Much has been made of the notion that democracy may actually hinder economic growth. In Singapore, this idea has been put in practice for all of its post-independence existence. The PAP, in trying to isolate economics from democracy, completely misses (or refuses to acknowledge) the point that the absence of political participation of the people has an adverse impact on the economy. It doesn’t take a lot to see that how people live and how they organise their lives depend on the way in which economic activity is constructed, which is, in turn, wholly based on decisions made by politicians. And because these politicians have a vested interest in the decisions they make, citizens want to ensure that the process is open and transparent, and one in which they have a say. When this is not possible, emigration becomes an attractive, and sometimes the only, alternative. The migration of people from oppressed lands in search of freedom has been taking place for centuries. In modern times, it is how America was built and, to a certain extent, was how Singapore came into existence as well. Thus, it seems a trifle odd for Singaporeans to want to leave their country for another, especially considering that the city-state has been touted variously (unfortunately, most often by the PAP) as a ‘garden city,’ an ‘intelligent island,’ a ‘Boston of the East,’ and a ‘hub’ for everything from the liberal arts to the life sciences. In the early years after independence, emigration from Singapore was negligible. By the mid-1980s, 2,000 families a year were leaving the country for good. In 1989, the figure jumped to almost 5,000. This is no small number, given the diminutive size of Singapore’s population. It was about the same as the number of Hong Kong citizens who wanted to get away from the territory because of the looming return of Chinese control, a threat that did not exist for Singapore. The problem of emigration had become so acute by the late 1980s that Lee Kuan Yew, then prime minister, was moaning over the seemingly incomprehensible exodus, berating these Singaporeans as ‘washouts.’ As was pointed out earlier, former prime minister Goh Chok Tong admitted that many of Singapore’s best and brightest, having left for studies and training overseas, are refusing to return home. The government continues to believe that offering fiscal incentives is the key to retaining the country’s talent. Lee Hsien Loong cited how a French supermodel had left Paris for London, despite the fact that she was accorded goddess-like status by the people and the government in her own country because of her superstar qualities. The reason she left, Lee said, was because of the high income tax in France, and he added that Singapore ‘will have much more problems than France if we do not allow our talent to earn what they can command in the global economy.’ All else being equal, this observation may very well be correct. He forgets, however, that people of talent also want to live in a country that respects their political rights. In Singapore, high wages and low taxes for professionals may beckon, but the lack of political space in the city-state makes the place rather unappealing. Nobel laureate and economics professor Amartya Sen underscored this point: ‘Economic incentives, important as they are, are no substitute for political incentives. The lacuna of the absence of an adequate system of political incentives cannot be filled by the operation of economic inducement.’ Not only does democracy not hinder economic growth, it actually facilitates growth. We all know that creative thinking is what makes entrepreneurs successful, and it is through these entrepreneurs that jobs are created. Even Lee Hsien Loong is able to see that ‘entrepreneurship creates more new jobs.’ What he is unable or unwilling to grasp is that free and open societies are to creativity as oxygen is to fire. One analyst commented that ‘Singapore’s problem is expecting competent technocrats at home to operate as fire-in-the-belly entrepreneurs elsewhere in Asia, without creating a political climate in Singapore that rewards free enterprise [emphasis added].’ If Singapore is going to remain economically viable, politics in the republic cannot remain unreformed. Scale back GLCs The economies cited earlier are also good examples in which the domestic private sector, and not the state, has taken the lead in the country’s economic development. For example, the Taiwanese government has initiated forays into certain industries and subsequently left the development of the business to the private sector. It continues to encourage entrepreneurship by providing a business-friendly environment, but at the same time keeping itself from becoming directly involved in business. Japan and South Korea are other instances in which the authorities provide the basic infrastructure so that private enterprise can develop. It is crucial that Singapore make the transition from a state-dominated economy to an economy in which private individuals take the lead. Quite apart from the conflict of interest generated by direct involvement of government with business, there is also the problem of inefficient use of resources by the GLCs. Pretend as they might, GLCs cannot provide, much less sustain, economic development in Singapore. They must be dismantled and, in their place, local private companies must be allowed to surface and be given the chance to compete internationally, with the government taking only a supporting role. This will, of course, require a sea change in the thinking of the PAP, because the party will lose its grip on the political economy of the country. No one is expecting this to happen anytime soon as the government has emphasised repeatedly that GLCs will remain a firm feature of Singapore’s economic structure. Unfortunately, it is precisely this continued economic strangulation by the government through GLCs that will cause even greater hardship to the people of this country.
Minimum
wage: What it is and why it's important Since we posted the proposal of instituting minimum wage in Singapore, some readers have asked questions about its feasibility. Will it raise the cost of business? Will it cause more unemployment? One even said that it was unworkable. The Singapore Democrats present more information on this topic and provide compelling reasons how such legislation will help not just help the workers but the economy in general. What is minimum wage?
Minimum wage is
mandated by law where a worker cannot be paid below a ceratin
amount (usually calculated on an hourly basis). One, it minimises exploitation of workers. Singaporean workers are paid very poorly in relation to the cost of living in this country. In a survey conducted by the Global Competitiveness Report, Singaporeans are among the worst paid in the world after one accounts for productivity. Out of 59 countries surveyed in the study, Singapore ranked 56th. Only Russia, Ukraine and Ecuador paid their workers more poorly. Another indicator is that while Singapore’s GDP income is 25 times that of Indonesia's, our labour costs is only 1.6 times as great. This tells us that for the kind of work that they produce, working Singaporeans are not being paid equitably. Even the Government has admitted that while the country’s GDP levels are high, our wage structures remain at the Third World level. Two, minimum wage increases the purchasing power of Singaporeans which helps the general economy. Three, it raises the productivity of workers. Workers who are underpaid have to find alternatively sources of income such as taking on a second job. Under such stressful conditions, can an employee give their 100 percent to their first job? Financial stress and insecurity bring added problems at home. This again boomerangs on a worker's performance in the workplace. Worker efficiency and labour productivity suffer when workers’ salaries are not commensurate with living costs. Paying workers unjust wages may well be a case of being penny wise, pound foolish. Four, higher wages encourage employees to stick with one employer instead of job-hopping. This enables workers to learn new skills and gain important experience which, in turn, benefits the company. Conversely, employers are more willing to train the workers rather than go for the lowest wage “bidder” for the job. Increase in employer-employee trust and loyalty can only boost productivity and lower other cost factors. Won’t minimum wage drive up costs and thus cause less people to be employed? Studies by some economists in the US show that minimum wage, while causing increases in salaries, show no signs in decreasing the number of jobs. Of course, there will be a “tipping point” beyond which minimum wage becomes counterproductive. That is, the minimum wage is so high that businesses have to close, resulting in retrenchment, or that they cannot afford to employ more people. But this is where market forces come in where employers and employees come to a compromise/agreement on the level of a healthy and productive minimum wage which benefits both sides. But the point is that there must be this tension between management and workers. In Singapore at present, no such mechanism for bargaining exists. The PAP Government is the employer and final arbiter on wage levels, and it insists that there should not be minimum wage. In the meantime, Singaporeans continue to labour under impossibly low wages. We cannot even begin a debate about whether a certain level of minimum wage is too little or too much because we’re not even at the starters’ block! Perhaps the most convincing evidence in support of minimum wage is the fact that many countries have it and, more important, they are doing much better than Singapore in terms of economic performance. The best example is Ireland where the minimum wage is US$8 per hour. Yet the country has the fourth-highest GDP per head in the world in 2005, low unemployment not to mention a very free political system (meaning a strong labour movement as well). It is also one of the most competitive economies in the world in terms of attracting investments from multinational companies. Ireland’s economic performance really blasts a gaping hole in the PAP’s propaganda that low wages and a one-party rule are necessary for economic progress.
Country Minimum Wage (Amounts are all in US$ per hour)
Australia Approximately $9 ($362/week)
Canada $4.86 to $7 depending on the region
Finland $6.50
Ireland $8
New Zealand $6.45
UK $5.27 to $8.53 depending on age and qualifications
US $5.15
Note: Switzerland, a country whose living standards the PAP has promised Singaporeans years ago, does not have minimum wage but collective bargaining by trade unions ensure that monthly wages don’t go below US$2,330 a month.
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