:: archives
:: categories
:: wp plugins
© 2009, silpstream
Monday, 18th August 2003
Singapore has of late been experiencing a downturn in the economy that has affected many foreign and local companies, and even more citizens who have lost their jobs as a result of this. While I do not think that this is a good thing, it is not necessarily unhealthy.
Let's first look over the various messages that our government has been putting across recently. I may not have them in exact terms, but should have captured the gist of things at least.
"Times are bad so be prepared for, and accept pay cuts should they come your way."
"Singaporean set their expectations to high, thus cannot find jobs."
"More jobs in Singapore are going to Singaporeans not foreign talents."
"Be more entrepreneurial like so and so, especially in these times."
"Singapore has to move forward as a knowledge economy as that is where our strengths will lie to be competitive in the global economy."
"Singaporeans will not get the 4% back for their CPF contributions, and may in fact have it cut further."
"Salaries should not be based on seniority, but instead based on performance."
"Singapore must pull together to get through the worst."
All commendable messages and I doubt any government could do better when it comes to damage control in a situation such as ours. However I also feel that certain actions and policies should be targeted more accurately.
Singapore is a gem on the face of this world. We boast some of the lowest unemployment and poverty levels. We have a higher standard of living compared to our neighbors. Our standard of education manages to attract the brightest young minds from the region. In fact we are so good that our government has managed to distribute wealth more evenly than any country in the world. That being said, we probably have one of the largest per-capita numbers of middle-class families of any nation.
This is good since it ensures that Singaporean as a whole can manage a minimum standard of living much higher than that of any developed nation. Most Singaporeans will manage to pull through the current crisis, and most Singaporeans still maintain a high confidence level that our government will guide us through our time of need.
This however is also bad since we as Singaporeans are getting fat, we do not feel the urgency as much as our global peers would, and we are for the most part content with our lot (or lack the will and power to complain). In short, we have started to rest on our laurels, another message that our government has been putting across and something that they do not want us to do.
I ask however, how do we do this? How do we find more entrepreneurs? How do we create more jobs? Can it be done, or has our government done such a good job that we've fallen asleep in their caressing embrace? This economic downturn is our alarm clock ringing, but many of us are still pressing the snooze button, unwilling and disgruntled that we have to get up.
Entrepreneurs, this is defined as "A person who organizes, operates, and assumes the risk for a business venture". The operative phrase here being the assumption of risk. Forget the organization work and forget the great or novel ideas. First and foremost in our minds is, "How risky is this?"
Most of us have too much to lose, we are feeling safe in our jobs and are satisfied with our lot. We have our stake in the country; a nice 1000 square foot HDB flat, that our CPF contributions just manage to pay off, and we've got our salary that for most manages to cover our family's expenses.
Would you risk all that for a business venture that may fail thus squandering what little savings you have or worse facing possible bankruptcy? I did not think so. We have such a large middle-class that such thoughts are commonly entertained and dismissed either by one's self or one's kin. The lack of necessity on our part stifles such course of action.
We all know that necessity is the mother of many things, but most importantly it is the mother invention. Maybe more lost jobs will create this necessity, and maybe this necessity will be what inspires us to invent. Who knows what sort of things a person can dream up to take advantage of this situation and the newly displaced personnel on the street. Our fast food joints did well in hiring senior citizens after all, and from the latest our newspapers have been publishing about successful entrepreneurs, they we all driven due to a job fall out.
Our CPF cuts are supposed to create more jobs because Singaporeans are too expensive. You could hire 3 Malaysians, 8 Thais, or 18 Indians for every one Singaporean in the manufacturing sector. I'm sure this figure is correct and has been double or triple checked. I ask though, how this can be a useful figure for comparison?
We are told that we are moving away from a manufacturing to a knowledge-based economy, as this is how Singapore is to maintain it's competitive edge. Let us be real about this. This is all true! We can't be comparing our economy to that of the other 3 countries, not in the manufacturing sector by a long shot. We are much more advanced in development by comparison. Even our government claims that Singapore is a resource for intelligent workers in any field. What is the purpose of all our research hubs and universities if all we want to do is have a population of factory line workers?
This does not mean that we should widen the income gap, or that we should put more people on the streets. We should however allow some things to follow a natural course and allow markets to adjust. I read in Asia Inc recently and they reported that Singapore is ranked as the freest economy just behind Hong Kong, which makes us number two. How did that happen? Our CPF is controlled by the government and used for policy, this is ridiculous, since most companies already budget with CPF in mind and the total is seen as an employee's pay package during negotiations. The fact that our government retains control over this component does not make us a free market economy.
So now we have a cut to create more workers with factory line jobs. These workers, even with the CPF cut, are too expensive to even export as a resource. Let's be realistic, the cut of 6% will not mean that the company goes out to hire more people. The manufacturing is driven by consumption, and they don't produce beyond their markets ability to consume. Correct me if I'm wrong but I don't see manufacturers complaining that they are backlogged on orders.
This does mean though the Singapore could potentially be faced with a shrink in the economy instead. The population after suffering this will probably cut back on expenditure. This seen on the mass basis means less consumption, meaning less manufacturing, thus leading to more losses and possibly more job cuts. If we are lucky and by some miracle, there may be new jobs created, but I doubt that this will offset the effect of the general population cutting back on spending.
If anything the jobs create will be in areas that we define within the scope of the knowledge economy, because let's face it, foreign investors don't look to Singapore for factory lines. They come here to find people that are more productive and intelligent, and they know that they will pay a higher premium for them. Simply put this is the wrong medicine for the ailment.
This being said, our government should look to other ways of spurring the economy, and increasing our competitiveness. They've got a whole slew of tools to use, why use this one? Especially since it is designed as an instrument for our population's long-term savings. I mean what happened to interest rates, exchange rates, and tax measures? Are our reserves so over taxed that there is no other suitable solution? Unless I'm mistaken, we still have a 1% GST increase next year.
So where are we now? No entrepreneurs because the environment has not geared itself to that level yet. We need a freer market and possibly more necessity creation, meaning job losses and bigger income gaps, and less direct government intervention into microelements like our pay packages. Most companies have just went through negotiations for pay cuts with their staff, thus our government should leave that prerogative to the individual companies not take it upon themselves.
I felt that things were going the right way; employers were restructuring pay packages and promising more performance based remunerations. While employees were unhappy they would accept it since they can understand. Instead we now have an island wide blanket cut with reasons stipulated by our government that I cannot understand, and I would be happy for someone to explain and run the comparisons of different possible solutions by me.
We want a economy based on knowledge and thinkers, we pay the premium afforded to them, and must be given adequate reasons that stand up to testing and probing for any government policies. My peers and I are far more demanding to this extent, and this is because we are the new generation that will build the knowledge economy, gone are the days that issues can be skirted or covered, gone are the days of acceptance without question. Troublesome qualities at times, but qualities that allow us to command the premiums we are paid.
