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By Avery Chong, Gerald Giam, Nathaniel Koh, Watson Chong and Yaw Shin Leong
Singaporean workers are facing their most challenging period since Independence. Thousands have lost their jobs since the current economic crisis began last year, and unemployment is expected to continue rising through 2009 and beyond. Many workers have been forced to accept salary cuts or go on unpaid leave to help their companies stay profitable.
These workers should be saluted for their resilience, perseverance and adaptability in the face of enormous challenges. Singapore‘s prosperity and economic progress were achieved primarily through the sweat of our workers.
The Government always claims credit for Singapore‘s economic growth during good times, yet conveniently blames the global downturn when our economy takes a nosedive. However the facts tell a different story. Singapore was the first country in Asia to slip into recession last year. Our GDP is expected to contract 8.8% this year — much worse than almost all our major trading partners (see Annex A for the economic forecasts for our top trading partners).
The Government’s economic model may no longer be serving us well, and we need to start a national conversation to discuss alternative economic models to take Singapore to the next level of progress.
Closing the income gap
Singapore‘s economic growth over the last decade has resulted in phenomenal income increases for PAP ministers, “foreign talents” and top company executives, while the incomes of low wage Singaporean workers have stagnated or even fallen. Singapore‘s income inequality is now more in line with Third World countries than with other developed economies like Japan and Denmark.
Economic growth should benefit all Singaporeans, not just the rich and well-connected. While there should be fair rewards for hard work and good performance, the reality is that many ordinary Singaporeans work just as hard, if not harder, than their wealthy counterparts, but have not reaped commensurate rewards.
The Government should implement measures to increase the take home pay of low-wage local workers. This can be achieved through tighter restrictions on the import of foreign labour in domestic industries, skills development for higher value-added industries, productivity increases through capital investments and increasing government-funded income supplements.
The Goods and Services Tax (GST) for basic necessities like rice and sugar should be removed to benefit low-income Singaporeans. The GST should be reverted to its previous rate of 5% for all other goods and services, except luxury items.
While a no strings attached welfare state is undesirable, there is room for limited and conditional financial assistance for the unemployed. This financial assistance could be based on a fixed quantum or a proportion of the job seeker’s last drawn salary. It should not be disbursed solely at the discretion of Citizen’s Consultative Committees or Community Development Councils. It should be given for a limited period (e.g., six months) to all retrenched Singaporeans who demonstrate a commitment to looking for a new job.
Finally, wealthy Singaporeans should do their part to help their less fortunate countrymen through increased contributions to social welfare organisations and foundations that help Singaporeans in need.
We wish all our fellow Singaporean workers a Happy Labour Day!
 The Economist Country Briefings (17 April 2009).
 Caught in the pay squeeze, Straits Times, 8 Jun 2008; MOM Report on Wages in Singapore 2006, p45.
 Singapore‘s Gini index is 42.5, similar to Thailand (42.0) and Cambodia (41.7). Gini index for Japan (24.9) and Denmark (24.7) are much better than Singapore’s. There are no developed countries that have a worse Gini index than Singapore (UNDP 2007/2008 Human Development Report).
2009 GDP Growth Forecasts for Singapore’s top trading partners
Trading partner rank
Real GDP growth forecast (2009)
Source: IE Singapore and Economist Intelligence Unit