S’pore needs a new game plan, a new “miracle”

Rajiv Chaudhry -

The two objectives, Singapore as a business and Singapore as a nation society appear to be on divergent paths.

With a general election due to be held in little over a year's time (and possibly a lot earlier given the strong performance of the economy this year), it is not surprising that the government is finally taking notice of the rumblings which have been growing steadily louder among the people on a number of issues. Chief among these is the subject of the large numbers of foreigners that have been let into the country in the recent past. In his National Day Rally speech, Prime Minister (PM) Lee Hsien Loong devoted a considerable amount of time to this issue.

To many observers, however, the overall impression created by his speech was one of obfuscation, forced optimism and defensiveness at an issue that appears to be taking on a life of its own. In the words of the veteran journalist P N Balji in Today (31 August issue), the PM switched from  explaining to empathising to (finally) pleading.

Dr James Gomez of Monash University in an interview with TOC (13 July) identified the foreign workers issue as likely to be the single most important issue in the coming elections.

The total population of Singapore has grown from 3 million in 1990 to 5 million in 2010, an increase of 2 million people (or 66%), the bulk of which has come from abroad. The government has acknowledged that the fertility rate amongst Singaporeans is languishing below 1.3 which, after accounting for deaths, is well below replacement rate. The PM, in his speech, said, “For this kind of productivity, Singaporeans are not working hard enough” - to laughter.

More seriously, let us look at elements of the PM's speech, to see whether the government's arguments are valid and sound.

The government's entire thesis for letting in large numbers of workers rests on the oft repeated mantra that foreigners are needed to grow the economy and create jobs for Singaporeans.

The PM said that immigration “is an issue everywhere,” citing Australia, Britain, France, Germany, the Netherlands, Japan and the US as examples. While it is true that in a world where workers are increasingly mobile, immigrants everywhere are facing a political backlash, to mention Singapore in the same breath as these countries is simply not comparing apples with apples.

The key point to bear in mind in any discussion on the subject of immigration into Singapore is the limitation of space in this country. Singapore is a country with a mere 710 sq km of land area with an outer limit of 800 sq km at most. It is the third most densely populated country in the world after Macau (China) and Monaco with a population density of over 7,000 people per sq km. Adding more people to this limited land area creates pressures quite unlike those at any of the larger countries  mentioned by the PM.

The government's central argument that more foreigners are needed to grow the economy continues to have a circular ring to it (create more jobs for whom?). For example, the PM said that the integrated resorts (IRs) have created more than 20,000 jobs. What he did not say and what Singaporeans would be interested to know is how many of these went to Singaporeans who have had roots in the country for over two decades and how many of these jobs went to recent immigrants.

While it is also true that the IRs will generate substantial tax revenues for Singapore, this needs to be balanced against the social cost of creating a pressure-cooker society with large numbers of low-wage and less educated immigrants in our midst.

In support of his case to allow foreigners into the country, the PM cited the example of the Malaysia born couple which designed the [email protected]. This is obfuscation. Is the PM using this example to suggest that all foreigners who have been allowed to settle in the country are as talented as this couple?

The PM also cited the examples of Keppel and SembCorp, mentioning that three-quarters of the 20,000 workers in these two companies are foreigners.  I have suggested  in a  previous series of articles (here) that high-end manufacturing activities such as rig-building and oil refining where Singapore has a comparative advantage must be retained. In any case, most of these workers are migrant workers who, as the PM said, will not put long-term pressure on the country's infrastructure.

What is putting (or has put in the past) a severe damper on wages and productivity is the easy availability of low-wage workers from abroad for non-critical manufacturing and service industries. In the 1970s labour-intensive industries were gradually phased out as the economy moved up the value scale; I suggest it is high time to restructure and re-orientate the economy once again to reduce our dependence on large numbers of low-skilled or low-wage foreign workers.

By continuing to allow businesses to freely employ such workers, the economy suffers twin disadvantages; first of not putting sufficient pressure on firms to innovate and raise productivity and more seriously, by placing a glass ceiling on the wages of the bottom 20% of Singaporean workers.

The government says there are some jobs Singaporeans will never do. I venture to suggest that if wages are high enough, Singaporeans will accept most jobs on offer.

The two objectives, Singapore as a business and Singapore as a nation society appear to be on divergent paths.

As a society evolves and moves up the development scale, it must carry all of its citizens with it. In this regard, the Scandinavian countries still remain the model for the rest of the world to follow. I believe it is still not too late and if Singapore changes course, it is possible, over a time-frame of, say, 30 years or so to raise the wages of the bottom of our society to developed country levels.

As far back as in 1994, Paul Krugman, Nobel Laureate and Professor of Economics at Princeton University, pointed out that the growth of the East Asian “miracle” economies could not continue without an increase in productivity. The Economics Restructuring Committee recognized this fact and made it a key recommendation to the government. Yet, progress on productivity will be limited so long as companies are fed a diet of cheap and easy labour.

In the meantime, social pressures on housing, transportation and other services continue to mount. Yet, last week, the Minister of National Development, Mr Mah Bow Tan said, “If the demand is there, in 2 years time, we are going to build a new Toa Payoh”. If we keep adding the equivalent of  a Toa Payoh every two years, the mind boggles as to where the process will eventually lead.

My vision for Singapore is a country that is small, manageable, comfortable, caring of the under-privileged, green and yes, SM Goh, gracious. It is not necessary to be the biggest and the best in everything. Luxembourg does not aspire to host the Olympic Games, yet its citizens enjoy one of the highest per capita incomes in the world. It is not crowded.

We continue to parrot the formula that worked well in the first 25 years: “grow or perish” (it seems to have become hard-wired in the nation's operating system.) I suggest it is now time to think “grow too much and risk social atrophy”. We need a radical re-formulation of our national aspirations and goals. Although we are far down the road, it is still not too late to change course, or else SM Goh's vision of a gracious society will recede until it is a mere speck on the horizon.

P N Balji concluded his commentary by saying, “What Singapore needs is a game changer …. that will redefine the country for the next 45 years”. Do we have that spark of talent in this government to provide that game changing inspiration? Will the new Population and Talent Division under the charge of the Deputy Prime Minister Wong Kan Seng be equal to the task? (DPM Wong looked rather tired when I last saw him on television.)

Before concluding, let me quote something Robert Kennedy had to say on the subject of the Gross National Product way back in 1968. It continues to be just as relevant today:

"Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things ... Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile.”

Let us learn to measure the worthwhile things in our life and manage our growth better by listening to the concerns of citizens who care about the quality of life in a country they and their parents built.