The following article was published on 2 Novermber 2010. With the release of the PAP election manifesto 2011, we thought it's a good time to re-post this article.
Andrew Loh / Leong Sze Hian
In its 2006 General Election manifesto, the People’s Action Party (PAP) outlined, in rather brief details, its plans for the nation the next five years.
The manifesto, criticized for its brevity and motherhood statements when it was released, professed to improve Singaporeans’ lives in various aspects.
As the next General Election nears, The Online Citizen takes a look at one particular promise made by the PAP – to “redesign old jobs to pay more, and upgrade workers’ skills so that they can earn more” - and asks if it has been kept.
“Redesign old jobs to pay more, and upgrade workers’ skills so that they can earn more”
The promise to “redesign old jobs” so that they would “pay more” has not, it would seem, been delivered.
Cleaners and road sweepers, for example, now earn around $650 a month, which is down from around $800 in 2005. Among the general population, Singapore workers had only a 1.4 per cent per annum real wage increase in the last 10 years. 2008 and 2009 saw negative real wage growth, with real earnings falling by 3.2 and 1.2 per cent in those two years respectively – this despite the fact that Singapore workers put in one of the highest number of work hours per week in the world, at 45.9 hours, surpassing South Korea which had the highest work hours in the world in 2008.
Wages is but only one issue. The other is the availability of jobs. Despite the government saying Singapore is expected to be “the fastest growing economy in the world this year”, the job situation is still a major concern.
While media reports say the labour market is “bursting at the seams”, on a seasonally adjusted basis, the resident unemployment rate rose from 3.2 per cent in March to 3.3 per cent in June.
84,000 remain unemployed in June, of which about 16,500 had been out of work for more than 6 months.
The hardest hit are older workers. Close to half of all resident job seekers were those who are about 40 years old.
61 per cent of the long-term unemployed were aged 40 and over.
Letters to the media have also highlighted another growing problem for older workers – employers, even government-linked companies, are cutting the wages of older workers, especially those who have reached the age of 60.
Better-qualified workers, such as the PMETs (professionals, managers, executives and technicians), accounted for more than half of those made redundant.
The re-employment rate of those with a degree was the lowest in 2009, at 61.2 per cent.
What are the reasons for these? Anecdotally, employers may prefer to hire non-Singaporeans as they do not have to pay CPF, may not have to pay maternity leave; they do not have to give national service reservist leave to their foreign workers, or cope with turnover problems, as work permit and S-Pass workers are generally tied to the same employer for two years.
The break-down of unemployment data of locals into Singaporeans and PRs continues to remain a secret and has never been revealed by the government.
Another area of concern is the dip in productivity, which the government itself has highlighted. In 2007 to 2009, productivity declined sharply among small and medium-sized enterprises (SMEs), with all sectors registering lower levels of output, with Profit Per Employee ranging from minus 25 to minus 70.6 per cent.
In the last decade, productivity increased by an average of only 1 per cent, according to Senior Minister Goh Chok Tong. (Channelnewsasia)
“[If] you want the economy to do well, that means the productivity must go up,” the Prime Minister said in February 2010. (Channelnewsasia)
In April, Minister for Manpower, Mr Gan Kim Yong, unveiled measures to raise productivity which included “continuing education and training, targeted programme for SMEs, support for low-wage and older workers, enhancing regulatory framework for employment agents, and tripartite partnerships.” (The Government Monitor)
To get around the short-term impact on labour productivity, which is a measure of the output per worker, Labout Chief Lim Swee Say urged companies to ‘find ways to prepare these 10 workers, so that by the time the upturn comes, (they) can produce the output of 11 to 12 workers’. (Straits Times)
The Economic Strategies Committee said, in February, that Singapore “must raise its productivity by 2 to 3 per cent a year over the next decade so that its GDP can grow by 3 to 5 per cent a year.” (Straits Times)
The government accordingly set up a S$2 billion National Productivity Fund in September to this end. (Channelnewsasia)
But does raising productivity mean higher wages for workers?
Well, the latest labour statistics from the Ministry of Manpower's (MOM) Labour Market
Second Quarter 2010 report are far from encouraging and hopefully not a glimpse of what the future holds. Despite being the fastest growing economy in the world this year, Real Earnings and Nominal Earnings fell by 12 and 11 per cent respectively, from the first quarter to the second quarter.
Also, with companies preferring to hire younger, cheaper (foreign) workers, and cutting the salaries of older workers when they reach 60-years old (as in the case of Singapore Airlines), it is unclear how a rise in productivity will help workers to “earn more”, as declared in the PAP manifesto. This especially when NTUC Chief and Minister Without Portfolio, Mr Lim Swee Say, wants workers to be “cheaper, better, faster” while at the same time rejecting calls for minimum wage. Also, Senior Minister Goh Chok Tong, in January 2010, cautioned “Singaporeans… to be prepared for slower economic growth.”
Workers’ Party MP, Low Thia Khiang, fingered the “growth at all costs” strategy of the PAP government for the current ills faced by low-wage workers and for the 15 per cent decline in productivity in 2009. “The ‘growth at all costs’ strategy initiated since the late nineties resulted in the present state of our economy where low wage earners are growing dependent on state-funded handouts to subsist,” Mr Low was reported as having said. “He charged that for Budget 2010, the Government is using their (sic) same conventional wisdom to address the fundamental problems caused by its policies of the last decade.” (Gerald Giam’s blog)
Singaporeans have said that the huge influx of foreigners, numbering some 2 million, is responsible for not only the loss of job security for Singaporeans, but is also responsible for the depressed wages of locals.
The PAP government, on the other hand, insists that foreigners are indispensible and that they help create jobs and keep the economy going.
But as they say, the proof is in the pudding - Singapore is ranked second, after Hong Kong, in income inequality by the United Nations Development Programme, among the world’s most advanced economies (see here and here). The government’s response to this was to introduce the Workfare Income Supplement (WIS) scheme. Essentially, the scheme allows the government to subsidise the salaries of workers.
If the PAP had been successful in getting jobs to pay more, as it promised in its manifesto, one wonders why the government needs to introduce the WIS. If workers' salary “paid more”, there would be no need for the WIS, would there? (By the way, Singaporean workers below age 35 are not eligible for WIS and the bulk of WIS payouts are into workers’ CPF accounts, and not cash which workers can use for daily expenses.)
To compound the problem, Singapore is known for its hardline stance on welfare, a lack of social safety nets and a lack of employment protection for its workers. Indeed, the PM himself said workers “cannot simply go strictly by what is explicitly spelt out in collective agreements, or individual contracts, or worse, work to rule…” In short, the advantage is entirely weighted in favour of employers for now workers cannot even depend on what is spelt out in employment contracts, as the Prime Minister said.
The question is: What’s next for Singapore?
The PAP government seems lost and so far its only solution seems to be to raise productivity and to introduce skills enhancement programmes for workers, reacting rather than anticipating problems – something which the PAP has often boasted being able to do..
It has instead resorted to piecemeal solutions, inadequately addressing the symptoms, instead of the source of the problems - which is the lack of protection for workers.
Indeed, and this is what should worry Singaporeans more: the Prime Minister himself admitted that he (and his government) did not foresee the consequences of globalization.
“I think if we had known how quickly the pace of change would accelerate and how much our people would be under pressure from globalisation, we would have prepared them for it earlier,” he said in a dialogue session organized by the American news network, CNN, in October. (PMO)
And four years after the PAP promised higher wages for workers, the same meaningless mantra is being repeated.
Employers are still making that promise. (Source)
So did NTUC Chief Lim on 13 October this year:
“[Don’t] be preoccupied with minimum wage as the way forward because the outcome we're aiming for is the same: we're trying to get low-wage workers to earn higher wages. We all agree on this outcome. Our idea is Workfare Income Supplement and the minimum skills system. We have the financial capital and political will and the competency to make it happen.” (Source)
“Workers can look forward to higher wage increments this year,” Mr Lim repeated in July. (Straits Times)
The Prime Minister too gave the same assurance in his National Day Rally speech in August:
“Lots of jobs have been created, unemployment has gone down, Singaporeans can look forward to higher wages and good bonuses.”
Will we hear a different tune come next year – or the months ahead, as we did in 2008 when Finance Minister Tharman Shanmugaratnam dismissed calls for higher wages by saying that “Singapore could face another round of inflation if companies increase wages to help workers cope with the higher cost of living today.” (Channelnewsasia)
The PAP government has had four years to fulfill its promise to help workers "earn more", made in its election manifesto. The statistics - and the income gap - show that this has not been delivered. In his attempt to side-step these concerns, the Prime Minister said: "What's important is not the absolute gap between the top and the bottom, but whether those at the bottom are being helped to move up." (Straits Times)
Minister Mentor Lee Kuan Yew also did his part to play down the worries. "Never mind your Gini coefficient," he said. "If you don't have a job, you get zero against those jobs." Dismissing Singaporeans' concerns, he said such a "social divide was inevitable." (Straits Times) Perhaps the MM has forgotten that the PAP's election slogan in 2006 was "Staying Together, Moving Ahead" and that the wages of the low-wage earners have not increased for the last 10 years.
The only certain thing so far is that the PAP's election promise of higher wages remains just that – a promise - at least for the average worker, especially the lower-income, those above-40 and 60. And Singaporeans, especially the low-wage earners, will continue to depend on the government for handouts, contradicting the government’s own philosophy of self-reliance.
Has the PAP therefore fulfilled its promise of helping workers “earn more”?
"We must also not allow ourselves to be divided between haves and have-nots, or winners and losers. We have built a society where every Singaporean has access to good housing, education, healthcare, and much more. This is the result of the deliberate policy of the PAP government, and the efforts of our MPs, grassroots leaders and other volunteers on the ground. If we let the politics of envy drive a wedge between us, our society will be destroyed, and all will suffer. That must never happen."