Reform Party’s May Day Message 2014
Reform Party notes the NTUC chief and PAP Minister Lim Swee Say’s May Day message to the workers of Singapore. As usual with PAP government messages, it made little or no economic sense. It contained nothing new and was the familiar mixture of simultaneously telling our workers to work harder (the “Cheaper Better Faster” slogan again) and shifting the blame for the PAP’s own failed economic model. The PAP seem to expect the Singaporean worker to be like Boxer, the carthorse in Animal Farm. He recited every day the mantra “I must work harder! Comrade Napoleon is always right!” until finally he fell sick and was sent off to the glue factory.
Lim talks about a tighter labour market lasting till 2020 but strangely seems to regard this as an evil rather than something to be welcomed, as we do. Perhaps our workers will finally enjoy some real wage gains after years in which wages have failed to keep pace with inflation once housing costs are properly measured. Those in the bottom 40% have probably seen declining real wages over the last ten years though accurate statistics are hard to come by. A tighter labour market should actually be the norm rather than the exception particularly if we want to encourage productivity growth by encouraging firms to use less labour.
So why has it not been the norm in Singapore? We should remind ourselves that it was the PAP who deliberately adopted a policy of opening the floodgates to an abundant supply of cheap labour from the rest of Asia as a means of boosting economic growth. Economic growth was indeed artificially boosted but at the cost of stagnant productivity growth and rising income inequality. Your wages suffered and in order to maintain your real incomes you ended up working the longest hours of any nation in the developed world.
We doubt that the labour market is as tight as Lim claims. Our feedback on the ground indicates that there are still many Singaporeans who are only able to find part-time work if they can find jobs at all. Many of our graduates now do jobs for which they are overqualified. Even though this is a global phenomenon this has been worsened in Singapore by the PAP’s policy of having no restrictions at all on the employment of foreign graduates provided they are paid only a little more than the median wage.
Even though the PAP have raised foreign worker levies and tightened slightly the rules governing how many foreign workers a business can employ there are still many loopholes, as the example above of how easy it is to obtain an Employment Pass illustrates.
A tighter labour market is at least as much a function of rising real wages in countries like China, which is one of our main sources of foreign labour. This may only be a short-term phenomenon. We are likely on the threshold of a Third Industrial Revolution spearheaded by disruptive technologies like robotics, intelligent software, 3D printing, the Internet of Things, and rapidly falling energy costs from renewable sources. This has the potential to make large numbers of workers redundant even in relatively well-paid areas like law, finance and medicine.
However historical experience is that rapid productivity growth and new technologies lead to new industries, which end up providing just as many jobs as before. We need government to ensure that there is enough demand in the economy through the right fiscal and monetary policies and that the some of the gains from this growth are redistributed to those affected by technological change.
These new technologies also give us the opportunity of finally ditching the outmoded PAP economic model of maximising growth through the use of low-cost labour without a rise in productivity. Instead we will be able to produce more with our own indigenous workforce rather than having to import so many workers from the rest of the world.
However there is no sign that the PAP will adopt the right policies. Under the PAP the gains from faster productivity growth are unlikely to be shared with our workers just as the higher returns earned on capital and land from lowering the cost of labour through immigration were not shared with the bottom 80% of Singaporeans. Instead we may find real wages driven down even further as the PAP continues to have a relatively open policy towards foreign labour but refuses to share any of the gains from higher productivity with Singaporeans.
Reform Party embraces the new technologies as the best hope of reducing our dependence on foreign labour. We have consistently called for a minimum wage or for greater controls on the use of foreign labour and to ensure that Singaporeans get priority in employment. We advocate the use of a cap on total foreign worker numbers with visas being auctioned annually. This would replace foreign worker levies. The cap could be raised or lowered depending on whether wages were rising faster or slower than productivity.
By giving every Singaporean the freehold of their HDB and the distribution of shares in Temasek and GIC to citizens, we want to create a property-owning democracy. We want to free Singaporeans from being serfs of the government and reduce the conflict between the interests of capital and labour, as everyone becomes a shareholder.
Reform Party also sees the new technologies as an opportunity to level the playing field between the owners of capital and labour, and between producers and consumers, as some of the huge investments in old technologies are rendered obsolete and monopolists lose their control over markets. Unfortunately the PAP government with its monopoly over huge areas of our economy is likely to try to slow down change so as to preserve its monopoly at a huge cost to innovation.
Reform Party ends by wishing all Singaporeans a very happy May Day 2014. We believe we have the best vision for Singapore’s future and the best policies. It’s time for change.