In a televised interview on 3 August, Prime Minister Lee Hsien Loong said Singapore has “maxed out” all the easy ways of driving economic growth.
These “easy ways” included encouraging women to join the workforce, along with older people and foreign workers to top up the numbers.
“But that reaches a limit, too,” Mr Lee said. “What do you do? The only thing you can do is productivity. Work smarter, work better and deliver results, and improve our lives.”
“Productivity is very tough to do,” Mr Lee added. “And that is what we depend on now.”
In his May Day message earlier this year, Mr Lee lamented how “productivity levels in Singapore have risen too slowly over the last few years.”
The government had set a 2 to 3 per cent growth in productivity from 2010 to 2020 annually.
However, the last five years have seen negative growth in this.
It prompted observers to wonder if the government is too ambitious.
“There’s a big disconnect between aspiration and achievement in the matter of productivity,” Dr Augustine Tan, professor of economics at the Singapore Management University, said at a panel discussion on economic restructuring in October last year.
“When the target of 3 per cent was mooted in Parliament three years ago … I was quite astonished … Where did (they) get that figure from?” he added.
Former head of the Civil Service, Ngaim Tong Dow, said in July that he was disappointed at how productivity in Singapore has remained “stagnant”.
Kenneth Jeyaretnam, secretary general of the Reform Party (RP), has in fact been urging the government to focus on productivity growth since as far back as 2009.
Referring to what Mr Lee had said in the interview, Mr Jeyaretnam slammed the prime minister for going for a simplistic economic growth model by opening the doors to the influx of cheaper foreign workers to prop up the GDP.
“[Boosting] economic growth by simply letting anyone in is an insane policy for any country,” he said.
The policy “hurt ordinary working Singaporeans, first at the bottom of the wage structure but increasingly at the middle levels where Singaporeans have to compete with foreign PMETs from much cheaper labour countries.”
“While cheap labour is available the PAP will just pay lip service to productivity,” Mr Jeyaretnam, a former London-based hedge fund manager, said.
“The only thing that would change this is if the playing field is radically tilted by costs falling so rapidly through automation and AI that even cheap labour cannot compete. The economic incentives are not there and it is a waste of time and taxpayers’ money subsidising companies to adopt productivity enhancements.”
He said that Singapore needed “fundamental changes to the economic model before we get a major change in our productivity growth prospects.”
But, he said, the “PAP has too much invested in the current model to change.” (See here.)
The Singapore Democratic Party (SDP) agreed with Mr Lee and called for fundamental changes.
“The PM is right – Singapore has ‘maxed out’ on the ‘easy’ ways of increasing growth – by simply increasing the population, it has become apparent that the infrastructure cannot cope and the quality of life for average Singaporeans has deteriorated,” the SDP told The Online Citizen (TOC).
“There have been numerous schemes with uniformly disappointing results,” the party said.
“We need to build an inclusive economy where we encourage innovation by investing in people, reforming our education system which is too exam oriented, and empowering our workers by reviewing harsh labour laws.”
To the secretary general of the Singaporeans First Party (SingFirst), Tan Jee Say, there are other “easy” areas of growth which the prime minister has neglected.
“They are right in our backyard,” Mr Tan told TOC. “This is the domestic socio-economic sector.”
He explained that under SingFirst’s “Pro-growth Social Package” economic plan, there would be a national investment programme comprising two main components – a safety net to help the vulnerable and struggling middle class; and social investments in healthcare, and education.
There would also be family support through building more hospitals, schools, childcare and elderly care centres, and the training of more doctors, nurses, teachers and other related personnel.
“Together with diverting part of our huge defence spending to healthcare and phasing out GST, this investment programme will put more money in the hands of Singaporeans to cope with the high cost of living and thereby give a major boost to local businesses and generate more jobs for Singaporeans,” Mr Tan said.
He added that the total re-investment package of $14 to $28.5 billion a year “will remove the current severe shortages in healthcare and education, and improve their level and quality of service.”
“In due course after serving Singaporeans first, this programme will provide a solid foundation to develop Singapore into a heathcare and education hub serving the region,” he said.
“Our package is not wasteful consumption but will give a strong boost to the local domestic economy,” Mr Tan explained. “We will create a strong, stable and diversified economy that benefits local businessmen and families.”