by Yee Jenn Jong
Prime Minister Lee addressed the nation yesterday on Singapore’s future in a post COVID-19 world. His speech is the first in a series of national broadcasts with five other Cabinet ministers laying out future plans for the country.
I have a few areas which I’d like to see for Singapore post COVID-19.
(1) First is on domestic wage reforms. Business leader Ho Kwon Ping brought this issue up in an IPS talk in 2012. He presented data in a refreshing way. Ho asked IPS to compile data on the wages of various professions across 9 of the most developed economies in the world.
The finding? Singapore is the MOST UNEQUAL of all developed nations. On average, we pay doctors about four times more than nurses and 11 times more than construction workers. Doctors represent the top end of professional work, nurses the middle range and construction workers represent the low wage. In other developed countries, the disparity is far smaller. Doctors and lawyers were paid slightly better in Singapore than the average elsewhere but the startling fact was how badly we paid the low wage workers. In Germany and Australia, a construction worker is paid HALF that of the average doctor! Hong Kong, a small and open economy like ours, paid nurses a third that of doctors. Construction workers earned a quarter that of doctors!
Ho called it the incomplete wage revolution. It began in the 1980s as we reformed the export-oriented industries. Factories that relied on low wage workers shifted out. We had to move up the value-added chain with higher wages. Today, we have high value-added export and services industries that pay decent wages. The trouble was with our domestic industries. There are some industries that cannot be shifted out – we will need to have cleaners, gardeners, security guards, construction workers and retail assistants in Singapore. Instead of also increasing wages gradually and allowing companies to figure how to make workers progressively more productive, we had large-scale import of low wage migrant workers. The situation started to explode in the 1990s where we grew from 311,000 migrant workers in 1990 to over 1.42 million by 2019, the vast majority of whom are low wage. Foreign workers account for 38% of our workforce today, stretching the limits which a small country like Singapore can take.
The large influx of migrant workers over such a sustained period depressed the wages of local low skilled workers who had remained in the domestic industries. Employers continued to fill with migrant workers as the demand went up. Levies started increasing when the government wanted to force companies to hire locals and be less reliant on foreigners. I believe many of the measures were done too late. We were already having many low wage migrant workers willing to work for very little. The better and more experienced migrant workers can find better paying jobs in other countries. The higher levies and accommodation costs made businesses look for cheaper workers, never mind that their skill levels are not there and that they do not speak much English.
In two of my earlier blog posts, I recounted this 3-decade journey of large influx of migrant workers and some solutions we can look at using the construction sector as an example.
Today, Singapore face a rapidly changing world with lots of technology disruptions and with our neighbours also hungry for success. We are now presented with the disruptions due to the pandemic. We have China and USA on hostile relationship that is impacting world trade. These are all known facts. Even before the pandemic started, we were already seeing higher retrenchments amongst PMETs and challenging operating environment for our companies. There is mismatch between training and employment opportunities. With the pandemic, more jobs will be lost. More companies will close down.
We can use this current period of job stresses to transform certain domestic industries. It will take big government interventions but we can make certain jobs more viable for Singaporeans, to progressively pay better for technical skills like in other developed economies, and to gradually move the industry up the productivity path. We should seriously state our intent by setting Minimum Wages. We want to match the Swiss standard of living but our model for growth had so far been that of Dubai’s and not Switzerland’s.
(2) I am concerned as to our strategy on low wage migrant workers. This is an old issue, raised by experts from time to time. Even our founding leaders such as the late Dr Goh Keng Swee and the late Mr Lee Kuan Yew had warned about becoming over-reliant on migrant workers or having too many of them. We have blown past all the numbers they had warned about. In the 2013 Population White Paper debate, we were told to accept 1-2% increase in migrant workers each year or face economic decline. The numbers continue to rise after that debate. We could reach 6.9 million population in 10 years’ time and far more after that.
Beyond providing better accommodation, we need to look at how to bring in more productive foreign workers so that we can have a better starting base and can pay them better. I am not an expert. I suspect there are lots of low hanging fruits we can pluck by first recruiting better. Currently, the middleman makes big bucks bringing able-bodied workers in from low wage countries willing to pay the huge fees to come to Singapore. Many may not have relevant skills. Many come saddled with debts, desperately afraid of being sent back home.
Singapore has done some small scale setting up of ITE-type of training in neighbouring countries on government to government relationship. I think if we can look at places where we recruit large number of migrant workers. We can put our vocational training expertise to good use. If we can have more productive workers already trained at source; familiar with the tools, processes and automation needed in Singapore, I believe we can jump start productivity. Having such institutions at source can also offer better transparency and links for recruitment. The implementation may need more thoughts and strong government backing to be workable. I think this can uplift productivity and wages at the low end, and allow us to do with fewer numbers of workers. And I believe that if we can build up a strong pipeline of skilled overseas workers, coupled with aggressive investment in better construction processes and automation, we might even be able to create globally competitive Singapore construction companies.
The welfare of workers can also be better taken care of. We can think of careers for them to move upwards while in Singapore. A few months ago, I came across a former foreign domestic worker who did part time studies in early childhood when in Singapore (she had a very supporter employer), and is now a trained preschool teacher here after finishing her domestic helper contract. Such stories are few and far in between. Most come, work hard with outdated and low productivity methods and return home with some savings to do other things. I believe few low wage migrant workers make it up the career ladder in Singapore. Many years ago, Singapore thrived because we provided opportunities for our low wage migrant workers. The innovative and hardworking ones climbed in their career and even start businesses in Singapore. Many of our big local institutions had started that way.
(3) We need to free up the Singapore spirit. We are victim of our past successes – we have grown risk averse. We celebrate innovation only when it meets the government’s agenda but clamp down on alternative views. I wrote about this last month – Monopoly of wisdom will cripple Singapore. I cited Sonny Liew as an example.
Be open. Be free spirited. Be bold. Our past leaders were so. PM Lee’s speech yesterday recounted how Singapore had overcome. Yes, we did. We overcame the lack of an armed forces with a modern force built on national service and modernisation. We overcame housing problem by being socialist – mass land acquisition from the rich and building HDB flats for as many Singaporeans as possible. We cleaned up the Singapore river, and more. Sure, we can do it again. There was boldness in the early leaders. There were no past successes to safeguard, only a future to aim towards. Bold ideas had to be tried.
These days, I noticed that many have become afraid to take risk. There are tried and tested ways to succeed. Just follow rules. Leaders in the government service or political office bearers are rotated frequently. We become wary of projects that may take years to see results or that cut across ministries or are seen as ‘risky’. We become afraid to let smaller start-ups have a go at projects in case we have to answer if projects fail. We award at higher costs to companies with big names so that if they fail, it will not be the fault of the evaluation team.
If we are to build world leading companies, to pioneer big brands that can fly the Singapore flag all over the world, we need to free up our spirit, not mute it. Our reforms cannot start only when Singaporeans enter the workforce. It must start from school. In education, we are again victims of our past successes. Our schools were earlier reformed to make the education processes more efficient to train up workers for incoming investments and to fill up jobs. We thought we had figured out the formula for sorting out students by abilities and then fast track them along career paths. We cannot rely on model answers, for the new world economy may not conform to known models. We need to celebrate ambiguity in education. We need students to be bold to ask questions. We need them to create.
(4) I believe Singaporeans are resilient. In recent years, with the growing mismatch between jobs and training, more have switched to the gig economy. Food delivery and private hire driving are not easy work. Yet PMET Singaporeans, many retrenched or in low paying jobs, turned to these trades to find a way to make a living. We will need to reclaim PMET jobs for Singaporeans and to work out viable career paths for Singaporeans in domestic industries, many of which are too low-paying to sustain the high costs of living in Singapore.
Being more resilient also means better preparedness in food and other supplies. Yes, it is great that we have Polish eggs and Arabian shrimps. MTI is doing right by seeking new sources of food and essential supplies. I think it would be just as great if Temasek takes the lead to invest aggressively so that we own critical food sources overseas. Sure, we might still be hit with supply restrictions such as what had happened over masks in Taiwan recently. To overcome our smallness in size, we may need to expand more aggressively into ownership of critical resources outside of Singapore.
Let’s look forward to a more resilient, more creative, more productive and more egalitarian Singapore post COVID-19.
Note by author: The views are that of the author. I had an earlier discussion with Ku Swee Yong where we found that we share similar ideas about having some ITE-type institutions in countries with large number of migrant workers bound for Singapore.