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Kubes.SG
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« Reply #1 on: 04 March 2010, 8:40:26 am » |
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Hou Lian:
So proud, is it? How have the political elite in your beloved Singapore deserved such riches. Lets look at what they have delivered the voters.
An analysis of the UBS study: Singapore has the lowest wages and domestic purchasing power among the Asian Tigers
February 2, 2010
By Eugene Yeo, Consultant Editor
The worldwide study conducted and released by UBS lately, titled “Price and Earnings 2009″ has some unflattering results for Singapore.
While our economy has the highest GDP (PPP) per capita in Asia at $49,288 according to a World Bank report (source: Wikipedia), our people do not enjoy a quality of life which commensurate with it. Though we are technically a developed first world country, some economic indictators as shown by the UBS study suggested that Singaporeans are not that better off than those in Third World countries.
Low wages
Singapore has a GDP (PPP) per capita higher than Switzerland, but our wages are way below the Swiss. The UBS study found that employees in Copenhagen, Zurich, Geneva and New York have the highest gross earnings. With its extremely high gross wages and comparatively low tax rates, Switzerland is a very employee-friendly country. The net wages used have been deducted for taxes and social security. Zurich and Geneva have wage indices (gross) of 119.8 and 107.5 respectively. In contrast, Singapore has a wage index of only 31.3, comparable with Moscow (30.9), Tallinn (28.7) and Johannesburg (26.7). In the Asia-Pacific region, it is exceeded by Tokyo (83.0), Sydney (74.1), Auckland (44.1), Hong Kong (42.3), Taipei (35.5) and Seoul (32.3)
Low domestic purchasing power
Where does an average income buy the most products and services? Wages alone do not determine the standard of living in a particular city or country. A better way to measure prosperity is to divide the average annual salary by the total price of a selected basket of goods and services (as used in the UBS study). This tells us how much purchasing power local wages. Again, Zurich (106.9), Sydney (95.9) and Luxembourg (95.4) topped the list ? its citizens have the highest domestic purchasing power. Singaporeans have a low purchasing power of only 39.9, comparable to Kuala Lumpur (39.5), Warsaw (34.0) and Bogota (33.7). Other countries in the Asia-Pacific region which are ahead of us are Tokyo (82.2), Auckland (68.9), Taipei (58.9), Hong Kong (58.1) and Seoul (57.4). In other words, though the cost of living is higher in Tokyo, the average Japanese has a domestic purchasing power more than twice that of an average Singaporean. Though Malaysia is still a developing country and has a GDP (PPP) per capita of only $14,215, less than 3 times of ours, the ordinary Malaysian citizen has about the same domestic purchasing po wer as the Singaporean.
Low relative purchasing power of wages
This is calculated in the UBS study by using a specific, highly uniform product that is available everywhere in the same quality, and then calculate how long an employee has to work to afford it in each city. For the purpose of this article, the iPod nano (with 8 GB of storage) is used. An average wage earner in Zurich and New York can buy a nano from an Apple store after nine hours of work. A Singapore worker will have to work three times longer after 27.5 hours. The figures for selected Asia-Pacific cities are as follows: Sydney (9.5 hrs), Tokyo (12hrs), Auckland (16hrs), Hong Kong (19hrs), Seoul (22hrs) and Taipei (23.5hrs). Again we came in last among the 4 Asian Tigers. Long working hours People work an average of 1,902 hours per year in the surveyed cities, but they work much longer in Asian and Middle Eastern cities, averaging 2,119 and 2,063 per year respectively. European cities had the lowest working hours per year. A global comparison showed the people in Lyon and Paris spend the least amount of time at work: 1,582 and 1,594 hours respectively. Singaporeans spent on average 2,088 hours at work per year with 11 days of vacation. This is less than Hong Kong (2,295) and Seoul (2,312), but more than Tokyo (1,997), Taipei (2,074), Sydney (1,747) and Auckland (1,884). Singaporeans also took the least number of holidays after Hong Kongers (10 days/year).
High cost of living
Singapore was ranked the second most expensive place to live in after Tokyo, surpassing Hong Kong for the first time. Let us compare the food prices in Singapore and other developed countries since food is a basic necessity. In the UBS study, a basket of 39 food items is put together and weighted mainly according to Western European consumption habits. The average worldwide cost of the basket is USD385. In Asia, Tokyo topped the list with an index of 124.7, followed by Hong Kong (96.5), Singapore (89.4), Seoul (89.0), Taipei (67.9) and Sydney (66.3) Conclusion The high cost of living coupled with low wages and domestic purchasing power condemns the average Singapore worker to an ignonimous, monotonus and stressful working life. Singapore workers have to work harder to earn the same amount of money and save for a longer period to purchase the same product. In 1991, then Prime Minister Goh Chok Tong promised Singaporeans that we will be able to achieve the “Swiss standard of living” within a decade. Ten years later, we have a living standard which is closer to Russia than Switzerland. < /SPAN> Like Singapore, the Russians has a low wage and domestic purchasing power and Russia, especially the city of Moscow, has one of the highest cost of living in the world.
In the next part of this article, we shall examine the uncanny similiarities between life in Singapore and Russia after the disintegration of the Soviet Union. When Mr Goh Chok Tong became the second Prime Minister of Singapore in the 1990s, he promised Singaporeans that we will attain the “Swiss standard of living” within a decade. In 2001, during the National Day Rally, Mr Goh said: “I was also quietly satisfied that we realized our vision of reaching the 1984 Swiss standard of living last year.” Have we really achieved the Swiss standard of living? Though we do not have economic indicators for Switzerland in 1984, we have the figures in 2009 and it appears that Singapore is heading towards a Russian standard of living, rather than Switzerland’s.
Let us compare the indices for each category: Singapore Moscow Zurich Wage level: 31.3 &nb sp; 30.9 119.8 Domestic purchasing power: 39.9 49.4 106.9 Working time to puy iPod nano: 27.5 36.0 9.0 Price of services: 72.5 65.0 110.9 As the above figures have shown, the Singapore worker has more in common with the Russian worker than a Swiss worker. Like the Russian worker, the Singapore worker has low wages and domestic purchasing power which is aggravated by the relatively high cost of living in their respective countries. In fact, the Russian worker has a higher domestic purchasing power than the Singaporean worker though his wage is slightly lower. And don’t forget Russia is a vast country. If one cannot survive in Moscow, they can move to the countryside where cost of living is lower. There is nowhere for Singaporeans to move to.
A greying population
Both Russia and Singapore have suffered from low birth rates though the latter is making the numbers up through mass immigration. Russia’s population growth is almost stagnant at -0.085% in 2008. Its population could drop by as much as one third by 2050 if current trends does not improve. Singapore will have about a quarter of its population above the age of 65 by the year 2030. A greying population is expected to place heavier burden on the younger population to keep the economy going. With no social safety net to speak of, the Russian worker will have to support themselves in their golden years. Many of them become addicted to vodkha which results in a higher mortality rate than the European average. The Singapore worker is not in a better position either. Their CPFs will not be enough to support their retirement needs as most of it is tied up in mortage loans to finance over-priced HDB flats. The government has encouraged Singaporeans to work beyond the age of 80. Parliamentarians recently consider passing a bill to legislate that children take care of their aged parents. With a high cost of living and declining wages, the future of Singaporeans is becoming as bleak as the Russian winter.
A modern serfdom
Not surprisingly, the economies of both Singapore and Russia are dominated by state-linked companies. In the aftermath of the Soviet Union’s disintegration in 1991, many Russian politicians and crooks made use of the economic turmoil then to purchase national companies and assets at bargain prices. These are the oligarchs who soon become the new aristocracy of Russia. The politicians at the Kremlin maintained their tight-fisted control of Russia with the financial backing of the oligarchs. Like Singapore, Russia has one of the highest income gap between the poor and the rich in the modern world. Ordinary Russians are being enslaved in a modern serfdom to contribute to the state while getting very little in return.. Both states are very rich while its people have to slog daily to earn a pittance at work in order to keep themselves afloat. Russia has Gazprom, Singapore has Temasek Holdings. The former obtain its funds from sale of natural gas which Russia has in abundance; the latter accumulated funds from years of budget surpluses. Russia is now returning to back to tsarist era where its people are nothing more than serfs toiling the fields for others. Ordinary Russians do not benefit from their country’s economic boom whose riches are plundered largely by corrupt oligarchs and politicians.
State-sponsored repression
Though Russia and Singapore are supposedly democracies, both are authoritarian governments with little tolerance for political dissent. In Russia, political dissidents are kidnapped and murdered. Singapore’s opposition politicians who dare to seek the truth are sued till bankrupt and barred from participating in elections. Repressive laws are put in place in both countries to curtail freedom of speech, assemblies, and other forms of civil liberties. The mainstream media are muzzled and becomes nothing more than mouthpieces of the regimes. Russia’s United Democratic Party is the dominant party in the Russian Duma as in the People’s Action Party in Singapore.
Conclusion
What started out as a “Swiss dream” is fast becoming a “Russian” nightmare. Isn’t it strange that Singapore, with one of the highest GDP (PPP) per capita in the world has a standard of living closer to Russia than Switzerland? How is it possible that the state is flushed with cash and yet ordinary Singaporeans have a domestic purchasing power comparable to the Russians and way far behind the Swiss? What went wrong? Are Singaporeans getting a fair deal from their government? Why are we paupers in a first world economy?
Until the global financial turmoil last year, Singapore has enjoyed 10 years of continuous growth of more than 5% per day. The Singapore government has always used GDP growth as a basis for citizens to appraise its own performance. Even a variable portion of their multi-million salaries is pegged to the GDP.
Singapore’s GDP figures are indeed impressive: Singapore is ranked third in the world by the World Bank in terms of GDP (PPP) per capita ($49,288). (source: wikipedia) [PPP = Purchasing Power Parity, GDP at PPP per capita refers to the value of all final goods and services produced within a nation in a given year divided by the average population for the same year] Only Norway and Luxembourg are ranked higher than Singapore. The United States, Switzerland, Hong Kong, Sweden, Austria, Iceland and Holland are the other countries within the top ten.
In a way, our economy’s sterling performance is a vindication of the government’s ‘growth at all cost’ economic policy. Singapore has a first world developed modern economy. GDP growth is usually translated somewhat to a better quality of life for the citizens, but not exactly in Singapore’s case. If we study the indices such as wage level, domestic purchase power and spending power as shown in the UBS study, we will realize that we are ranked way below the developed economies.
Our income gap, as measured by the Gini Coefficient, is the highest among the twenty most developed economies, comparable with the Philipines, Nigeria and Nicaragua. (source: wikipedia) This means that the gains we have made as a nation from years of economic growth are not distributed evenly across the population. A minority becomes richer, but the rest are not better off. Some even become poorer.
According to a NUS study completed last year, lifetime income inequality has been increasing rapidly especially after the Asian financial crisis. In fact, despite the substantial growth of the economy, the lower income quantile has seen a drop in their real lifetime income. (source: NUS SCAPE) In a way, we are “paupers” compared to our counterparts in other first world economies? Singaporeans have lower spending power, they are likely to work longer hours and even then, many may not save enough for their retirement. Why is this so?
Influx of foreigners
When MM Lee said recently that foreigners are vital to our economy, he was not exaggerating. Foreigners contribute to almost one third of our workforce. Our economy will collapse without them. In the past, foreign workers in Singapore consisted chiefly of the low unskilled blue collar workers and the highly skilled white collar professionals. The former do not compete directly with locals as they worked mostly in industries shunned by Singaporeans while the latter helps to add value to our economy and create more jobs in the process. However in recent years, we are seeing more semi-skilled foreigners entering our labor market. Not only are they competing directly with Singaporeans for jobs, they also have a certain degree of spending prowess which compounds the problem of inflation.
These foreigners took up many jobs which can otherwise be filled by locals such as engineers, mid-level managers, and administrators, leading inevitably to stagnation or even decline in overall wages. Of course the widespread use of foreigners help to bring labor costs down collectively, contributing to GDP in the process. While other countries are exploring ways to improve productivity, Singapore continue to take the easy way out by importing foreigners en masse to pop up its economy.
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