There is a productivity revolution sweeping the world and Si
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There is a productivity revolution sweeping the world and Singapore is not part of it: WHY?
Written by Ng E-Jay
01 Dec 2009There is a productivity revolution sweeping the world, but Singapore apparently is not part of it. Since the bust of the dot-com bubble in the early part of this decade, labour productivity in Singapore has been on the decline, in contrast with other developed economies around the world.
What is this productivity revolution that has taken the world by storm? It is the technological revolution brought about by rapid advances in information technology and the internet. Breath-taking innovations in the telecommunications and internet space have allowed individuals and businesses to connect and synergize their activities in ways that could not have been imagined 30 years or even 20 years ago. Entire new industries have been built up on this technological revolution that is still on-going today, and which will progress even more rapidly for the foreseeable future.
This technological revolution has enabled vast increases in productivity in the global economy, Coupled with rapid globalization and an increasingly mobile global workforce, this has brought great prosperity to many Asian and G7 economies. Singapore’s stock market however is still currently languishing barely 10% above the level it was trading at in 1994, essentially going nowhere in the last 15 years.
Citigroup economist Kit Wei Zheng was recently quoted by the mainstream press as saying that over the last few years, Singapore’s rapid growth has been mostly driven by a massive increase in the workforce, and that it is clear that growth powered by importing foreign labour is simply not sustainable. (Straits Times, “Declining productivity here a problem“, 30 Nov 2009)
According to Mr Kit, Singapore’s workforce has increased an average of 6.5 percent per year since 2006, mainly due to liberal (I should say, overly liberal) immigration policies. By last year, foreigners accounted for one third of our labour force.
However, labour productivity has been decimated in the process. According to the Singapore Competitiveness Report produced last week by the Asia Competitiveness Institute, Singapore’s labour productivity lags that of developed countries like the United States, France and Norway, as well as Asian neighbours like Hong Kong and Taiwan.
The same report found that labour productivity here is falling in the manufacturing, construction, hotels and restaurants, business services, and wholesale and retail trade sectors, which collectively employ two-thirds of the workforce and make up 60 percent of the economy.
This trend of declining productivity is clearly a big negative for the Singapore economy. I have repeatedly emphasized that economic expansion based on mere increase in population size without organic productivity growth is unsustainable, and this bubble can only end in tears.
This scenario creates vast amounts of wealth for big corporations, especially the Government-linked corporations which make up over half of our economy, due to the fact that they have very easy access to cheap labour from all over the world.
However the small mum-and-pop business and individuals like you and I and the ordinary heartlander have been left out of the equation.
The indiscriminate import of large number of foreigners to shore up GDP growth also puts strain on our social fabric and erodes Singaporeans’ sense of belonging to our nation.
This unsustainable increase in population has also driven up property prices and put an enormous burden on the budget of young Singaporeans who are just starting out on their careers and looking to purchase their first home.
Prime Minister Lee Hsien Loong said in September that the rapid influx of foreign workers would start to slow, and the Ministry of Manpower has also tripled the minimum medical insurance for S-Pass and work permit holders, effectively raising the cost of hiring foreign workers.
However without recognizing the flaws in its “growth-at-all-cost” model of economic management and imposing significantly higher standards on the foreigners we import, current Government policies will only exacerbate the situation and create an inevitable bust somewhere down the road.
I began this article by mentioning the technological revolution that has swept the world since the 1980s and which will continue to progress exponentially for the foreseeable future.
To take full advantage of this technological revolution as well as bring the fruits of globalization to all citizens and not just the elites, we need to cultivate both talented locals and foreigners. Our current Government policies merely stuff our country with low-cost workers as one would stuff potatoes in a curry puff, without caring about the quality of those workers.
Minister Mentor Lee Kuan Yew once remarked that if Singapore did not build casinoes, the world would pass us by.
If we do not overhaul our immigration policies and recognize that a “growth-at-all-cost” approach is unsustainable, then indeed the world will pass us by and we would all be worse off. That is one gamble we simply cannot afford to take.
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Quote:
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I began this article by mentioning the technological revolution that has swept the world since the 1980s and which will continue to progress exponentially for the foreseeable future.
To take full advantage of this technological revolution as well as bring the fruits of globalization to all citizens and not just the elites, we need to cultivate both talented locals and foreigners. Our current Government policies merely stuff our country with low-cost workers as one would stuff potatoes in a curry puff, without caring about the quality of those workers.
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Why is there a pair of CurryPuffs ???
If low-cost workers are not here , we would still be sardine puffs with our old Bus system ?
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Originally posted by OH-FF:
Quote:
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I began this article by mentioning the technological revolution that has swept the world since the 1980s and which will continue to progress exponentially for the foreseeable future.
To take full advantage of this technological revolution as well as bring the fruits of globalization to all citizens and not just the elites, we need to cultivate both talented locals and foreigners. Our current Government policies merely stuff our country with low-cost workers as one would stuff potatoes in a curry puff, without caring about the quality of those workers.
"
Why is there a pair of CurryPuffs ???
If low-cost workers are not here , we would still be sardine puffs with our old Bus system ?
tonight just eat the 2 curry puffs
can skip dinner
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Productivity slowed because of low wages
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It's a fact the economy's GDP grew largely due to massive influx of foreigners into the country which in turn increased demand for basic goods and services.
But what comes after this to continue to grow the economy?
Surely you cannot increase the population by 10% every few years?
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Originally posted by charlize:
It's a fact the economy's GDP grew largely due to massive influx of foreigners into the country which in turn increased demand for basic goods and services.
But what comes after this to continue to grow the economy?
Surely you cannot increase the population by 10% every few years?
Will GDP hit a block at some point?