Singapore’s widening income gap – From an employment perspective


I was tuning in to the radio (938Live) on my way to work, and there was this discussion hosted by Keith De Souza and Bharati Jagdish on the problem with Singapore’s widening income gap.

Hearing the comments from our fellow Singaporeans (I assume they are), it leaves me wondering if we’ve missed the elephant in the room.

All of us (in Singapore) had benefited from the ambitious, aggressive and spectacular progress of Post-Independence Singapore. And “Yes”. I do mean all of us – the citizens, permanent residents and foreign talents.

Just think of the numerous amounts of employment opportunities that are available in this tiny island nation. Think about the speed of recovery that got us out of the recent economic crisis. Compare that with the other developed nations. We should be smiling.

Accept it – A “dollar” yesterday is not equal to a “dollar” today and will never be the same as a “dollar” tomorrow. Ten years ago, 1 US Dollar will get you 1.7917 Singapore Dollar. And today’s exchange rate? (1 US Dollar – 1.293 Singapore Dollar) **

What about our unemployment rate? – 2.1% in Sept 2010.

What’s the real problem?

Are we seriously complaining about the cost competitiveness of the foreign workforce? A few of the comments were centric around the low wage structure which these workers are brought in to Singapore on. Seriously?

Remember not too long ago. In the early 80s. We used to be competitive. Our wage structure was low and that presented a strong value proposition to the foreign investors in bringing their business to Singapore. We became a strong manufacturing hub.

As we progress, our cost structure increased, causing a certain amount of manufacturing capacity being transferred to lower cost regions. Such as Malaysia, Thailand and China. We probably can remember that we used to have a large number of PCB board and Hard Disk manufacturers. Where are they now?

We’ve changed ourselves to adapt. Moving up the value chain, we focused on high tech manufacturing. In came the Semiconductor, Pharmaceutical, and Solar industries. At an industry level, that’s skills upgrading!

There are many jobs with low skills requirements we see today that employs a large number of foreign workers. Are we really saying that they’re taking work away from us?

How many of us can put our hands up and say “I want that job!”?

Ask the HR managers of companies in the construction, shipping, retail, F&B and hospitality industry – “How difficult is it for them to hire?”

Remember – 2.1% unemployment rate! – Are there that many locals to hire from in the first place?

Alright. Let’s just say that we have enough unemployed local workforce to fill ALL those positions. Are we seriously willing to work at those wages?

Ok. We have the unions and there are talks about “minimum wage structure”.

Let’s revisit the point on overall national competitiveness. Are we prepared to lose more jobs to our more cost competitive neighbors? Think about it. If the cost of port services goes up, the cost of manufacturing goes up, and etc etc. How long do you think it would take for the foreign companies to start spreading their eggs in other baskets?

The majority of us had been too focused on cost. Singapore’s value proposition is in its complete package – Well regulated business environment, political stability, developed infrastructure, efficient banking facilities etc.

What we really need to do is to look at how we as individuals can develop and move into the jobs that contribute at a higher value chain. When an entire nation functions in that model, we will be able to progress with time and improve our earning in that process.

Lastly, there will always be the less privileged group who will struggle to cope with the effects of low income. Let us tackle those issues separately. When the majority of the workforce is pushing themselves up the value chain, the number of people falling into that less privileged group will naturally decrease, thus more focused attention can be placed to helping those truly in need.

**Ref
http://en.wikipedia.org/wiki/Tables_of_historical_exchange_rates_to_the_USD
http://www.xe.com/ucc/convert.cgi?Amount=1.00&From=USD&To=SGD (Exchange rate for 05.01.2011)