[Senator1]

http://www.temasekreview.com/2009/10...smally-low/#at

By Abdul Gafoor, Social Correspondent

A closer look at the share of Singapore’s economic pie that goes to workers as incomes throws up another paradox. Singapore’s economy itself has grown more than 30 times.

Despite the fact the country has been working hard with full devotion to continually continue high economic growth rate for over five decades, employee’s income share in GDP, has only reached around dismal 41%. In 2008 it reached 44% but is unlikely to remain at that level. If one compares this with the developed countries, that is more than 50% and healthy levels are around 60% or more.

What basically this means is that despite the economy growing continually and rapidly, the share of labour income has not reached adequate levels. The government, politicians and policy makers for five decades have been naively and stubbornly believing that by growing the economic pie at a fast and high rate continually, workers will enjoy their rightful returns.

The government, politicians and policy makers may argue average incomes have risen very high over the same five decades. That is true but each of this serve a different purpose.

Achieving high average income will give a higher standard of living if the necessary set of outcomes, which I discussed in earlier article, are achieved. Achieving a healthy or adequate share of GDP as labour incomes will empower the labour with choices and stability.

It will also allow them to spend adequately enough to make them a strong contributor to domestic demand. The reason why the government has been refusing calls to give greater importance to domestic demand given the high volatility of external demand is purely because of this. The workers are just not getting enough of the pie they produce to become a force within the domestic economy to reckon with.

Singapore’s continued chase for high economic growth rates will not change this situation in another fifty years. What is required is major changes to the economy and labour force.

Instead of blindly and foolishly adding cheap labour in multitudes to the production process, the labour force requires quality labour who have higher productivity. Instead of having six $800 foreign worker waiters manning a restaurant, the employer should aim to have three $1,600 highly competent local waiters who can do all the jobs and work with ease and competency.

Employers need to restructure work and jobs so that each employer can achieve high output in given 8 hour work day instead of achieving high output over long dreadful working hours. Competency and marginal productivity is what employers should aim to seek from their employees.

On the MNCs front, the government must not just aim to draw in companies that invest big dollars. It must ensure the companies are able to hire locals for high skilled jobs and/or also compensate the workers highly according to the job done. If MNCs are to come here, hire foreign labour for the high skilled jobs and locals or also foreigners for the average skilled jobs and expatriate much of the profits, what real gain does Singapore and Singaporean labour really have?

Singapore companies, led by GLCs, government associated companies and government agencies also need to restructure their organisation structures and compensation structures. They have to shed the primitive top power centric, middle empty structure and bottom heavy where CEOs and directors are paid hefty sums and the average worker is underpaid. They not only need to rebalance power structures, they also need to rebalance compensation structures.

However all these reforms will never ever happen in the lifetime of the current government. The elites will resist it. The politicians and policy makers will never see any merit in it and will never want to change the status quo. Rather they will chant the mantra of continual high economic growth endlessly.


About the Author:

Abdul Gafoor is a researcher based in the United Kingdom. He hopes to return to the Singapore he once knew as a child one day.