Eugene Yeo: An analysis of the UBS study: Singapore has the lowest wages and domestic purchasing power among the Asian Tigers

This is not written by me. I had first saw this article on a Facebook friend’s Timeline. I am reposting on this blog this article by Eugene Yeo, Consultant Editor of the UBS study: Singapore has the lowest wages and domestic purchasing power among the Asian Tigers. This is his analysis which I read here.

I am unable to find the source of the article, and have thus taken excerpts to reproduce here. Please go to the link to read the full article and give Eugene Yeo the full recognition.

The reason why I am posting this article here is because even though this article was written a few years ago, it is still very relevant today, especially with our current debate on the Singapore Population White Paper 2013.

Low wages

“Singapore has the lowest wages and domestic purchasing power among the Asian Tigers. While our economy has the highest GDP (PPP) per capita in Asia at $49,288, our people do not enjoy a quality of life which commensurate with it.

Though we are technically a developed first world country, some economic indicators as shown by the UBS study suggested that Singaporeans are not that better off than those in Third World countries.

Singapore has a GDP (PPP) per capita higher than Switzerland, but our wages are way below the Swiss. Switzerland is a very employee-friendly country. The net wages used have been deducted for taxes and social security.

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 power as the Singaporean.

Low relative purchasing power of wages

An average wage earner is 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

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. 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).


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. 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.”

A greying population

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 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.

A modern serfdom

Not surprisingly, the economies of both Singapore and Russia are dominated by state-linked companies.

Like Singapore, Russia has one of the highest income gap between the poor and the rich in the modern world. 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. Neither channel their returns back to the people.

Singaporeans … is very rich and powerful, the politicians are the highest paid in t he world, rich businessmen well connected to the elite dominate much of the economy together with gigantic state-linked companies and sovereign wealth funds but the people are poor, miserable and powerless.

State-sponsored repression

Though Russia and Singapore are supposedly democracies, both are authoritarian governments with little tolerance for political dissent. 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 become 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. Singapore’s two former Prime Ministers have remained in the present Cabinet with the portfolios of Senior Minister and Minister Mentor. Their exact responsibilities are not outlined.


With so much in common between them, it is no wonder that Singapore’s state-linked companies are flocking to Russia to explore opportunities of collaboration. Not only are our standards of living becoming more and more like Russia, there is an insidious ”Russification” of our economy and politics as well. What started out as a “Swiss dream” is fast becoming a “Russian” nightmare under continued PAP hegemony.

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). 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. 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.

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

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 impr ove productivity, Singapore continue to take the easy way out by importing foreigners en masse to pop up its economy.

Government dominance of domestic economy  

The economy of Singapore is a highly developed state capitalist mixed economy. While government intervention in the market is kept to a minimum, the state controls and owns firms that comprise at least 60 per cent of the GDP through state-linked companies such as DBS and Capitaland and its two giant sovereign wealth funds, GIC and Temasek Holdings.

The government is also the largest employer, giving it leverage over the wages of ordinary Singaporeans who are employed in the civil service. State-linked companies stifle entrepreneurship and retard the growth of small and medium enterprises. Singapore has the lowest number of entrepreneurs and local startups among the four Asian Tigers. The state’s only legal trade union, NTUC, controls all facets of the domestic economy from supermarkets, pharmacy chains, medical clinics, food courts, insurance, taxis and even the undertaker business.

Singapore workers have their natural rights forfeited under the government’s “tripartite” arrangement which is strongly probusiness. Strikes and protests are outlawed. Ordinary workers have few official channels to turn to for seeking redress or settling labor disputes. The government’s overwhelming dominance of the domestic economy leads indirectly to a passive, subservient and riskadverse citizenry who prefers to earn a low, but fixed, regular income as employees rather than strike it out on their own as bosses.

The brightest college graduates either pursue a professional degree such as medicine and law or take up attractive government scholarships to serve in the civil service upon graduation. Very few Singaporeans aspire to be businessmen, scientists or innovators.

As a result, the population lacks initiative, motivation and creativity, becoming overly dependent on the nanny state to guide, manage and control the economy which also partly explains why Singapore produces less millionaires than Hong Kong and Taiwan.

High prices of public housing

Over 85% of Singaporeans live in high-rise public housing built by the government. Though they are meant to be cheap and affordable to the masses, recent price hikes has priced ordinary Singapore workers out of the market.

In the 1980s, a new four room flat in Bishan cost about $60,000 while the median pay of a fresh graduate is about $1,500. A young couple paying a monthly mortage of $1,000 will be able to repay the entire housing loan in 5 years time. Today, a new four room flat under the Design, Built and Order scheme in Bishan cost around $600,000. The median pay of a graduate is only $2,500.

How much will a couple need to pay a month in order to service a thirty year loan?The high cost of public housing means that families have to save more to finance the bank loans which translates to less cash for domestic consumption in the purchase of non-essential goods and services. It is little wonder that Singapore’s domestic purchase power is the least among the Asian Tigers in the UBS study.

We are “paupers” compared to the Taiwanese, Hong Kongers and Koreans because we are unable and unwilling to spend as much as them.

The monopoly enjoyed by the HDB enables them to set prices arbitrarily though the new flats are pegged to the resale markets.

There is no incentive to lower the price because there are no competitors. In a completely free market, HDB will be competing against smaller private firms to build flats at a cheaper price to serve the needs of the buyers who are mainly from the middle and lower income group, thereby bringing down prices considerably.

Lack of social safety net

The Central Provident Fund (CPF) scheme was originally introduced to ensure that Singaporeans have sufficient funds to serve their retirement needs. However, recent studies have shown that most Singaporeans have insufficient funds left in their CPF.

In the government’s CPF Life brochure, it claims that CPF is inadequate to provide a lifelong income to the elderly because they are living longer. This is only one of the reasons. A more important cause lies in the exorbitant HDB prices which tie up the CPF funds.

Most Singaporeans finance the purchase of HDB flats through their CPF which has become a basic necessity in Singapore since there is no hinterland to retreat to like in Hong Kong. The government parcels out state land to HDB which built the flats to be sold to its citizens. The selling price is not determined by market forces, but is set by entirely by the government. Nobody knows the cost of the land and building the flats. Is it reasonable for a new 4 room HDB flat to fetch more than $300,000 and still considered “affordable”? Though healthcare costs remain heavily subsidized in Singapore, citizens are expected to foot part of the medical bill from their own pockets. A single hospitalization is enough to wipe out one’s lifelong savings. Faced with a grim and uncertain future, Singaporeans have to save more than they can spend, contributing to our low spending power.


Every elected government of the day has an implicit ’social contract’ with the voters. Citizens vote for a government to take care of their interests. To many, this means a roof over their heads, a decent standard of living and provision of basic medical services.

Singapore has one of the highest GDP per capita in the world, but are we living the lives of people in a first world economy? Has the government fulfilled its ’social contract’ to us?

The UBS study has once again exposed the inherent fallacy in the government’s argument that unbridled economic growth will bring prosperity to all Singaporeans.

Besides the high cost of living, all of Singapore’s other economic indices are far away from those of first world countries including our closest competitors in Asia ? Hong Kong, South Korea and Taiwan. In fact we are closer to the Russian than the Swiss standard of living.

Singaporeans are “rich” as defined by the assets we possessed ? 90% of Singaporeans “own” their homes, but in name only as most of the households are mired in debts due to borrowing from the banks to finance their mortages. As a result, we have little disposable income to spare ? ‘asset rich, but cash-poor’.

With no social safety net to speak of, many Singaporeans cannot afford to retire. They have work well into their twilight years till the day they die. Is this the kind of future you want for yourself and your family?

Many developed countries now realize that the obsession with GDP growth does not necessarily bring happiness and well-being to its people. In fact, high GDP growth has a propensity to cause inflation, rising cost of living, longer working hours and greater stress level for the working population and does not always lead to wealth creation or distribution to the lower income group.The Sustainable Development Commission in U.K. is now advocating ”prosperity without growth” to the government in order to engineer a rethink of its economic policies from one which is mainly econometric to one which is more humanistic.

A recent study published by the New Economics Foundation shows that the happiest people on Earth are not from countries with the highest GDP per capital. Costa Rica, with a GDP a quarter of the United States, has the highest Global Happiness Index in the world.

As we stand in a pivotal moment of our history, Singaporeans must decide whether it is worthwhile to continue pursuing high momentum growth at all cost at the expense of the quality of life or refocusing its energy to really achieving “happiness and prosperity” for everybody albeit with less impressive GDP figures.

There is an old Chinese adage: “Resting is merely a preparation to walk the longer journey ahead”. We have come a long way as a young nation and there are still many years ahead of us. What do we really want to achieve together as a people, a community and a nation? Have we lived up to the aspirations of the National Pledge to “build a democratic societ y, based on justice and equality?” Are we brothers and sisters or are we simply “digits” in the economic machinery which makes up Singapore INC?

A country is not a corporation. Neither are its people shareholders. A nation deprived of purpose, ideals and vision will never survive the test of time. We need to look beyond economic indices and nurture a sense of belonging, pride and patriotism among Singaporeans. This will only be brought about by a government which truly respect and care for its people.”

by Eugene Yeo

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