PM Lee: Grow the Economy to Grow Your Wages. Oh, Really?

The Straits Times reported yesterday that PM Lee Hsien Loong had said that, “for incomes to rise, the economy must grow … Everyone would like their lives to become better and one important way of doing that is to make sure your pay goes up, especially with low-income workers. And for the pay to go up, the economy has to grow.”

The Straits Times also said that this made “clear the centrality of economic growth which has been disputed by some who are worried about foreign workers and inequality.” Essentially, what is being said is that Singaporeans should prioritise Singapore’s economic growth, and put aside our concerns of over-crowding and income inequality.

  • So, should we stop thinking that Singapore’s income inequality is that high, and that we should stop asking the government to increase our wages?
  • Is it true what PM Lee had said that as long as the economy grows that we will have higher wages?

Let’s take a look.

In the charts below, I will compare the following:

  • GDP per capita
  • Wage levels
  • Price levels
  • Domestic purchasing power

I will compare these indicators with two different sets of countries (developed vs developing economies). Note that except for GDP per capita which is based on the countries, the comparison is based on the cities. I am unable to locate the GDP per capita for the cities.

The data source for GDP per capita is taken from the Human Development Report 2013. All the rest are taken from UBS Prices and Earnings report. The 2012 report did not include Singapore in the report but I had managed to locate the 2011 report, which did include Singapore. You might perhaps understand why Singapore was omitted in the 2012 report after reading this article.

Comparison with Other Developed Economies

In this first set of comparison, I will compare the indicators with a select group of developed economies.

Chart 1 shows the GDP per capita of the developed countries. You can see that Singapore has the highest GDP per capita.

Slide1

Chart 1

Now, according to PM Lee, if the economy does well, so will our incomes right? So, let’s take a look at Chart 2. Chart 2 shows the wage levels of the cities, with New York = 100.

Slide2

Chart 2

You can see that even though Singapore’s economy is doing very well and we are the richest country, we actually have the second lowest wage level among the cities compared!

So, when PM Lee says that, “for incomes to rise, the economy must grow”, is that even true? Obviously, not.

In Chart 3, you can see the price levels. What is shocking is that even though Singapore has the second lowest wage level, we actually have quite a high price level – we have the fifth highest price level.

Slide3

Chart 3

Which means that if you look at Chart 4, because we earn such a low wage and prices are so high in Singapore, we actually have the lowest purchasing power, as compared to the other developed economies.

Slide4

Chart 4

In sum, what you can see here is that even though Singapore is the richest country and has the strongest economy, by per capita, we earn comparatively much lower wages, and because prices are so high, we have a severely eroded purchasing power.

Comparison with the Developing Economies

In the next set of comparison, I will compare the indicators with a select group of developing economies.

In Chart 5, you can see that Singapore has a much higher GDP per capita than all the other countries.

Slide5

Chart 5

In Chart 6, you can see that our wage level is higher as well, but more importantly, even though Singapore’s GDP per capita is nearly 4 times higher than the next highest country and 7 times higher the third highest, our wage level is barely twice as high as the second and third highest city!

Slide6

Chart 6

In Chart 7, you can see the price levels of the cities. Note that price levels in Kuala Lumpur is actually half that of Singapore.

Slide7

Chart 7

Finally, and more importantly, when you look at Chart 8, you can see that Singapore’s purchasing power is similar to the next highest city – Kuala Lumpur. This is even though our GDP per capita is nearly 4 times higher than Malaysia!

Slide8

Chart 8

Singaporeans, We Are Being Cheated

What’s going on here?

  • Even though Singapore is the richest country in this comparison, we are paid the lowest wages among the developed economies. Among the developing economies, their peoples are paid comparatively higher wages even though the country is much poorer.
  • Even though Singapore is the richest country, we have the lowest purchasing power among the developed economies. Not only that, when compared to the developing economies, our purchasing power is the same as that of Kuala Lumpur.

What the F is PM Lee Hsien Loong talking about when he says that, “for incomes to rise, the economy must grow”?

If this is indeed the case, what has happened to the past two or three decades of economic growth? Where has all the supposed wage growth that PM Lee is presumably talking about gone to? Why is it that even though Singapore’s economy was growing so strongly and that we are the richest country, that our wages are the lowest in the developed economies (as compared to countries in this comparison)?

Not only that, why is it that even though we are the richest country, we have the lowest purchasing power among the developed economies and our purchasing power is almost on par with that of the other developing economies.

For a country so, so F-ing rich, why are we able to afford only a standard of living which is only on par with the developing economies?

Behind all the glamour and blink-blink, have we been had, Singaporeans?

Last year, the government said that they had hoped to increase productivity by 30% in the next 10 years so that our wages will increase by 30% as well. As I had written previously, this proposal was doomed to fail because:

  1. Singapore’s productivity growth did not even reach an average of 2% annually over the past decade. In fact, Singapore’s productivity growth had been dropping decade-on-decade for the past 3 decades. How did the government intend to miraculously grow productivity by 3% annually for the next decade?
  2. Also, Singapore’s wage growth had never kept pace with productivity growth in the past decade so even if productivity growth did miraculously grow by 30%, our wages wouldn’t have grown by as much.

So, after one year of telling people that we need to grow our productivity, so that wages will grow – knowing how it will not work at all – the government has finally changed tack and said, well, we would need to grow the economy.

Of course, when you increase productivity, you would be able to grow the economy. So, is PM Lee saying one and the same thing? Well, he could be.

Old Wine In New Bottle: Still Not Interested to Increase Our Wages

More importantly, the government is trying to repackage what they had been saying. The government would be thinking – you know what? People might not understand what productivity growth means and if we keep saying that and they don’t see results, they will know that we are lying to them. Let’s say something else. Maybe let’s say if the economy is growing, their wages will grow? Maybe they will buy into that?

And wa-la – economic growth for wage growth. Whereas last year, the government came out with some statistics, no matter how erroneous, thrown together to explain how productivity growth will lead to wage growth, I don’t see any statistics this time.

Perhaps PM Lee will show some statistics on the May Day Rally on Wednesday, but I wouldn’t think too much of the statistics, if there were to be any. The statistics that I have presented here are already very clear. Whatever the government wants to show us, you can trust that it is not going to work, because it didn’t.

As I had discussed before, the government gets to decide how much wages can grow. When the government comes out with fanciful concepts of how if we grow this, wages will grow, or if we do that, wages will grow, it will not. The only way wages will grow is if the government DECIDES to grow our wages. It’s all in the government’s hands.

So, it’s a matter of whether they want to or not. They have insisted that they do not want to implement a minimum wage. As said, Singapore is one of the few countries which still does not have a minimum wage. All the Asian Tigers and even Malaysia, Thailand and Indonesia have minimum wages to protect their people.

There are a few countries without the minimum wage law but which pay their workers well – the Nordic countries and Switzerland – but this is because they have very strong and independent unions which fight for their workers’ wages and are not lackeys. You can read more about it here (link).

I have also discussed here (link) before that Singapore has the highest income inequality among the economically developed economies.

So, what is PM Lee trying to tell us when he knows jolly well that even if the economy grows, that our wages wouldn’t grow in tandem. And what is The Straits Times trying to tell us when they tell us not to focus on income inequality but on economic growth, when our income inequality is so dire! (Please read the link)

Holding Singaporeans Ransom to Our Wages

Do you know what the government is doing? The government is holding us ransom. Essentially it is this, the government is saying – you know what, you want to have higher wages? Well, we don’t feel like it. We will pay ourselves high wages but you can stay as low as we want you to be. And you know what, if you want high wages, well we can raise it. But – only if you increase productivity for us. Can’t do it? Well, we know. Guess what, let’s try growing the economy. You know what, if you can do it, we will increase your wages. How about that?

So, you might say – but you have the power to increase our wages if you WANT to!

But, the government would say – precisely, I have the power. So, now what? Do you want to work hard for us or not? If you don’t, you will not get any increase. If you do, well, let’s think about that when we come to that, shall we?

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22 comments

    • Lee LH

      There is no need to increase our wages of our workers , but keep the PM and Ministers ‘ pays to a third of what they are? Forget about ‘responsibility’ or positions and status,they cannot have the cake and eat it !

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  2. Alvin

    I think PM is only 1/2 right. When the economy grows, not the income, but the income ceiling grows. However, the government, and the people need to do something to help increase the income, especially of the low wage earners.

  3. Jiayi

    Awesome post. I have been saying the same thing over and over to a lot of Singaporeans and no one is buying it. It might be because I am in a university and the people around me are from relatively well-to-do families. This is the reality of Singapore and we need young people to be aware about our circumstances, which has been so well-kept from us.

  4. Don't be fooled

    This article is statistic manipulation at its best. When comparing GDP he takes SG as a country vs other countries but when comparing wages he takes SG as a City vs other major cities instead of vs other countries.

    In all major countries, city wages far outstrips wages in rural areas and overall GDP per capita gets dragged down those areas with lesser income. So instead of comparing apples to apples he changes the numbers and stats as and when he likes just to make SG look bad.

    For example median income in Taiwan is about SGD$1.8K while SG’s median income is SGD$3K. In his chart he chose to use only Taipei instead of the entire country of Taiwan because the pay in Taipei is comparable to SG.

    This would not be an issue had he use the GDP of the major cities in his first chart but instead use GDP of countries which would be significantly less than it would have if it was just based on their major city. Anyone reading this needs to open your eyes wide, put on your thinking caps and not get con by him

    Writer just loss all credibility

    • My Right to Love

      Hi,

      What are you talking about? Be systematic.

      I’ve clarified that I could not locate the statistics for the GDP per capita by city and has thus used the GDP per capita by country. Now, if you want to do something useful, go locate the statistics and put them here.

      As for the wage levels, please look at the link I had included and download the report to understand their methodology. I don’t understand why you even bring out the statistic for the whole of Taiwan. I stated very clearly the comparisons for the wage levels are of the cities.

      Now, unless your geography fails you miserably, you will know at Singapore is 100% urban and 100% a city, and thus it would make perfect sense to compare Singapore as a city with Taipei as a city.

      And in future, if you would like to troll, please get your facts and knowledge right before you do so, because it’s terribly embarrassing to comment on something and be incoherent at that. And it’s a terrible waste of time to have to reply and clarify a half-baked comment.

      Thank you.

      Roy

      • Don't be fooled

        U conveniently used different stats to mislead readers now U accuse me of trolling. If U have any integrity left U would have removed the charts of stats u don’t have and rewrite your article base on stats that U had. I’ve already given U a huge benefit of a doubt when the report U claim to base those chart with is not on the link that you provided

        Ur argument that Singapore is totally urbanize and should only be compared with cities is invalid due to as I already pointed out it’s OK had U showed us the GDP of Cities instead of countries.

        Instead U accuse SG of under paying base on GDP as a nation but comparing it with Wages of major cities as I’ve pointed out earlier, GDP of a country is a lot lower than GDP of a major city. For example the GDP of the city of New York City alone is 1.29trillion(see link below) with a population of 8 million. That’s almost 4 times Singapore’s GDP with a population less than twice of ours.
        http://www.smartplanet.com/blog/cities/10-us-cities-with-economies-larger-than-entire-countries/4194

        So Ur entire article is not only WRONG, it is downright dishonest if U actually knew what U are comparing it with

        If you want to compare SG as a country compare it as a country. Median wage/Average wage data is easily available for all countries. If you want to do it as a city, compare all stats as a city. Before U accuse me of trolling do proper research first

      • My Right to Love

        Hi,

        1) Go research – urbanisation in Singapore
        2) GDP per capita for other cities – go on, convince me, and yourself.
        3) Proper English, please.

        I said statistics, not an avalanche of complaint.

        This has been amusing.

      • My Right to Love

        For the benefit of the other readers, I managed to find this:
        http://www.businessinsider.com/this-quiet-american-city-has-the-highest-per-capita-gdp-in-the-world-2012-1

        The GDP per capita for Oslo, New York and Paris is listed here. Oslo has a significantly higher GDP per capita than Singapore. New York and Paris have higher, but almost similar GDP per capita as Singapore.

        The argument still stands. If you look back at the charts, you would expect Singapore to have similar wage levels and purchasing power as New York, or even Paris, but Singapore has a much lower wage level and purchasing power – where our purchasing power is similar to that of developing countries such as Malaysia.

        Now, if you look at Kuala Lumpur, Beijing, Manila and Jakarta, all except Malaysia / Kuala Lumpur, the GDP per capita of the capital cities are similar to that of their countries.

        But what is more important to note here is that not only is Kuala Lumpur has a much lower GDP per capita than Malaysia’s GDP per capita, Kuala Lumpur was still able to give its people a purchasing power that is the same as Singapore – in spite of having a much lower GDP per capita and wage level.

        I will leave you to make the conclusion for yourself. But you can see that it’s clear how Singaporeans aren’t getting our fair share back.

        Roy

      • kENNETH sv

        Most Singaporeans can go and visit all the places you mentioned. In fact more Singaporeans can visit them than they can visit us.Your problem is that you have too much time to gripe and complain. Go out there, get a job, save some money (after all you still living with your parents) and use this to
        1. Visit countries and cities you mentioned.
        2. Stand for elections as an individual candidate (after all everyone knows how you took on the PM and broke down and cried)
        3. Join an existing political party (if they will have you)
        Why dont you compare our living conditions with Indonesia, Malaysia or any other Asean Country. You know what I love about Singapore : YOU CAN LEAVE ANYTIME YOU WANT

  5. Kenneth Vaithilingam

    To The Rafflesians 65 (and whoever else you are)

    Singapore does not enjoy the hinterland status to that of the other countries that you are comparing it with. Even KL has a large hinterland where they can use or misuse to the benefit of those living in the Cities. Everything thing we have comes from abroad, even the toilet paper that you use or reuse.

    Our purchasing power really depends on where and from whom we buy.

    My purchasing power may be lower than most but I am assured that what I purchase is genuine, free of germs and mostly safe.

    All food consumed is of the highest safety standard and not killed and packed in the backyard of somebody’s shit-house.

    Sometimes when you ask for mutton you may get beef but at least you dont get Kangaroo meat or wild boar as a substitute.

    The buildings we work in dont collapes on us and it is relatively safe for my children to come home at 3am in the morning from a night-club (which doesn’t catch fire when they are dancing) and I am sure it will be quite safe for my grand-children to take a bus to school…(although they will have to pay one of the highest bus fares in the world.)

    And most of all I know how much Mr. Lee Hsien Loong, earns and that he doesnt have his own ship , aeroplane and palace bought with my money. I also know that he has to use his own car (with current CEO prices like you and me)and can only use the State Cars on official occasions

    And most of all I KNOW that I had to work hard to get what I wanted in life and that nobody was going to give me a handout unless I was crippled. I was given a leg up by Lee Hsien Loong’s father and now he is trying his best to do this for the the new generation. The best thing about Singapore is that it is the Best Place In the World to live for people who work hard and long for a better life………………and you know something , it is also the easiest place to leave, if you want to. You can leave for Indonesia, Malaysia or even Thailand where things are less than 50% of that compared to Singapore. There are 10 million Indonesians, Malaysians and Thais waiting to change places with you

    • eremarf

      Hi Kenneth

      I respect your comments, and agree that Singapore is generally rather well-governed in many areas (especially if you compare us to world average standards, instead of to equally rich countries). Nonetheless, I think the picture isn’t as clear-cut as you make it out to be:

      1. Does the state-controlled media whitewash problems so that you don’t realize you have problems? I’m sure if you asked North Koreans if they enjoyed their life, a lot of them who’re not too in touch with reality (not their fault – they live within a propaganda machine) would find it quite satisfactory too. Now Roy is offering you a choice: “You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland, and I show you how deep the rabbit hole goes.” (The Matrix)

      2. BTW re: food – don’t be so trusting. We import fresh produce from China. If you eat out, food is prepared by PRC folks. I am quite worried about these. Europe is in some ways more stringent on food than SG (in terms of pesticide and pollutant contamination, in terms of GM labelling, etc). We might be having food issues, which are just not being reported, because news is controlled.

      3. I have no issue with Lee Hsien Loong’s pay. It is transparent. How about his wife’s appointment as head honcho at Temasek Holdings? How about wealth holdings of the Lee family, and other ministers? Can we be transparent about those? How about good deals for cronies? Why do civil servants and personal friends keep getting jobs at GLCs? How many AIMs are there? Are GIC and TH actually earning or losing money? You imply there is little corruption – but to me – many things seem shady!

      4. Re: safety – I’m not sure bro. I worry when my friends and family cross the road in Singapore. People get mowed down by buses. At the workplace, Singaporean workers are mostly okay – only foreign workers face unsafe work environments and lack of treatment and compensation for accidents.

      5. Singaporeans have been leaving, but not for Indonesia, Malaysia or Thailand. They move to America, the UK, Australia, etc. I would like to move too. Why? Try finding out from people who have moved? There’re lots of other issues in Singapore. People want to maximize their potential. They have dreams, want to spread their wings. That’s tough in Singapore, working 60 hours a week just to pay the bills.

      6. You think that working hard gets you somewhere in Singapore – I see everyone in Singapore working much harder than people in developed countries, and being rewarded with less. I don’t agree with you that Singapore rewards hard work. Singapore is a cruel country that treats some people like dirt, and buys the complicity and silence of the rest with material luxuries (helped by a climate of fear and dirty political tricks). If you’re well off, good for you. I hope you and your loved ones will never have the misfortune of being poor in Singapore. If you ever are – let me know how it goes. I’m curious to see if you will change your mind then.

      • Jonny Johnson

        Very Well Said . Why do you think so many Singaporean Talents and the Middle Class would wanna Migrate to America , Europe & Australia ? Because the Government keep Emphazing on Singapore Economy , Country Wealth Number 1 , Singaporean Citizens Priority & Quality of Life Number 3 . For the Past 15 years of their Policy Making , they cause all these Problems for their own Citizens that people are complaining about Today . Sure , they claims all these while to have the capabilities to Lead the Country in terms of many Issues to make a Country Successful , but just look at what our own people have Face with Today … especially the Young Generations of Singaporeans . They have taken very good care of the Pioneer Generations with the Pioneer Generations Package … Kudos to that , but with all these Problems that the Current Young Generations that have to Deal with Today , Do you think it is Right that they can just leave the Issues to ourselves to Resolve as we should be 100 % Independent ?? Fuck it to that as it shows that they are too Political and have only been interested in Making Singapore an Excellent Country but the Young Citizens to suffer these Issues of Life Here . Getting Paid Millions & Millions as they Claimed that They Deserved that Salary as Elites while the Average Singaporean Citizens Fought Hard very Every Day to Make Ends Meet ??? Sorry but I DO NOT BUY INTO THAT !

    • Jonny Johnson

      Very Simple , Possibly Because you Doesn’t need to Face these Problems they Average Singaporean Citizen have to Face , surely you can Supported the Government Views .

      • taipeir

        Your stats on Taipei wages vs Singapore wages seems completely off.
        Taipei’s wages come in 40% less than Singapore according to this stat, and I still think that the average wage of Taipei metro area (if including New Taipei City) should drop down to around 40k NTD+/mth,

        Also from my personal experience most middle class Singaporeans earn far more than middle class Taipei residents.

        Check Numbeo.com, their average monthly income after taxes …..

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