The Businesses of the State

The world is again caught in a state of flux and many changes which are beyond our wildest expectations are taking shape. From ISIS to Brexit, there is a looming picture of gloom and the impacts in socio-political-economic terms are wide and extensive. In the tiny state of Singapore, these tumultuous occurrences taking place in the middle east and Europe are far away from the minds of ordinary Singaporeans. Their immediate worries are about bread and butter issues. 

 

 

The economic slowdown does not seem to recover anytime soon and retrenchment exercises are back. In the early 60's when Singapore was emerging as a developing nation, the state took control of economic development and charted a course which had state-owned enterprises taking the lead in opening up new industries. State capitalism intensified even after Singapore ascended the ranks and became a developed nation in the 80's. In the next 3 decades, the state continued to expand and acquire substantial business interests either directly under its statutory boards or indirectly through state-linked companies. Today, it has become the biggest landlord and business owner. It is also the biggest employer in Singapore and a major international investor with an enviable sovereign wealth fund.

When every citizen is gainfully employed and is able to afford a roof over their head, no one really cares too much about who owns what and how much money is made by the businesses and their management. In the minds of a people deeply accustomed to letting the state take the lead in almost everything, the business of running our economy, including what investments to make overseas, belongs to the state and not the people or even private enterprises. However, as at every critical point in our growth as a nation, past solutions invite serious questions when they no longer appear to be effective in dealing with present day problems. Ever-rising rents and costs of doing business, increasing unemployment, retrenchments and slower economic growth have become recurrent topics in our daily news. When state capitalism in our past as an emerging economy could create jobs, homes, higher incomes and hopes for a better future, these times are considered hard times. A fundamental question relating to market economics has to be asked. Is a state-owned and controlled economy, with its current breadth and depth, still a viable solution for the challenges that Singapore faces, given that the dynamics of doing business today requires greater innovation and creativity?

It is not suggested that state capitalism per se is undesirable. For instance, state capitalism in China has brought sterling economic growth for the Chinese economy in the last 20 years and it would be hard to find any no pure free market economy in the world today. The state is always involved in some economically strategic matters, such as regulating the banking system and lending activities and ownership of what are considered important national assets. However, to the extent that state capitalism is essential in order to protect its people from a wayward economy, the logic falls short when it goes beyond that. Heavy-handed state intervention in free market forces creates serious distortions of the market, generating misinformation and unrealistic expectations. Extensive business interests of the state also unwittingly compromises good political governance when the state chooses to protect its business interests over the rights of the people . Unfair competition may also breed disenchantment and stifle entrepreneurship in areas seen to be dominated by state-linked businesses .  

Is it time for our economy to be driven more by real private enterprises than by state-owned businesses? If so, how can we achieve a better balance between state capitalism and free capitalism? These are questions that need a rethink at higher levels.

THEME: Employment - The White and Blue Collars

In recent years, our legal profession has seen an open-door policy that allows foreign lawyers to practise law Singapore law in transactional matters. Yet, even though the rules are relaxed to admit foreign law practices into Singapore, there is still one category of foreign lawyers who remain subject to a long-standing strict legal regime for their admission here - Queens' Counsels.

The rules permit the admission of Queen's Counsels (or "QCs") for them to represent a litigant before our courts if the QC has, inter alia, special qualifications or experience pertaining to the case. This idea in the admission of QCs ensures that a real foreign talent is being allowed to represent a litigant in place of a local counsel. This same idea of "special qualifications or experience" should be considered as part of the criteria for allowing foreigners to take up any job in the category of Professionals, Managers, Executives and Technicians ("PMET") in Singapore where we are not short of suitable candidates.

It is a reasonable assumption that each job taken up by a foreign PMET in our job market means that one potential Singaporean candidate is displaced. The justification for doing so must be that the applicant is a "real foreign talent" who is not paid a less favourable remuneration package than that offered to a local candidate. Where a real foreign talent is recruited, there should be a requirement that a transfer of his/her knowledge and skills should take place during the tenure so as to upgrade the quality of our own local pool of PMETs. Any extension of the foreign PMETs' eligibility to continue working here should be supported with cogent reasons and corroborated by a statement from a local apprentice.

The construction industry has traditionally relied on foreign construction workers and there are not many Singaporeans who will consider taking up construction work except as foremen and project managers. Construction workers do not seem to pose a threat to our workforce and have become more or less indispensable. However, in the F&B industry, the need for cleaners, waiters, front service and other workers has not been adequately met by our local workforce because of low wages and a lack of pride in such jobs. In order to develop our own labour force to undertake the work that is now substantially taken up by foreign labour, we need to take a hard look at the costs of living that our workers at the lowest rung of our economic ladder are facing and how to inculcate job-pride.

There is a growing need for us to seriously consider whether minimum wages should be imposed to protect the rights of the most vulnerable groups in our workforce who contribute to the massive profits that many of our local companies are generating. The Progressive Wage Model advocated by NTUC to increase the salaries of workers in the cleaning and security industries, which is enforced only through licensing requirements,is in substance a minimum wage scheme and a step in the right direction, But more can be done to match up the wages to the minimum costs of subsistence.

Wages and work morale are not unrelated. In fact, low wages lead directly to low morale. Perhaps, there are business owners who will be genuinely troubled by wage increases because of their costs of doing business such are high rental costs. But if businesses are taking care of their workers, then the state with all its resources, ought to step in to see how they could help these businesses.

Thoughts From A Concerned Singaporean

A fellow Singaporean sent me a message and I thought of sharing it with you.

The writer's message (as it is) is as follows:

"We have a large and brain tank in public service. Sometimes I wonder

(1) Why we react to public needs of reducing migrant workers before increasing workforce in service industry. Strategies to overcome shortages should be in place first. For example, increase the culture and empathy for people in the service sector. Initiatives can take many forms, such as requiring Students to do ECA or internship in service sector, and increasing minimum wage of service staff. 

(2) Pilots are paid well. Taxi drivers can earn >$3k a month. Bus drivers, also shuttle many lives around. Many of them are not locals. Can you imagine bus drivers cannot convey information on bus routes during mrt breakdowns? 

(3) We link ministers' salary to link the median income of the top 1,000 earners who are Singaporean citizens, with a 40 per cent discount to reflect the ethos of political service. Couldn't the public service, under this group of leaders also re-look at the half baked solution of implementing tray return policy at hawker centers. After years of implementation, is it really working or shall we discontinue this good objective but a major implementation breakdown with ill creativity?

(4) LTA hopes to create a people centered land. Does LTA knows that aunties and uncles do not use wifi. Shouldn't visual aids on bus arrival time be indicated at every bus stops? As we age, shouldn't all bus stops have seats instead and take priority over narrow sliding benches that aims to prevent people be sleeping over it?

(5) Surely LTA has done numerous study trips overseas before implementing MRT in Singapore. LED signs in trains are often faculty or blocked in crowded trains. Announcements are muffled by rattling sounds of the train. As Riders may lose track of the approaching station after a tired day, has LTA observed that the London Underground has images of the approaching station's name along the tunnel much before the train arrival ? After all, gadgets like LED and announcements failed to delivery."

What are your thoughts?

THEME: Employment

One of the biggest bugbears for Singaporeans has been the growing competition for jobs as a result of the long-standing "foreign talent" policy. 

The policy was intended to supplement our local workforce with expatriate talents to sharpen and maintain Singapore's competitiveness in the new global economy. This policy initially saw an influx of British and European expatriates into our banking, financial and advertising sectors who had the relevant skills, expertise and network that made a real difference. Later, it developed into a fashion statement to have these expatriates working in the company, a reminder of our colonial mentality.

With an aging population and falling birth rate, the "foreign talent" policy took a twist and denigrated into what is generally perceived as "cheaper foreign talent" policy. Combined with the open door policy on immigration based on the white paper to expand our population to 6.9 million by year 2030, Singapore became the hot destination for PMTs (professionals, managers, executives and managers) coming from Europe, China, India, Philippines, Myanmar, Vietnam and Thailand. 

These foreign job-seekers were attracted by the strong Sing dollar and our favourable job climate for foreigners, fostered by constant refrains from the policy-makers that gave these PMETS the mistaken belief that we needed them more than they needed us. Whilst Singaporeans were answering to the calls to re-skill or upgrade their skills to improve their productivity, PMETs were recruited to fill job vacancies to avoid down-time. Contract appointments soon became more permanent appointments and younger PMETs with greater work-commitment were seen to be favoured over aging local PMETs.

The lower remuneration packages for foreign PMETs, as compared to Singaporeans, are attractive enough to make them leave their families and home countries and to work and live in Singapore. Apart from better pay packages and working conditions, housing schemes were introduced to provide them with affordable and comfortable accommodations. These schemes paved the way for permanent residents ("PR") to own HDB flats and to bring their families here to be with them. The number of PRs owning HDB flats run into the tens of thousands (Read HERE). Amongst these PR-owned flats, thousands are rented out by PRs who spend most of their time outside Singapore and there are also PRs who own also own private property at the same time. A diaspora of foreign communities quickly emerged in our local housing estates, giving rise to communal tensions due to cultural differences.

According to the statistics in 2014 (Read HERE), there are now 3.343 million Singapore citizens and more than 527,000 permanent residents living in Singapore. An average of 18,500 foreigners are granted citizenship each year with 30,000 new permanent residency given out (Read HERE). Singaporeans are getting hot under their collars and many are feeling immense pressure competing for work, accommodation and transport in their own land from these new citizens and permanent residents. Singapore-born PMETs who have lost their jobs are attributing their unemployment to cheaper foreign and many are unable to find re-employment in the same line. PMETs. 

From a warm and hospitable people that was always ready to embrace new arrivals onto our shores, Singaporeans are now generally perceived as being nationalistic and less tolerant of foreigners who live and work here. What can we do to help assuage the feelings of a people that has been hurt by a long period of "hands-off" approach in job competition without hurting the economic progress and stability of our nation?