State-owned enterprises or government-linked companies (GLCs) are taking a bigger and bigger share of the economic pie in both Singapore and China. And, in both countries, labour gets the lowest share of the national income in the form of wages.
So says Singapore-born Linda YC Lim, a professor of business strategy at the University of Michigan, in a paper which asks: Why do East Asians save so much?
One reason is high property prices. Then again, "Some economies—Singapore, Malaysia, Hong Kong—have forced-saving schemes or national “provident funds” with high rates of mandatory contributions out of earned income."
Nevertheless, there is a growing income gap between the rich and the poor. It is the high income earners, GLCs and multinationals that are thriving in "corporatist" Singapore, she adds.
Unlike in other East Asian countries, domestic consumption in Singapore fell from 46.3 per cent of the gross domestic product (GDP) in 1990 to 38.6 per cent in 2007 and in China from 50.6 per cent to 36.4 per cent, says Lim. Private consumption and wages are probably held in check in Singapore by the presence of a large and growing foreign workforce which, like the multinationals, wants to send money home, she adds.