What have I learnt today? Blogging about books, media, words, Singapore and the world today. The blog that was Blowin' in the Wind.
Singapore has broken new ground with a novel scheme to increase the wages of Singaporeans.
The government will bear 40 per cent of the pay hike for Singaporeans earning up to 4,000 Singapore dollars (over $3,200) a month. This should benefit at least half the Singaporean workers as they earn less than that. The gross monthly income from work of Singapore citizens and permanent residents working full-time was 3,480 Singapore dollars last year, according to the Ministry of Manpower.
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.
Foreign workers not only helped the Singapore economy to grow but also helped raise the median income of Singaporeans, Finance Minister Tharman Shanmugaratnam said in his Budget speech yesterday.
That contradicts a Wall Street Journal report last month, which I quoted in an earlier post.
The minister and the Journal both agree the foreign workers helped the economy to grow.
But their presence was a damper on productivity and blue-collar wages, according to the Journal.
Foreign workers — over a million strong — make up about a third of the Singapore workforce.
The median monthly income of people working full-time rose 0.5% from 2,590 Singapore dollars in June 2008 to 2,600 Singapore dollars in June 2009, after soaring 11% in 2008 and 7.7% in 2007, the Ministry of Manpower reported on November 30, 2009.
But many Singaporeans are unhappy about the influx of foreign workers.
The minister said there was a need to "moderate the growth of the foreign workforce", using a "price mechanism", like for any other product in the market.
Here are the "average monthly nominal earnings per employee by industry", according to the Monthly Digest of Statistics Singapore, October 2009.
They have fallen back to 2007 levels and productivity has plummeted, too, as mentioned in my previous post.
The "average nominal earnings per employee by industry" was 3,609 Singapore dollars (about $2,575) in the second quarter of this year — less than the 3,773 Singapore-dollar average pay cheque in 2007.
Here's another way of looking at the same figures.
Average monthly nominal earnings are computed using data from the CPF Board, says the report. They include bonuses but exclude employers' central provident fund (CPF) contributions. The figures include all full-time and part-time employees who contribute to the CPF and exclude all "identifiable self-employed persons", the report adds.
The actual figures are given in my previous post.
The Singapore economy is set to slow down after two quarters of rapid growth, according to the Monetary Authority of Singapore (MAS).
The economy won't grow as rapidly as in the second quarter, when Singapore came out of recession, and in the third quarter when, according to advance estimates, the economy grew 0.8 percent over the same period last year — the first such growth in more than a year.
GDP growth in 2010 is expected to be slower than in previous post-recession periods, says MAS.
There is bad news for workers and job seekers.
Singapore pay cuts have been deeper than those in other Asian economies such as Japan, Hong Kong and Thailand, but less than that in Taiwan, says the MAS Macroeconomic Review which you can download here.
Wages declined in the first half of the year by an average of 3 percent year on year and are expected to go up by just 1.6 percent next year compared to the 4.9 percent average increments in 2007 and 2008.
More worryingly, job vacancy rates in all sectors remain well below their levels before the recession.
Overall,there were only 33 job openings per 100 jobseekers, compared to an average of 72 during the 2005-07 period.
And hirings are not likely to pick up much.
Three-quarters of the 635 firms polled intend to maintain headcount.
The outlook is most pessimistic for the manufacturing sector.
People in Kuala Lumpur have more purchasing power than those in Singapore, according to the UBS Price and Earnings Survey 2009. But Big Macs and iPods are more affordable in Singapore. (Go here to download the full survey.)
In Asia, people in Tokyo have the highest purchasing power and the highest wages. Next in purchasing power come the residents of Dubai, Tel Aviv, Hong Kong, Seoul, Kuala Lumpur and Singapore.
Tel Aviv pays the second highest gross wages in Asia. Dubai is third, Hong Kong fourth, Seoul fifth, Taipei sixth, and Singapore seventh.
Singapore gross wages are almost twice that of Kuala Lumpur's, but people there have slightly more purchasing power than those in Singapore both in terms of hourly wages and net annual income, after taxes.
With the exception of Tokyo, which pays more than Sydney, London and Paris, wages in Asia lag far behind those in Europe and North America.
Singapore wages are only just more than a quarter of what's paid in New York.
Gross wages are highest in Copenhagen, but net wages are highest in Zurich, which pays the second highest gross wages. New York is fourth on both counts. Geneva pays the second highest net wages and the third highest gross wages.
Of the 73 cities surveyed, wages are lowest in Delhi, Manila, Jakarta and Mumbai – about four or five times less than what's paid in Singapore.
UBS came out with this interesting comparison of how many minutes or hours one has to work in various cities to buy the following goods.
| City | 1 Big Mac in min | 1 kg bread in min | 1 kg rice in min | 1 iPod nano, 8 GB in hours |
| Bangkok | 45 | 43 | 27 | 66.0 |
| Beijing | 44 | 52 | 31 | 73.0 |
| Delhi | 49 | 20 | 58 | 122.5 |
| Dubai | 18 | 15 | 16 | 20.0 |
| Hong Kong | 14 | 21 | 16 | 19.0 |
| Jakarta | 136 | 80 | 47 | 93.0 |
| Kuala Lumpur | 41 | 22 | 13 | 52.0 |
| London | 13 | 10 | 8 | 11.0 |
| Manila | 88 | 84 | 38 | 128.5 |
| Mumbai | 61 | 17 | 37 | 177.0 |
| New York | 14 | 12 | 8 | 9.0 |
| Seoul | 27 | 21 | 20 | 22.0 |
| Shanghai | 30 | 53 | 41 | 56.6 |
| Singapore | 36 | 35 | 17 | 27.5 |
| Sydney | 14 | 11 | 16 | 9.5 |
| Taipei | 20 | 23 | 12 | 23.5 |
| Tokyo | 12 | 15 | 21 | 12.0 |
Now let's compare these cities with the highest-paying cities in the world.
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