Despite Bold PAP Promises of a New Economy Our Leeder Continues To Be Mired in the Past
Last week the release of the latest population figures showed our population growth rate accelerating to 1.2% from 0.5% the year before (taking total population from 5.63 million to 5.70 million). The misleadingly and euphemistically named “non-resident population rose much faster, from 1.64 million to 1.68 million, which state media Channel News Asia said was due to a rise in the number of work permit holders, driven by growth in services and construction.
This is curious because the GDP quarter-on-quarter growth rate to June was -3.3% at an annualised rate and the year-on-year growth rate is only 0.1%. As the EU, Chinese and even the US economies are continuing to slow, it is quite possible that Singapore could see its first recession since 2008 though as our Statistics Department is not independent it is quite likely that the economy will miraculously escape recession. In any case, as I have said frequently, Singapore’s GDP growth, like Ireland’s, is driven more by MNC tax avoidance strategies and is largely disconnected from Singaporeans’ incomes and welfare.
Even more curious is that the rise was attributed to an expansion in services and construction. MTi’s figures show that both construction and services shrank in the second quarter though they both expanded in the first quarter. Manufacturing shrank in both quarters.
As employment in manufacturing did not shrink, or losses in manufacturing were outweighed by employment gains in construction and services, we can expect negative productivity growth figures that will be accelerating in line with worsening economic growth figures. So much for Heng Swee Keat’s claims in the last Budget that his Government had brought about some kind of productivity miracle with its poorly audited subsidies to companies for automation. These would appear to be largely a waste of money.
There are usually lags between output and employment so it is possible that we will see much of the additional labour taken on let go later in the year. However given the many cost advantages, many of which the PAP Government has created or exacerbated, of hiring foreign workers over Singaporeans it is quite likely that the pain of adjustment will be borne by Singaporeans rather than by nonresidents. This is borne out by Ministry of Manpower’s (MOM) press release dated 29 July 2019 which shows that, while the unemployment rate as a percentage of the total labour force remained steady at 2,2%, the unemployment rate for Singapore citizens rose to 3.3% .
When you take into account the fact that our unemployment rate is kept lower than other countries by NS and Government subsidies for courses (which keep workers laid off but offered course of dubious value out of the unemployment numbers) it is clear the unemployment rate for citizens is much worse than that in the UK or the US and much much worse than global cities like New York or London. Clearly most of the pain of declining external demand is being borne by Singaporean workers rather than foreign ones.
It is difficult to understand why, at a time when Singaporeans have difficulty finding work and the economy is shrinking, that the Government would be loosening rather than tightening the restrictions on foreign workers. It could be because Lee Hsien Loong is so confident that Singaporeans will vote for him no matter how many lies he and his ventriloquist dummy, Heng Swee Keat, tell with a straight face about the need for austerity and the Government’s lack of reserves, while at the same time the PM arrogantly keeps his own wife’s remuneration secret. Perhaps it is because the steady growth in the citizen population which has now reached 3.5 million, fed by a roughly 1% p.a. increase in the number of new citizens, allows the PAP to feel confident that every year they gain new voters grateful for the fact that, for men at least, they do not have to do NS like other Singaporeans.
Despite Lee Hsien Loong’s and Heng Swee Keat’s claims of grandiose visions, it is clear that the new Singapore economy looks very much like the old one of the last twenty years. There has been no productivity transformation. The only thing that has changed is that the external environment, which provided a huge tail-wind and allowed the PAP to falsely claim credit for a bogus economic miracle fuelled by cheap foreign labour, is now working in reverse. The only question is if Singaporeans will wise up to this fact in time for the next election.