NUSS lecture: Putting the statistics to the rhetoric?

We refer to the transcript of the NUSS 60th anniversary lecture on 3 October.

HDB?

It states that “We have been concentrating in recent years on what is happening within Singapore and understandably so because we have had urgent issues to deal with – housing, public transport, medical care and so on.”

- We continue to not spend a single on public housing, as we make profits by charging about 60% of HDB flat prices to land costs.

MediShield Life?

“We are strengthening and enhancing the social risk-sharing to bear the vicissitudes of life together for example with MediShield Life.”

$2.4b MediShield Fund assets?

-  Since the MediShield Fund’s asset was $2.4 billion at end 2013, why is it that the  Health Minister’s recent reply in Parliament said that “the MediShield Fund’s reserves were at $1.7 billion as at 31 December 2013″? – without mentioning that there is about another $700 million set aside as capital?

Does this make MediShield the most profitable national health insurance scheme in the world?

Skills upgrading?

“We are preparing our workforce for the future through the work of the ASPIRE committee and now the SkillsFuture committee to create opportunities and upgrading paths for all our people wherever their positions in our economy.”

Best indicator is pay increase?

- Arguably, perhaps the best indicator as to how well our consistent rhetoric for more than a decade now – asking Singaporeans to upgrade their skills continuously  - is working, may be the pay of polytechnic and ITE graduates – who are now the new focus (degree not important).

In this regard, the median basic wage of associate professionals and technicianswas $2,210 in 1999, and $2,908 in 2013.

This is a nominal increase of 31.6% or 2.0% per annum.

As inflation was 34.0% or 2.1% per annum from 1999 (CPI 86.4) to 2013 (CPI 115.8) – the real basic median wage was negative, at -2.4% or about – 0.17% per annum.

Real pay increase negative last 14 years?

So, the real wage increase for the last 14 years was negative. Isn’t this really pathetic!

“We are absorbed in our daily lives, leaving little time and energy to track less immediate concerns.”

Work longer hours?

- In the recent report (“Majority of Singapore’s professionals working excessive hours: Survey“, Channel NewsAsia, Sep 17) – we may be working very long hours.

Singaporeans have the longest work week hours in the world.

Problems not unique to Singapore?

“We are preoccupied with healthcare financing, aging population, immigration, income inequality, and so many other domestic items. But these are not items unique to Singapore. Many other countries in the world, especially developed countries face similar issues and exactly the same list of things and we are all facing, dealing with the challenges in our different ways. So to make sense of what faces us and to assess what we are doing and have ideas on what we can do, we have to know that this is not peculiar to Singapore. We have to know how others are tackling their problems, and learn from their experiences.”

Lowest government spending in the world?

- According to the Economist (Sep 27) – “(in) Denmark, government spending runs to nearly 60% of GDP. More diverse America allocates just 39% of GDP to government, in polyglot Singapore the figure is just 14%”.

So, why is our government spending on the people, apparently the lowest in the developing and developed countries?

Comparing with other countries?

“There are many examples from all sorts of countries of the best of intentions producing zero results or worse sometimes even negative results, especially in social policy. Too often, the policies ends up hurting the very same people they were intended to help. Take the problem of poverty. Many countries have generous welfare schemes to alleviate poverty, or minimum wage laws to help poorer workers but none of them have succeeded in eradicating poverty. Instead they have often created welfare states, bureaucracy, dependency, disincentives to work, and even higher unemployment. Because what you want from a policy is not necessarily what you get from it. You intend some outcomes but you will often produce unintended results. So that is the first reason we have to be hard headed – to get the right results.”

Pay the most, get the least?

- From a cashflow perspective, we arguably pay the highest taxes in the world (taxes, indirect taxes, highest CPF contribution in the world (akin to social security and insurance taxes in other countries), implicit tax by paying the lowest real pension returns in the world, and receive relatively the lowest social benefits. On top of this, from a cashflow perspective, we are not spending a single cent on CPF, HDB or healthcare.

Keep accumulating huge surpluses?

Why do we not spend more to help particularly the lower-income by accumulating less surpluses which arguably were much derived originally, and still currently from our CPF? – Our Budget surplus in FY2012 using IMF fiscal reporting guidelines was $36.1 billion against the Budget surplus of $3.9 billion

CPF?

“Take CPF and healthcare financing, it would be easy for us to lay the burden on our children, as some other countries have done, by paying for generous welfare benefits through debt financing or hopefully one day future taxation. That is not what we have done. We have the Pioneer Generation Package. We could have promised this to pioneers and left it to future governments to find the money to pay for our generosity. But instead we set aside the money now so that the package is guaranteed. The Pioneers can be sure that they will get it and our children are not burdened by the cost of what we do.”

- We continue to from a cashflow perspective – not spend a single cent on our CPF system and healthcare.

Has any national pension fund ever paid negative real interest rates, like our CPF Ordinary Account rate of 2.5% since 1999?

Is our CPF rate historically, the lowest real rate of return among all national pension funds in the world?

Grow economy to have better lives?

“We have to grow the economy as it is the only way our people can have a better lives.”

Bottom 20% households spend more than what they earn?

- According to the Household Expenditure Survey 2012/2013 report – the lowest 20% households average monthly household expenditure at $2,231 is higher than the average income of $2,022.

Does this mean that they were spending about 10% ($2,231 divided $2,022) more than what they earned?

Disposable income even worse at more than 10%?

Moreover, as income is including employer CPF contribution, and regular government transfers such as Workfare Income Supplement, the bulk of which is not in cash, and accounted for 9.3% of total incomes – the gap between income and expenditure may be even greater from a disposable income perspective.

800,000 people struggling to make ends meet?

As the bottom 20% is 214,628 households – we may be looking at about 800,000 household members who may be struggling to make ends meet.

Population growth?

“One important example where we need both Heart and Head is our population policy – for example talking about marriage and parenthood, about immigration, about foreign workers.”

29,500 citizens, but 20,572 new citizens?

According to the latest population statistics – As the growth in citizens was 29,500 – if we less off the 20,572 new citizens – we get only 8,928 “true blue” Singaporeans.

With 31,017 citizen births less 18,938 deaths – we get 12,079. Does this mean that Singaporeans who may have left Singapore accounted mainly for the difference of 3,151 citizens (12,079 minus 8,928)?

1 Singapore = 2 new citizens?

In other words, for every 1 “true blue” Singaporean increased – there were about 2 new citizens (20,572 divided by 8,928).

Foreigners increased by 44,600?

The increase in foreigners was 44,600.

1 Singaporean = 5 foreigners?

So, does it mean that for every “true blue” Singaporean increased – there was an increase of  about 5 foreigners (44,600 divided by 8.928)?

1 Singaporean = 2 new citizens + 5 foreigners?

Hence, for every 1 “true blue” Singaporean – we had about 2 new citizens and 5 foreigners?

At this rate, even if it is the slowest overall population growth rate in a decade – “true blue” Singaporeans may increasingly become a minority in their homeland in time to come.

Employing Singaporeans first?

“That is why we have created the TAFEP – the tripartite group for fair employment practices as a mechanism to investigate cases, complaints and do something about them.

We are determined to get a fair deal for Singaporean employees.”

- The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) on the other hand has publicly announced that it received 1,055 complaints against employers over the last 3 years, but only 12 cases were heard within the same period of time.

Tertiary education opportunities?

“Today, 30% of each P1 cohort enter publicly-funded universities in Singapore to pursue full-time undergraduate degrees. And even those who do not, they would have graduated from a Polytechnic or the ITE, and they will have many chances to move up in life.”

Negative real wage growth for 5 of 8 job categories & near 0 for 3 of 8?

The real median basic wage  growth was negative in the last 14 years, for 5 of the 8 major job categories in Singapore; and only grew by 0.2 to 0.7% per annum for the other 3 of the 8 categories?

Job category with the highest real pay increase was only 0.7% p.a.?

In fact, the job category which grew the most in real terms, at 0.7% per annum – Plant & Machine Operators – are only paid $1,600 today.

Cleaners’ pay dropped 35.5%?

Cleaners, Labourers & Related Workers were the hardest hit, with their pay at only $1,000 today, a decrease in real terms of -35.5% or -3.1% per annum for the last 14 years.

ITE real starting pay dropped 11%?

The median monthly gross starting salary of ITE fresh graduates in full-time employment increased from $1,217 to $1,350, from 2007 to 2012.

This is an increase of about 11 per cent over the 5 years, or about 2.1 per cent per annum.

Since inflation was about 21 per cent from 2007 (CPI 93.2) to 2012 (CPI 113.1) – does it mean that in real terms – salaries dropped by about 10 per cent over the 5 years or about minus 1.8 per cent per annum?

As to polytechnic graduates’ starting pay – the data from the Ministry of Manpower’s (MOM) Graduate Starting Salary Table(s) is also pathetic.

Poly real starting pay dropped 5% in 5 years?

The median monthly gross starting salary of polytechnic fresh graduates in full-time employment increased from $1,800 to $2,000, from 2008 to 2013.

This is an increase of about 11 per cent over the 5 years, or about 2.1 per cent per annum.

Since inflation was about 16.5 per cent from 2008 (CPI 99.4) to 2013 (CPI 115.8) – does it mean that in real terms – salaries may have dropped by about 5.5 per cent over the 5 years or about minus 1 per cent per annum?

Negative real total wage change?

According to the Ministry of Manpower’s (MOM) web site, the real annual total wage change (excluding employer CPF) from 2008 to 2012, was -2.4, -1.0, 2.7, 0.1 and -0.8, respectively.

This works out to a cumulative real decrease in wage change of about -1.5% or -0.29 per annum, from 2008 to 2012 – A negative real total wage change for the 5 years.

Real income growth?

Real median income change from 2008 to 2013 was only about 1.0 per cent per annum

… for the 20th percentile – the real change per annum for the last 10 years was only about 0.3 per cent

So many lower-income workers?

There were 207,100 residents earning below $1,000, 416,900 below $1,500 and 627,800 below $2,000.

Since the total workforce was 2,004,600 – about 1 in 10 earn below $1,000, 1 in 5 earn below $1,500 and 3 in 10 earn below $2,000

No “further measures to tighten foreign worker numbers further”?

“What we are doing, what we said we would do and are doing is necessary and is working. The latest manpower numbers do show that the foreign worker growth has slowed to a more sustainable level, and is about where we want it to be. I do not expect any further measures to tighten foreign worker numbers further. Meanwhile our economic restructuring is progressing, productivity is improving at least in some sectors, and we are steadily catching up in terms of our infrastructure – housing, public transport and so on.”

Jobs: locals 349,000, foreigners 774,900, 479,434 new PRs & citizens?

Sometimes have breakdown into locals and foreign workers?

- When the labour market second quarter 2014 report highlighted that only 3,800 of the 27,700 jobs created in the second quarter went to foreign workers – We were curious as to what was the figure for the first quarter.

However, we could not find it in the labour market first quarter 2014 report.

We tried an earlier period, but could not find it in the labour market third quarter 2013 report too.

Why is it that there appears to be some selective reporting?

Anyway, for the whole year of 2013 – 82,900 and 48,400 jobs created went to locals and foreign workers, respectively.

Assumptions in order to derive estimates?

So, if we assume that the distribution of locals and foreign workers was the same from the third quarter 2013 to first quarter 2014 – the number of locals and foreign workers for these 3 quarters may be about 64,300 and 37,700, respectively.

From this figure, we add the second quarter figures to derive an estimated 88,200 locals and 41,500 foreign workers for the 4 quarters ending second quarter 2014.