Population: Elemental considerations 2

pic_201302_15

In the executive summary of the Population White Paper and on page 32, it says:

By 2030, the number of Singaporeans in Professional, Managerial, Executive and Technical (PMET) jobs is expected to rise by nearly 50% to about 1.25 million compared to 850,000 today, while the number in non-PMET jobs is expected to fall by over 20% to 650,000 compared to 850,000 today. Overall, two-thirds of Singaporeans will hold PMET jobs in 2030, compared to about half today.

This is followed by a graphic that reinforces the above:

pic_201302_14

Then a link is made between importing lots of foreigners as a condition for achieving good jobs for Singaporeans. In other words, if you want the above-mentioned desirable outcome, then accept more foreigners. Still on page 32:

To create these high-value and good jobs for Singaporeans, we need to: Remain open and globally competitive to tap on Asia’s growth …  and complement the Singaporean core with a foreign workforce.

I would caution that the White Paper uses the terms “Singapore citizens” and “Singaporeans”  to mean those who hold a pink identity card at that point in time. The terms include newly naturalised citizens, and do not only mean native-born Singaporeans. The footnote in the graphic above — “Assumes current immigration rates” – should alert you to this.

The use of this PMET categorisation bothered me. It really didn’t tell me much unless I am prepared to accept some underlying assumptions:

Firstly, that there is a certain pyramidal hierarchy of jobs and PMET jobs sit above non-PMET jobs — the latter generally viewed as low-status manual work or having to serve (yes, my gosh, serve!) others.

Secondly, there is an implicit assumption that an economy must have a largish base of non-PMETs to support PMETs. It’s sort of like having a necessary number of privates and non-commissioned officers for the officer class to lord over. This assumption is implicit in how it speaks of having to import more foreigners if a larger number of Singaporeans move into PMET ranks. But the question will then be: if a largish base is always needed, does that mean we’ll just shrug if we don’t improve productivity?

Thirdly, there is an unstated assumption that PMET jobs must necessarily pay better than get-your-hands-dirty and serve-other-people jobs. Otherwise why would the White Paper boast of more Singaporeans moving into PMET?

If I express these underlying assumptions graphically, it would be like this:

pic_201302_13a

Yet all these assumptions troubled me. They suggest that our population planners are like generals preparing to fight the previous war. What if the world tomorrow were radically different? Why do we want to maintain an economy structured on old technology and rigid class lines?

* * * * *

Just on Monday afternoon, I interviewed a 24-year-old American who was passing through Singapore on an extended vacation. What piqued my interest was that since age 17 or 18, he had been taking seasonal work as a construction carpenter, building houses in northern California. He has no certification or formal training, and by our reckoning he would not be PMET; he’s “only” a construction worker.

Building a house

I asked him how many workers are needed to build a three-bedroom house. He said about three or four persons working about three months. In addition to these three or four, at various stages a plumber, electrician or roofer would come in to do his part, but each would need only a few days.

Such a house would cost about US$150,000. About half of this value would be paid out in the form of wages to the workmen directly involved, he said.

“How much are you paid?” I asked him.

“US$18 per hour,” was his reply.

“How many hours, how many days a week?”

“Eight hours a day, five days a week,” he said. Overtime isn’t common (think: wonderful work-life balance!), but occasionally, when it’s called for, it is paid at rate-and-a-half.

I will let my readers pick up a calculator and work out what this 24-year-old earns monthly doing manual work. By comparison, the typical construction worker in Singapore (virtually never a Singaporean) makes about S$18 – $20 per day. They usually work 10 or 11 hours a day, at least six days a week, sometimes seven. Inclusive of overtime, they gross about S$600 to $1,200 a month. Those with specific skills, e.g. tiling, make around S$1,500.

And oh, by the way, the American guy has a university degree in some unrelated field, social science or something like that.

I also learned from him that on the worksite, the crew of three or four would be led by a “lead carpenter”, who is generally paid US$50 per hour. His job is to read and interpret the architectural drawings, schedule the work flow in the most efficient way and to watch for quality of work. And to teach if workmanship falls short. Rush to your calculator again.

Is the lead carpenter a PMET?

Does it matter anymore?

By this point, I think you get my message. This business of PMET or non-PMET tells us very little. In fact it speaks more of our status-obsessed culture than anything else.

What is more important is whether people, doing whatever jobs they like, earn enough to support a family of four. Why a family of four? Because that’s what is needed for a steady-state population with replacement fertility rate. So, rather than speak about PMET or non-PMET, the graph should be presenting this kind of information: Where is the threshold and how many Singaporeans fall short of it?

pic_201302_13b

We should be focussed on making sure that most people, except maybe apprentices or others just starting a career, should be able to earn enough to support a family. If a minimum wage is needed to push wages up, perhaps this should be implemented. Better yet, we shouldn’t be such a low-tech, low-productivity society that needs a mountain of people at the low-wage side of the graph. We should have automated much of the grunge work, to take population pressure off this island. We’d be better off if the graph looked like this, where ALL work are compressed into a narrower income spread:

pic_201302_13c

This then brings up the question of income gap, and how a wide income gap,

  • leaves plenty of Singaporeans below the family line
  • which reduces the Total Fertility Rate since they can’t afford children
  • which drives our government to use immigration to top up the population
  • which leaves Singaporeans feeling like aliens in our own country.

This should be a ripe subject for further discussion. For now however, I’ll just point out that the pertinent issues are income gap or earnings spread, and cost of living. Fussing about PMET misses the point.

* * * * *

In the last two days, our government-friendly mainstream media  are loudly featuring calls from various chambers of commerce saying: We must have more labour or our businesses will collapse. I can picture the government waving the conductor’s baton frantically, summoning up fortissimo choruses from them.

There is an old saying we seem to forget: Necessity is the mother of invention. Innovation and creativity come not when inputs and resources are unlimited, but when constraints are tight. Unlimited inputs merely allow us the easy way out of carrying on as before.

When an interior designer has to work within just 50 square metres and still meet the client’s brief, that’s when he may be doing his best work. When a restaurant operator has to please the same number of customers with two fewer servers, that’s when he starts to look critically at his processes.

In contrast, our current approach implies this opposite reasoning: because it is hard to get productivity improvements to grow businesses, we need to open the spigot of foreign labour. May I suggest that it is because we open the spigot that we aren’t getting productivity improvements?

75 Responses to “Population: Elemental considerations 2”


  1. 1 Daniel Lee 6 February 2013 at 09:05

    It’s a really good idea; highly skilled tradesperson and a minimum wage. It does require a change of mindset from the current government, and could run counter to their party principles.

    It makes so much sense to do what one enjoys; thers is nothing wrong with being a plumber, carpenter, etc (a tradesperson) as long as one is highly skilled and earning enough to support a family. A minimum wage can also be a right step in supporting that direction.

    Unfortunately, the current government is somewhat biased against ‘less-educated / skilled’ occupations, seeing tradeswork as less desirable or fulfilling. Also unfortunate is the number of Singapore who have been conditioned to look down on such tradeswork, when in fact they earn pretty well for the hours required.

    A friend recently had to pay S$60 for a 15 mins plumbing job. Imagine that. Even just doing a couple of jobs a day will net a highly skilled plumber S$300 – S$400 daily.

  2. 2 Belgium 6 February 2013 at 09:11

    True – the government might frantically wave the baton. This however does not change the fact that there is a lack of people.

    I manage one of the many SMEs in Singapore owned by foreign investors. My investors would not even find Singapore on the map. Although we employ Singaporeans, Singaporean citizens and pay taxes, my investors dun care about who does the job, as long as the job gets done. Salaries are paid on merit, not passport.

    However If business growth is slowed down by lack of resources, shareholders will take the business elsewhere. Simple law of economics.

    The recent hype around FT’s is making many foreigners very uncomfortable. The resistance of expats against requested relocation by the non- resident shareholders is diminishing fast.
    The thought of 6+ million people on this little island is scaring the bejezus out of every expat.

    How many Singaporeans are employed by foreign companies? What is plan B if the foreign companies move out?

    • 3 Daniel Lee 6 February 2013 at 12:34

      The reality is that Singapore cannot keeping growing population wise, and businesses that depend on the cheap labour will have to adapt to the changing political environment in Singapore, or move to a lower cost location.

      Sure, business relocation is not pleasant, but a government can step in to help retrain the locals for other jobs; the foreigners will have to go home if needed. This helps free up local labour for other businesses, and foreigners leaving lowers the population in Singapore.

      Other business will grow with the available local labour, and our Standard of living is (hopefully) not affected. Have to remember that it is the government who create the mess they are now currently in at the first place.

    • 4 eremarf 6 February 2013 at 20:55

      @Belgium: Yes you are right that businesses will relocate and move out if they can’t remodel and innovate to stay (globally) competitive while located in Singapore. That’s part of the plan, isn’t it? Technology and innovation involve creative destruction. Old ways, less efficient ways of doing things are lost. New ways, efficient ways, replace them. Labour intensive (i.e. low labour productivity) businesses will have to relocate. In their place, we should have capital intensive (high labour productivity) businesses.

      YB says this himself (okay, perhaps too implicitly) with that necessity is the mother of invention spiel.

      So, when you say “What is plan B if the foreign companies move out?”, I don’t know if you are asking a rhetorical question to dissuade people from rejecting PAP’s population plans or you’re really wondering about how to manage the industrial changes of reduced labour pool increase.

      If you’re asking about the industrial transition from plentiful cheap labour to scarcer, more expensive labour – I think there’s a dearth of detailed discussion on this topic. And few answers, but some questions (e.g. Jeremy Chen asking how we should stage a change in minimum wage regime). I think Singapore/foreign academics either don’t (or can’t due to lack of data, political suppression, etc) research enough about Singapore, or there’s not enough effort to bring their work into the public sphere. And also, Singapore citizens might need to re-learn (I think we were doing a great job back in the 1950s and 60s) how to think about society, policies, etc in critical ways, so that we can engage with the technical experts.

      But, in spite of a lack of knowledge, I think we can be optimistic. I’m just a layman so I’ll be happy to be corrected. But – look at industrial shifts in the west – their citizens retain decent to good standards of living (depending on how income-equal their societies are), GDP growth slows down to 1-2% but continues to grow, labour productivity grows. It’s not just recent too – the Green Revolution destroyed huge numbers of agricultural jobs (transition was painful for agricultural workers who were forced to migrate to cities en masse – but transition powered industrial growth as well) – but no developed nation would wish to go back to the days when the agricultural workforce made up more than 50% of the workforce (very low labour productivity!). Factories and service providers are facing the same situation – right now, it’s better to hire workers to produce goods and services than to invest in new machines or procedures – but in the long run, I’m sure we all want Singapore to lever on machinery, robots, streamlined processes, etc to produce lots of goods and services with minimum labour.

      IMHO (and based on how I’m reading Singaporeans views), there are no grounds to deny a shift in population and industrial trends. And it might run into problems of pace, but not of direction. In fact, it’ll be an exciting time for entrepreneurial people, and many will rise to the challenge (more than when we try to train them in the classroom!).

      What I think is a much bigger (because it’s unrecognised) problem are the inefficiencies and negative externalities of wealth concentration (power concentration, leading to governments serving a rich minority rather than the majority, under-investment in human capital, leading to people not fulfilling their potential, leading in the long run to our inability to compete globally – c.f. how slave agriculture is always less efficient than agriculture by free citizens, etc).

    • 5 Fox 7 February 2013 at 00:39

      Plan B would be to develop our own companies or in the words of Ngiam Tong Dow, ‘grow our own timber’. No other OECD country is so beholden to MNCs. Think South Korea. Think Taiwan. Think Japan.

      • 6 yawningbread 7 February 2013 at 12:43

        I made a similar point at Tembusu college recently. I’ve been telling myself to write it up as an article, but other urgent headlines got in the way :)

    • 7 ricardo 7 February 2013 at 06:05

      The truth is, there IS NO Plan B. For the PAP, its just the old, “work harder, faster, cheaper”. For this population must keep increasing until meltdown occurs in this little red dot which is already one of the most overcrowded places in the world.

      So what if the infrastructure is already breaking down due to incompetent management? Our Lord LKY, the HoLee Family, their Ministers & friends will have taken their multi-million Dignity and emigrated to Hong Kong by the time overcrowding become unbearable, even for the Elite.

      It’s sheer lunacy to plan on increased immigration to ‘correct’ a falling fertility rate in a small place like Singapore.

      Have the PAP even considered how to SHRINK the population in a controlled manner .. in the process, increasing the Quality of Life for ALL Singaporeans instead of just the Elite … in the context of an aging population?

      Where is this on their list of priorities? Is it too hard for them?

      It should be a paramount consideration in ALL their policies cos its probably the biggest or 2nd biggest problem facing Singapore in the next few years.

    • 9 Chanel 7 February 2013 at 10:44

      Belgium,

      Like the case in advanced economies, S”pore is not suitable for companies reliant on cheap labour. This is a structural problem created by PAP’s policy over the past several years.

      The pertinent question to ask is how the other developed countries manage the the same problem. Did they massively import foreigners?

    • 10 D 10 February 2013 at 02:03

      Have to consider, what has the gov actually done on limiting the flow of labour? I think 5 pct reduction in dependency ratios for S and W permit foreign workers. Can still bring in unlimited EP holders. Are these not very minor changes? Many companies who are not maxing out their dependency ratios should presumably be unaffected. Have to ask what is the nature of labour shortage in Singapore? Really can’t find workers now or just complaining about increased levies which is a different question.

  3. 11 alex toh 6 February 2013 at 09:52

    This is one of the best articles I have read so far. I hope more people can read your piece instead of the shitty ones by Chua and Au on ST.

  4. 12 Jeremy Chen 6 February 2013 at 09:57

    My trouble has always been, how to implement a minimum wage in a sensible way. Gradually easing it in by starting low and pushing it up every year just seems ugly, but perhaps is the only way. And what of the easing in period? 5 years? 10?

    • 13 eremarf 6 February 2013 at 21:00

      I think one important aspect of such a policy (in fact all policies) is to provide good information early. Firms need information to make long-term strategic decisions, so it seems better for governments to make such decisions upfront, as many years in advance as possible, including the full schedule of increases (rather than “sudden” announce less than a year before – e.g. when tweaking PR benefits in education and healthcare).

    • 14 Crap 7 February 2013 at 10:45

      Many countries already have minimum wage law. Just learn from them how they manage it

    • 15 D 10 February 2013 at 02:07

      My thought was 900 per month increasing at inflation +2% each quarter over 5 years. Review after 18 months and 4 years.

      • 16 eremarf 12 February 2013 at 02:09

        I don’t know if this is a good place to discuss how to arrive at a minimum wage, so maybe someone should start a discussion somewhere else at some other time.

        @D: I’m not sure how you arrive at your numbers, but if you’re just thinking of an amount, I think a good way to approach it is to sort out what a minimum living wage is, and fix it there.

        And btw, minimum wage policy is pointless if MOM doesn’t enforce it, or allows loopholes to be exploited by companies. And we all know MOM has a terrible track record at enforcing labour laws. So – a discussion of minimum wage has to take this into account (i.e. it should be implemented in a way that tries to minimise loopholes and exploitation, and is easy to verify/enforce).

  5. 17 cydonian 6 February 2013 at 10:36

    Thanks. This is the precise nuanced, policy-based criticism of the population policy that I was hoping for. You’re absolutely right; all that the whitepaper does is to propose more of the same, without really considering how the world might change in the next twenty years. Yes, it also cements the class-based society that we seem to be developing here currently; which troubles me greatly because it would mean that whatever lack of empathy that people have right now towards maid or worker-related abuses would not just continue, but possibly increase.

    I’ll just add one more point to your rather valid anecdote about there being dignity of labour in the US, and the subsequent discussions on productivity gains: I’d argue that Singapore’s real-estate is actually more streamlined, and therefore more ready, for tech-based productivity than most other cities. I recently bought a (new) flat from HDB here; when I was shopping around for appliances and renovation, it appeared to me that the entire supply-chain already knew what my flat’s precise plan, configuration and needs were even before I stepped into the flat. If the neighbourhood hardware guy knew what the precise height of the shower was, the air-con guy knew where to lay the pipes. And so on; basically, HDB flats (and I presume, condos as well to a smaller extent) are highly standardized in just about every way you think, so you’d think it should be easier to create some significant process-innovation in a vertical that involves so much human labour.

    • 18 yawningbread 6 February 2013 at 11:12

      Standardised and not so standardised at the same time. Someone recently told me about getting her flat fitted out and the workmen from the aircon company, the new windows, the kitchen outfitter, discovered that the horizontals weren’t quite horizontal, the right angles weren’t quite 90 degrees and the flat floor wasn’t entirely flat. The plans may be standardised but workmanship is a huge problem.

      Having seen the consturction labour up close I’d say this is to a large part because when using foreign labour, contractors do no training at all. They don’t want to invest in training because the turnover of workers is too fast. Firstly, work permits are for too short a duration and many employers prefer to make money by taking under-the-table “agent fees” from fresh hires than from doing construction projects profitably with retained staff. In other words, high staff turnover is profitable for them, not good quality construction (training costs!!!)

      • 19 cydonian 6 February 2013 at 14:16

        That’s fair. We’ve had problems with masonry work too, specifically with the floor, and precisely because the workers didn’t seem to be trained enough. I should have said, everything appears to be streamlined *till* the point of involving labour.

        Fascinatingly enough, I’m beginning to see similar problems in the IT field as well; large vendors, especially those doing governmental projects, seem to have become highly reliant on contract staff who haven’t had the training to pull off a quality execution. Management doesn’t seem to care, or more precisely, is too ignorant to affect meaningful change; it all ends up being a case of an infinite monkeys eventually coming up with the full works of Shakespeare. (http://en.wikipedia.org/wiki/Infinite_monkey_theorem)

        Don’t want to hog the thread with more detail than this, but the broad point I’m making is this: this model, that of getting untrained staff to pull off “first-world” outcomes through a high attrition, is fast catching up in other industries too. Needs to change.

      • 20 eremarf 6 February 2013 at 21:18

        @cydonian:

        I think some people are starting to realise this, e.g. SMRT and the quality of their engineers, where short-term savings end up in higher long-term costs, and I’ve heard Singtel realised that the expected cost savings of hiring lower quality people didn’t translate (heard from a software programming dude).

        I speculate we have this problem, especially in government linked companies, because:

        1. Emphasis has shifted too much to short-term profits, worldwide and locally. On Naked Capitalism, I regularly see links to articles about management who are very disinclined towards making investments that show returns in long frames of time (because performance evaluation is biased towards short windows?). Everyone wants to report profits under his watch, but nobody cares about profits after they leave. NUS is hiring researchers with PhDs for SG$3k+ per month. On paper it looks good, but researcher supply is globally elastic – you pay $3k, you get $3k worth of research. Globally, the way we evaluate management has to change. And coming from the civil service myself – I think we’re modelling ourselves too closely on corporations – so we suffer the same problems. E.g. I get performance bonuses based on my students’ performances in ‘O’ and ‘N’ levels, not how well they succeed at life. No (monetary) incentive for me to educate them for the test of life, than a life of tests there (contrary to our Teach Less Learn More mission statement).

        2. Specific to GLCs, I’m feeling quite naked saying this, but I think GLCs are too cosy with the government, are getting coddled and fed easy gov’t contracts ($30 mil for software anyone?), are perhaps used as a reward for political loyalty, and thus becoming inefficient. Unlike in S. Korea or Taiwan, where firms get government support in order to compete globally, Singapore GLCs get government support but operate only in Singapore (I think some ventured out but failed?). Where S. Korean and Taiwanese firms win more global market share and hence benefit their countries, Singaporean firms only win market share away from potential local entrepreneurs and businesses – which suppresses local business success.

  6. 21 Permer 6 February 2013 at 10:54

    I find it suspicious that just when the white paper says the population must increase by 30% through immigration, we get ‘news’ about how companies are leaving Singapore because they can’t get enough foreign workers. You have to ask yourself:

    A. whether those companies really are leaving
    B. whether they would have left anyway for other reasons and
    C. whether we should give any credence to government-friendly mainstream media, and see it for what it is.

    • 22 Helen 6 February 2013 at 21:25

      I worked in a company that fired three of the top Singaporean managers (they brought in many govt contracts) and filled the positions with younger, less experienced Indonesians and Indians. It employed one singaporean out of 12 foreigners. Many companies like these have failed in their nation building and strengthening efforts. What the govt likes is that it contributes to the GDP thru sales (although profits are remitted to another country) Another reason this govt has destroyed the basic living standards of Singaporeans for the sake of a higher “GDP”.

    • 23 eremarf 6 February 2013 at 21:26

      Permer, even if they do leave, we should welcome it. Firms that cannot operate without cheap labour have no place in any developed society.

      There’re always winners and losers when new technology supplants old ones, new firms replace old ones. The problem in today’s world is that the would-be losers exercise too much political power (in Singapore, with so many GLCs, the losers are sometimes the political powers themselves!), and hence can exert political force to maintain the inefficient status quo.

  7. 24 Duh 6 February 2013 at 11:47

    A gem of an article again! Love this –

    “What is more important is whether people, doing whatever jobs they like, earn enough to support a family of four.”

    And I agree with you on the industrial productivity part – if there is no incentive for businesses to be more productive, they will not do it. Businesses that failed to adapt and help achieve nation building in their host country should be asked to leave and take their businesses elsewhere. What we want are socially responsible businesses. I believe Lucky Tan once wrote something similar (http://singaporemind.blogspot.sg/2012/04/breaking-out-from-cycle-of-cheap-labor.html).

    “Hard to believe but this is a human powered ferris wheel that uses cheap labor. The obvious way to improve productivity is to buy a motor and reduce the number of workers. However, the business man that owns this ferris wheel is not going to do it because he has access to cheap labor – why spend money on a motor when it is cheaper to use humans to do the job.”

    -Lucky Tan

    Besides, Singapore’s commercial sector should move away from labour intensive production industries to more skilled labour industries. Singapore simply cannot compete with India and China for cheap labour. Even in absolute numbers (ignoring wages), our population is never going to meet powerhouses like these countries and the US. For labour intensive industries like construction, special work passes for foreign labour can be issued AFTER wage adjustment and Singaporeans are employed. Construction IS expensive in ALL developed countries. The question is – is the Singapore PAP govt taxing other aspects of the construction sector to make it even MORE expensive? The govt has not once engaged in self-reflection on THEIR role in creating and perpetuating the situation. It is always (i) the fault of global trends, (ii) the fault of ordinary Singaporeans, and (iii) everyone/everything else besides the PAP’s fault.

    • 25 Helen 6 February 2013 at 21:32

      The high housing costs are directly caused by the PAP’s insistence on inserting sky-high land prices into sales of land to developers. Add to that their habit of waiting till housing prices are sky high before releasing land, selling to the highest bidder. It’s disingenuous of them to keep insinuating ‘costs (of homes, etc) will go up because of a minimum wage’ when construction costs are probably not much compared to the land prices.

    • 26 eremarf 6 February 2013 at 21:37

      I don’t believe socially responsible businesses can meaningfully exist. (Well, maybe it can if there is a radical change in our culture, our notions of roles and responsibilities, etc.) Henry Ford got sued for trying to be socially responsible. http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company

      My point is – don’t rely on a business to become socially responsible. Our best defence against businesses who externalise and socialise the costs of their doing business (e.g. political lobbying against labour unions, minimum wages, etc, thereby indirectly causing many people to be poor and thus under-invest in themselves, low quality schooling, 1 in 8 teenagers joining the workforce, poor health, etc) is government regulation.

      Don’t trust businesses to self-regulate – unlikely to happen. Look at how far they’ve gotten with being environmentally responsible. Lots of green-washing and lip-service, but little else (except where governments regulate).

      BTW, it’s funny how many Singaporeans like to say we don’t have natural resources, and only have human capital – in order to support policies which ultimately lead to under-investment in developing human capital (education and health).

  8. 27 harry 6 February 2013 at 11:57

    In Australia many construction workers are one-man subcontractors like brickie, electrician, plumber and painter. These people earn more than a manager in the office. The hourly rate for an electrician and plumber is A$85, a house painter A$55. A brickie gets more than A$2 for each brick and the good ones can do 500 a day. Given such a scenario, there is no social stigma on blue collar workers. Social mobility is fluid. I know of a helicopter pilot who became a programer and when retrench he became a borer to get underground water.

  9. 28 henry 6 February 2013 at 12:01

    Thanks again for a great post. If only the opposition MPs were able to articulate their views clearly as you do.Then again, speaking and writing are not quiet the same. They seem to have weak knees when challenged in parliament.

    The trouble with our system of economics is that its based on a crude belief that earning money is the be all and end all. Very crude, fast bucks, quick, quick, quick. If safety and taxes can be avoided, its even better.
    This does not instill pride and accountability for a job done.

    And with the white paper, its the same principle, only presented in a pseudo academic language ( without references too). Businesses are addicted to cheap resources and the Gov has sold the soul of our nation to them.

    My comments will be regarded as “rhetoric” by some. Yet I cannot see how the approach of increasing population numbers can help my life. It benefits industries that depend on cheap labour. What do they intend to do to raise productivity? Will we ever have wage increases that match the cost of living? Is importing labour the ONLY solution? I dont think so.

    Someone is not telling us the whole picture.

    • 29 CC 6 February 2013 at 15:22

      In the MTI occasional paper on Population and Economy, it was stated that NPCEC will spend S$2billion on improving productivity (again!), at a stretched goal of 2-3%., according to Amy Khor. Yet it’s interesting to see she was very quick in defending these SMEs or companies for their need of more foreign labor force. Exactly as Alex has said, is precisely we open the spigot that we aren’t getting productivity improvements! She might as well just call off the S$2billion spend as we know how this will end.

      http://www.mti.gov.sg/MTIInsights/Pages/MTI-Occasional-Paper-on-Population-and-Economy.aspx

      I also found what Chen Show Mao said about increasing the resident LPFR rate, although the figure he cited seems to differ from MTI paper. I wonder how is it that we will have such a high 1 million + inactive residents that PAP is not looking at tapping them to backfill the gap instead, or is MOM a real dud here when it comes to real unemployment figure? Something is not right, but I can’t seem to put my finger on it.

    • 31 JG 6 February 2013 at 19:29

      “If only the opposition MPs were able to articulate their views clearly as you do.Then again, speaking and writing are not quiet the same. They seem to have weak knees when challenged in parliament.”

      Without taking anything away from Alex, I want to point something out here : before you get to speak in Parliament, you must be voted in by the people. The average Ah Kow or Ah Lim or Yusof on the street may not care too hoots about how you write, than the party backing you and the “chemistry” he feels with you as a candidate.

      In other words, the hands cannot say to the feet, I have no need of you and vice-versa.

      I wish we have the ideal MP + great debater + great strategic thinkier. But we need to make decisions out of the available choices presented at a particular point in time.

      • 32 eremarf 6 February 2013 at 21:46

        You all got read parliament transcript not?

        WP website got collect WP MPs speeches – go and read. Yee Jenn Jong just made many good points I agree with. Maybe not so eloquent and English not so good lah, but good points lor.

        Ultimately, YB and YJJ are complementary lah. Some people trust the YJJ style, some people trust the YB style, and in the end, both are trying to crystallize the voice (plus shape it a bit in the meantime?) of some segment of the S’pore population.

        Kudos and much admiration to both these and other great men. When I look back on how much things have changed with GEs 2006 and 2011, I’m actually very proud of what we have achieved. Majulah Singapura! :-D

    • 33 MP 7 February 2013 at 13:51

      henry,

      Currently, it is 80 PAP MPs versus just 7 opposition MPs. How to out-debate??

  10. 34 maver!ck 6 February 2013 at 12:49

    we just need more critical-thinking people like you, not foreign “talents”.

    I’ve always thought we lack of that “something” in education which translates negatively into the workforce.

    maybe it’s common sense, because the government doesn’t seem to realize this is a classic trend of rat racing. what will they offer after 6.9? Invade JB?

    I would suggest PAP to slant back to its socialist roots. I feel like I’m a living irony where my country has one of the highest GDP at the same time rated as the most unhappy and unemotional.

    • 35 eremarf 6 February 2013 at 21:57

      As an ex-teacher, I agree our education system is quite lacking.

      A lot of it has to do with our exam system – too easy to be exam-smart without being really life or work smart. Lots of people in other countries fare worse than Singaporeans in international exams, but fare better in the workplace.

      A lot of good suggestions emerge from passionate teachers who care about how prepared their students are for work and life, but one common response from MOE is we don’t have the budget (e.g. to implement more coursework based assessment).

      Another problem is teacher evaluation metrics. There’s a big hoohah in America now about this – teachers’ unions are up in arms against a shift to a more “Singaporean” system, i.e. evaluating teachers based on standardised test results (we’ve had this for a long time). Right now, MOE can’t differentiate between teachers who prepare students well for the workplace from those who prepare them well for exams. Are there better metrics? I see some being used in the US which are pretty good, but they’re more fuzzy and not so black and white. It becomes more expensive to assess teachers (but the payoff probably makes it worthwhile?).

  11. 36 Saycheese 6 February 2013 at 12:51

    To employ immigration to get new citizens to make up for the shortfall in TFR may sound logical. Granting new citizenship involves social engineering to maintain the numerical superiority of the Chinese, perhaps to even increase those from certain tribes to sate their obsession with improving the gene pool and at the same time preserving their hegemonic superior genes.

    More and more are getting to “Someone is not telling us the whole picture” and will be watching how their elected representatives respond to this White Paper in Parliament. This may be the mea maxima culpa for citizens to correct in 2016.

  12. 37 Nerdybeng 6 February 2013 at 13:37

    The PAP has already put Singapore on the autobahn of cheap (foreign and local) labour for cost cutting to rapid economic success. They would not settle for gradual growth “hampered” by increasing manpower costs due to minimum wage. Unfortunately, now they can’t find the exit, and they don’t dare to switch lanes, lest Singapore gets overtaken. To make things worse, they find the ticking time-bomb onboard that will implode once they slow down, a la Speed. So they are stepping even harder on the accelerator, and telling the passengers – check it out, we’re going so fast, and we’re gonna go even faster, isn’t it wonderful?

  13. 38 Din 6 February 2013 at 13:46

    Let’s remember that NTUC labour chief has the mantra “Cheaper, Better, Faster” workforce. The current govt leaders are bankrupt of new solutions or rather any solutions at all.

  14. 39 henry 6 February 2013 at 14:31

    I know someone who has a diploma and was working as a support staff in a local company. She was 40+ then and was tasked to create an excel spreadsheet to record sales and inventory data. She had been working with this company for about 5 years.

    Soon after completing the task and testing it, she was asked to leave citing poor sales and business. About 2 months later, her ex colleagues told her that a PRC had taken over her role and was using the same spreadsheet that she had created.

    Perhaps it was just a business situation, but I am tempted to believe that the PRC was hired just because it was cheaper and permits was easy to get. Till today, I understand she is doing part time work and I am certain she did not vote PAP.

    If employing foreign workers was not so easy, she may have kept her job.
    The Gov can deny that they have nothing to do with business strategies or management, but when they allow easy access to cheaper alternatives without considering its effects on the whole product, they must face up to the consequences.

    If adding sodium benzoate as a preservative to foods is expensive and they allow a cheaper alternative, which may not improve quality, and may cause health issues. It would be irresponsible for grown men and women who are paid millions to deny accountability and worse, to approve of more of the same.

    • 40 eremarf 6 February 2013 at 22:03

      @henry: “If adding sodium benzoate as a preservative to foods is expensive and they allow a cheaper alternative, which may not improve quality, and may cause health issues.”

      In economics terms – businesses are externalising and socialising the cost of doing business to consumers.

      We get the socialised costs of having foreigners (congestion, cultural tensions, increased unemployment, etc) which businesses should have paid. But our government is adamant about not taxing businesses to provide social welfare/benefits.

      Wake up, Singaporeans! Wake up!

  15. 41 Innovation and productivity 6 February 2013 at 15:06

    I’ve always been very suspicious whenever the government threatens with the statement that the foreign investments will start drying up. If things become tough, some businesses will close, for sure. But not EVERY business will close. Businessmen are people who still need to eat. Some enterprising ones will find a way to survive.

    As for the MNCs, their departure might actually be a good thing – by creating a vacuum for locals to take over. Of course, it would take time before that happens but at least, we would be beginning on a journey we should have taken eons ago.

    Actually, given the size of the reserves, we should be putting them to good use in helping Singapore adjust to the new world order of productivity and innovation. The South Korean government invested $5 billion I think in starting up a HD/Plasma TV research organisation many years ago because they identified that as a key competency. And look at the advances they have made in this field, some might say even surpassing the Japanese.

    Instead, the govt had never wanted to invest in innovation and critical thinking because a more questioning population is going to create more problems for the government to ‘fix’.

    As for the reserves, that is another long story.

    • 42 eremarf 6 February 2013 at 22:21

      I think we’ve just been stupid about innovation.

      You discourage innovation when returns on property investment exceeds most returns in business. Any would-be innovater would have more incentive to invest in property than to try a new business idea. (Same thing with when returns on securing rentier rights are higher than returns on doing proper business.)

      You discourage innovation when inefficient GLCs occupy so much market share.

      You discourage innovation when you have no safety nets – which entrepreneur is going to take risks when the cost of failure is so high? In Sweden or Norway – he wouldn’t mind giving it a try – because he knows his kids are going to get a good education, that his family would receive healthcare – whether or not he succeeds at innovation.

      (Ok, granted, social safety nets and attendant high levels of wealth redistribution do disincentivize people from working so hard – but you’ve got to determine the net effect – whether it’s positive or negative… there’re indications that innovation levels in Scandinavia are by many metrics comparable to those in the US – see responses to Acemoglu et al’s paper on cuddly vs cutthroat capitalism.)

  16. 43 thecatman 6 February 2013 at 17:34

    Re. all these companies / MNCs threatening to leave for other markets. I am just wondering where else they would consider to be equally viable. Singapore may not be a cheap location to do business, but will their prospects necessarily be better if they move to Malaysia / China / wherever else? Yes, if they are in manufacturing, but if they are in the higher-value or high-tech industries, I am not so sure.

    I know this is simplistic but only HK in Asia is truly comparable in terms of (i) easy access to large marketplace / hinterland, (ii) decently well-educated local workforce, (iii) good infrastructure, and (iv) relatively socio-political stable environment. If you are invested into Singapore already, why would you want to take the risk and move to another market which may be cheaper but come with their own other pitfalls?

    Which is why I am convinced all this complaining by the business federation is just that – complaining. They have long been protected by the Singapore government over local employees and they know they will continue to get their protection. They know they can get away with not increasing productivity and merely importing workers / replacing local workers.

    This government will never have the balls to stand up to companies and say, “leave if you are feel you are not getting a good deal here… we need to be pro-Singaporeans first and foremost”.

    • 44 Chow 7 February 2013 at 13:04

      Well, they may leave for China, or India. These two countries have massive numbers of graduates and highly educated people coming out of the system.

      The other consideration is that the other Asian/S. E Asian countries are catching up and catching up fast. They have much larger populations as well and the domestic market there is definitely more lucrative. Everyone knows the trick to powering an economy forward these days. They’ve seen it in the US, Tiger Economies, and China. We’re past the enviable stage of rapidly rising incomes because we’ve harvested all of the low hanging fruit. The worrying thing is whether we’ve bought ladders or those ‘cherry pickers’ to enable us to get to the fruit on the higher branches and, if we have only just placed an order for them, will they arrive in time before the harvest is over?

  17. 45 Alan 6 February 2013 at 18:04

    What I don’t quite fathom why does our DPM
    uses the issue of construction workers to highlight the point about WP not being pro-business?

    Do we really have an issue with foreign construction workers taking our jobs away? Or was it that PAP uses that as a red Herring to smokescreen us?

    • 46 eremarf 6 February 2013 at 22:28

      I’ve long ago learned not taken anything PAP people say seriously. It’s always rhetorical stuff rather than relevant content.

      Which makes me wonder – are they malicious or incompetent?

      I think they know better, but are just doing some PR stuff, y’know. Which means they’re malicious and manipulative.

      But who knows, right? Maybe PM Lee really believes in what he says. As does Tharman about buying flats on $1k/month. Or Khaw about $8 heart bypasses, Vikram Nair about Nigerian scams, etc. In which case – it’s incompetence, and we should be really worried about all the secretive stuff like how much of our CPF money is still around.

      • 47 Duh 7 February 2013 at 17:29

        Vikram Nair is really a greenhorn in politics – this kid still thinks the parliament is some sort of a debating club back in his school days. He is preoccupied with scoring these trivial points during parliament rather than discussing important NATIONAL issues. This kid has no sense of the big picture. Like recently, instead of focusing on WP’s suggestion of the ‘Singaporean Core’ he decided to quibble about the exact numbers in WP’s proposal and resort to Ad hominem attacks (e.g., do WP held constituencies engage companies that employ foreigners to maintain them). The Nigerian scam analogy was another Ad hominem attack on WP’s CSM. Like, if VN has nothing constructive to say and can only do these little verbal skirmishes to score brownie points for the PAP cadres, for God’s sake, please shut up.

        ‘Full of sound and fury but signifying nothing…’ (Shakespeare’s Macbeth)

      • 48 D 10 February 2013 at 02:35

        Malicious vs Incompetent. I wondered myself for a while until some minister justified low CPF returns (2.5% on OA) by comparison to bank account rates. No one in their right mind saves for retirement by leaving money in their normal bank account, the comparison is ridiculous. If they justify forcing us to save for retirement by lending our money to the government at below inflation with this logic?? they cannot be that stupid, surely? Not incompetence…

      • 49 quack 11 February 2013 at 13:11

        You should be worried. You can’t vote them out because singapore is a pretend democracy, not a real one. They only bother to pretend in case the US has to rescue us from some war or something. Easier to get the cavalry to ride to the rescue if its a ‘democracy’

      • 50 eremarf 12 February 2013 at 02:23

        So, some, e.g. Vikram Nair seem stupid, but D and me think generally they’re being evil. 2 votes to 1 the PAP is being evil rather than stupid.

        @quack: actually, it’s a very exciting time for Singapore democracy now. We didn’t have it in the past, but it’s blossoming in strange ways currently, and we don’t know what sort of flower and fruit we’ll get in the end.

        I’m somewhat optimistic – because of how Singaporeans, being urban people, are so interconnected, especially on the internet – which is fulfilling some functions of the “free press” that we never had in the past, and also because of how most young Singaporeans have at least a decent basic education. We’re actually better off than countries like the US where education rates are much lower (rural areas, urban slums, etc), and it’s harder to get people informed and thinking.

        But I might be wrong (look where that Arab Spring went).

        One thing I really hope to see is that Singapore can grow beyond a First Past the Post voting system – so that we get better representation of diverse voices (instead of a duopoly). I’m worried about Singapore developing into a US/UK-ish system, where it’s either one or the other and no other choices. Which prevents people from punishing politicians when both sides are bad, e.g. how Obama and Romney are both very finance friendly, war-mongering, beholden to “big money” etc.

  18. 51 Terence 7 February 2013 at 01:50

    Alex – I think you must be the best person to enlighten me on this.

    Not exactly an economist, but assuming our unemployment rate is already very low, in very layman term: the day foreigners stop coming to our shore should also imply that we probably don’t have what they want – jobs. By then, younger Singaporeans may also want to leave. Then I don’t think we will hit 5.9M anyway.

    I juxtaposed this with my own experience. I studied in Tasmania, din like it there because people were turning against Asians. After graduation, I headed to NYC because the company that hired me is open to a Singaporean who is well-versed in English and Mandarin and sprinkled with doses of Hokkien and Cantonese; Lived in China for a while where the air sucks big time and I couldn’t stand it. I persevered because the pay from the Yankees was good. Couple of years back, I came back to Singapore because other than the fact that my folks were getting old, the company and the entire NYC was not doing too well either. Yuppies there had no jobs and the pay sucks.

    While I agree that the PAP Government screwed up BIG time for not getting the infrastructure ready as they drove workforce growth at a rate that we cannot sustain (so much for foresight really), but then, I was in NYC, and people were gawking at how Singapore can survive the recession, and still attract investors, when others were literally drowning. The PAP took a calculated risk by importing FT so that industries can keep cost low and offer jobs which in turn attracted more FT because other economies were faltering. PAP celebrated prematurely, patted themselves on the back, but their fruits have somewhat turned rotten now because infrastructure did not catch up with population growth. But didn’t many Singaporeans celebrated with them then?

    Now, it may seem that we are heading the other way. It’s another calculated risk. PAP and WP proposals isn’t that much different actually, just the magnitude of growth. Both sides are taking risk to artificially dampening our own GDP growth rate at a time when the region around us is thriving.

    Yes, all will be happy if we pull off the productivity stunts and inject creative means to employ Singaporeans who can and want to work. In fact, we can possibly go against the flow, extricate ourselves out of the global capitalist rat race, and achieve the quality work-life balance which the locals aspire for a long time at a much reduced growth. WP said we can employ the elderly and the women. This may be tricky and not appealing on the count that I will also be categorized as Senior citizen by then. Our perennial grouses is that the elderly in Singapore cannot enjoy their twilight years doing taichi, playing mahjong and hanging around in parks and void decks chit-chatting. Instead, they are expected to work till they die. I also now see a reverse trend of women leaving the workforce as it is now fashionable to be a SAHM. Many of my female colleagues with promising careers are turning to part-time or freelance work by choice. With that, so where is our workforce coming from, especially since our unemployment rate is low to begin with? It’s a vicious cycle. In a capitalist society, it is the cost that matters, however altruistic you are. Turning recluse means companies have nothing to rip off from Singapore. Cost will go up and I suspect companies, especially home-grown ones, will move out to cities where there are cheaper labor of equally good caliber. We have many such cities around us. Given that this region is probably the most thriving one in the next twenty years, Singaporeans will be working in KL, HCM, BK, or Jarkata – where the thriving trade in the SEA economy will benefit these fringe cities with thriving GDP but cheaper cost of living and an abundance of cheap foreign labor.

    Should we choose this path anyway? We were taught to fear the PAP’s “survival rhetoric”. Now, people are daring enough to challenge it, while others express an even bigger appetite to take a different path of a different set of risks and gambles. It requires a major mindset shift, an appetite for a bumpy ride, and a yoga-zen state of nirvana to forgo materialistic pleasures and decadence lifestyles that we have so indulge over so long. Instead, we have to learn to enjoy a slower pace of life, adapt to a lifestyle with less convenience, less working people and less congestion. We also have to be contented that we no longer have that competitive edge as a small city state since others in the region would catch up. But should we?

    • 52 Chow 7 February 2013 at 13:38

      You are right in a sense. People move to a location because of the presence of jobs, pay differential, or perhaps to enjoy the lifestyle. Many times it is the pay differential that draws them. When the perceived advantages of working/living in Singapore diminishes, less and less people will come. What keeps them coming? Well, my take is that right now, some of these countries are still behind us on the development curve. This keeps them coming. But this is dependent on us being ahead of them. As it is, we’re losing the edge. My opinion is that it’s our economy that needs restructuring. We have to move away from the vast amounts of foreign labour that was and is still readily available and the economy that relies on yesterday’s tricks.

      The other economies are surging forward (and by that I mean the Asian economies in general). I cannot imagine them locating their Headquarters, RnD divisions here if they can do it in their own countries. What have we to offer them when Indonesia, China, India, and Malaysia have implemented the educational system and so on that puts out highly skilled graduates on par with ours? What is Singapore’s competitive edge now and in the future? I’ve not seen it yet, unfortunately. Perhaps as a developing nation we are fortunate. Think of our start as a trading port and how we moved on. But the new economy requires more than a pair of hands working at the factory line. We don’t have a lot of time left.

      In a sense I get the idea that we’re in a weird state of semi-reality if I may put it that way. We’ve so often appeared to be keeping several steps ahead of our rivals but then nothing comes out of it. I still recall the call for ‘knowledge-based’ economy of the late 90′s and early 2000′s. Hordes of people were channeled into the Engineering departments and also Computer Science. That broke down with the DotCom bubble burst and 9-11. Then there was BioEngineering and Life Sciences. Money was given to them by the sackful and the big whales of research came in. Somehow, that seems to be fading into the background for now…

      All this talk of 6.9 million has been unfortunate because it mixes up the pressing point that our economy can no longer run on the same model with the visceral anger that comes from the impending doom of overcrowding and doubts that the PAP can manage things well. I guess many of us are pretty certain that the PAP are just hoping to do more of the same rather than different.

    • 53 MP 7 February 2013 at 13:48

      Terence,

      1) NYC is a city, but S’pore is a country. People in NYC can choose to retire elsewhere in the country, but S’poreans can’t.

      2) Can you tell us the proportion of foreigners in NYC? I suggest you comparison the percentage against S’pore’s

      3) If “PAP and WP proposals isn’t that much different”, then why are so many PAP MPs and ministers attacking WP’s counter-proposal??

      4) Yes, business costs matter. Do you know that rental costs are very high in S’pore? Labour input isn’t the only key cost bugging businesses (but this govt won’t want you to know that)

      5) S’poreans have been experiencing slower growth. In case you don’t know, most of the high GDP in the past several went straight to corporate profits. This led to depressed wages and wide income gap.

      6) The “low” unemployment rate is highly misleading because many are under-employed (i.e. not earning enough wages)

    • 54 eremarf 8 February 2013 at 00:03

      Hi Terence

      I’m not YB, but I admire your tenacity in framing your thoughts so fully, so I’d like to share my ideas with you too.

      Re: employment rate – if you define employment based on hours worked, I think the Singaporean unemployment rate would be even lower than it now looks. So we’re really maxed out.

      Re: discussions of growth from year to year, in NYC vs Singapore vs elsewhere – my opinion is that people are looking too much at the short-term. For example, it took more than a decade for Americans’ excessive debts to be “realised” in the Great Financial Crisis. If you look at year to year measurements and attempt to give credit to whoever was in charge of good growth years, then who’s in charge of bad growth years – you’re going to misunderstand things. (The key events causing the GFC are more proximally the revoking of the Glass-Steagall Act; and more distally the increasing corporate/rich people’s funding of politics, etc – which all began way before the GFC itself.)

      Instead – look to longer term data when looking for patterns. For example you keep hearing about whether China is having a bubble and liquidity trap – that China’s good GDP growth is masking not-so-spiffy realities. Is that true or not? You can’t tell until maybe 5 or 10 or more years down the road. There is a lot of noise, and it’s hard to separate the signal from all the background, unless we have some way to discern things. It takes time to learn how to and I’m still trying to learn myself – but here’s something I think is true – yearly GDP growth figures don’t matter as much as GDP growth figures over longer spans of time.

      And more broadly, if you’re assessing governments – what’s the end goal? Richer countries? Yes, kindof. Stronger countries? Sounds fascist and evil empire. Happier countries? Sounds good to me, with the caveat that happiness is hard to define, and probably involves some degree of (well distributed) riches, but is more complex than and goes beyond just absolute richness of a country. If we agree that government’s goal is more than just making countries rich, why are we so obsessed with GDP? Why don’t people talk about other metrics of success and progress? (My take is – the powers that be define the discourse. They implicitly conflate success with GDP and we get suckered.)

      Re: increasing labour participation via women and older people: this is an example of the above, of putting the cart before the horse. Without having determined whether women and old people derive more utility from respectively home-making or retiring with less money, vs working with more money and less leisure, we don’t even know if we ought to pursue this. We also have little data about how much home-making is worth – because it’s not straightforward to measure (having a stay-home mum might mean more children, better investment in children so their life prospects improve, better mental and physical health for the whole family, due to less stress, better nutrition, perhaps leading to less “broken” families and thus less social costs etc).

      Re: businesses moving out of Singapore. You’re not reading what people are saying here – you still think business will only follow cheap labour. Please browse Paul Krugman’s 1994 article – “The Myth of Asia’s Miracle” http://www.ft.com/intl/cms/b8268ffe-7572-11db-aea1-0000779e2340.pdf – high growth exists where easy improvements can be had. Singapore is past that stage. We had our day of high growth by increasing rates of schooling tremendously, by increasing women’s participation in labour, by investing in technology. So, if you compare apples with apples, you shouldn’t compare Singapore with China, Indonesia, Vietnam, etc. You should compare us to countries with similar demographics, similar technological prowess. None of those countries are able to grow at Singapore’s speed. US growth rates from 1980 to today is 1.6%, Scandinavian growth rates are 1.5% to 2.3% (highest Norway, then Finland). Switzerland’s over the same period was 1.1% (Data from Acemoglu et al’s 2012 paper http://economics.mit.edu/files/8086). No other developed country in the world grows as fast as Singapore – it’s just not sustainable even in these highly innovative countries.

      Re: “It requires a major mindset shift, an appetite for a bumpy ride, and a yoga-zen state of nirvana to forgo materialistic pleasures and decadence lifestyles that we have so indulge over so long.” … Well, I disagree. I’ve lived in Denmark for half a year before. You don’t need to be really zen to live in Denmark. True, there’re no rich people driving Ferraris on the cobbled streets in the old city. True, the houses there are ancient and quaint, not posh like Sentosa Cove. But I think by and large they get by rather happily (helps that beer is cheap I guess). I think you have to be zen to live in sub-Saharan Africa.

      Re: “We also have to be contented that we no longer have that competitive edge as a small city state since others in the region would catch up.” You really think it’s easy to catch up with truly developed nations like Switzerland, Japan, Germany, the US, Scandinavia? Look at the quality of their factories, their engineers, the products they make. Singapore was on its way there, our engineers were pretty good. But we had to regress a la SMRT. It’s not just Singapore that faces diminishing returns in growth rates. All countries will. And countries who have already built a strong production base will be ahead of those who are playing catch up.

      And anyway – if you believe in solving global problems like poverty, global warming and degradation, it’s actually a good thing that poorer countries are catching up. It’s when they can’t catch up that these problems persist. I think we shouldn’t be so worried about relative wealth (vis other countries, vis other people in our own country) – that leads to a lousy life. There’s better things to focus on in life than having more money than the Joneses.

    • 55 D 10 February 2013 at 02:53

      Singapore’s ‘low’ unemployment is a myth. We have some jobs ‘reserved’ for locals, they are typically self employed and part time which most people can do, like taxi driver, or real estate agent (is it reserved for locals?). Anyway the point is anyone with no job would presumably be better off trying to drive a taxi or do real estate than claim to be unemployed, even if there are thousands in the same situation? When the gov gives hardly any unemployment benefits, it’s not in your best interest to claim to be unemployed: hence low unemPloyment

      • 56 eremarf 12 February 2013 at 03:02

        @D: I know you weren’t thinking of this angle, but I’m afraid other people will read too much into what you say:

        “When the gov gives hardly any unemployment benefits, it’s not in your best interest to claim to be unemployed: hence low unemPloyment”

        This seems like a rather “neoliberal economics” idea – that without gov’t interference, the job market finds “full” employment (“full” because some dudes rationally find not working to be best – and some are transiting jobs – so there’s bound to be a degree of structural unemployment).

        I don’t believe it’s so simple in reality. Job markets aren’t free anyway even if gov’t doesn’t interfere – both capital owners and organised labour try to exert power to interfere in prices (c.f. how S’pore Business Fed predicts doom over labour crunch, how SMRT workers organised a strike – which is more an example of powerlessness than power actually).

        Also, wages don’t adjust down and up very well to market conditions over time (they’re quite sticky). People don’t really want to take up low wages in a bad economy because their “new” lowered salary tends to stick even as the economy recovers. Which makes their previous pre-depression wage sticky too, i.e. they’d rather be unemployed than take up a job at a lower wage (until desperate).

        In Singapore’s case – unemployment isn’t a problem. Overemployment, leading to overwork, no work-life balance, etc is. And that’s the bigger problem: lack of bargaining power of organised labour, leading to unfair wages (most profits accrue to shareholders and management (with minimal taxation!), rather than wage labourers). In Singapore, even though people are willing to put in 50 to 60 hours a week, some don’t earn a living wage after working so hard. As for being taxi-drivers and real-estate agents – well if they can’t earn a living wage doing that – it illustrates my point, doesn’t it?

        If they can actually earn a living wage (unlikely?) driving taxis or selling real estate or teaching tuition – well, I think it’s not bad that they can actually get employed (although for some – it’s a waste of valuable skills and experience – which is inefficient and undesirable).

        That’s just not possible in some countries. People there do try to stay alive too – they do odd jobs around the neighbourhood, grow their own food in gardens, i.e. participate in the informal economy. Or become homeless and wander around subsisting on charity. Or die (not joking – look at life expectancy in the US among the poor). All of which is very wasteful. (I am inclined to the Modern Monetary Theory discussion about this – which claims that gov’ts should go into deficit to take up the slack during periods of unemployment). But I think this is a different sort of problem than Singapore’s.

      • 57 D 13 February 2013 at 15:09

        Sorry I didn’t make my point well at all. I agree largely with what you say. The plight of the possibly apocryphal retrenched 40 year old PMET worker, probably displaced by cheaper foriegn import, who resorts to driving a taxi is a real social concern. As you mention, the waste of skills and experience coupled with the struggle (s)he faces making ends meet mean this person should presumably be a part of the debate on Singapore’s labour market.

        The way I see the situation is that the PAP have set up the labour market, with the job of taxi driver – and others – reserved for locals effectively operating as a huge elastic sponge that can soak up unlimited numbers of retrenched workers, regardless of the social ills, allowing the government to claim low unemployment and that there is no need for unemployment benefits. This frames the debate away from retrenchment, unemployment and underemployment, which suits the government politically, but neglecting the needs of the retrenched and under employed.

        Sadly I dont have any solutions to this but I do see a need to bring this point back into focus – I think it is somewhat disingenuous for the government to continually claim low unemployment without talking about underemployment for example.

      • 58 eremarf 15 February 2013 at 18:32

        I certainly agree that the PAP messed things up here, but I’m not sure if I would call it “underemployment” (seeing as taxi drivers and RE agents might still work very long hours, just at a much lower “pay grade”).

        (Actually, maybe the key message is, employment statistics don’t tell the whole story, and can hide important details, especially if politicians start spinning stuff. So we should look at more facts and figures to get the full picture.)

        I’d rather identify the problems as:

        1. Inefficiency – large waste of skills and experience when PMETs get rehired as taxi drivers and RE agents – waste of skills always occurs during industrial shifts, and the common way to tackle this successfully is retraining (PMETs changing to driving taxis doesn’t involve retraining – it’s just de-skilling).

        I know retraining looks very meaningless in the Singapore context (I think because we do it in a token and wayang way) – but it has worked for Scandinavia (they have unemployment and retraining benefits to help people get by while they train for another industry). In fact, job shifts across industries is one of the indices to measure innovation in an economy (it is a measure of how much creative destruction takes place – old jobs replaced by new ones due to innovation). Note I’m not saying Singapore is similar to Scandinavia – it’s telling that the jobs shift for Singaporeans is from high skilled to low skilled jobs, i.e. we are heading the other way – destroying high skilled jobs and creating low skilled ones – “de-innovating” in a sense.

        2. Which brings me to – changing the employment structure in our country. We’re not adding high-value jobs to Singapore if our 40+ y/o PMETs formerly in high-value jobs (high labour productivity) end up changing to low-value jobs (low labour productivity). I don’t have the figures for how the whole foreign influx has changed our proportion of high to low value jobs but the lack of productivity increases (plus all the anecdotes we’re bombarded with) suggest we’re static or regressing. This is bad, given that all advanced economies become and stay advanced by having superior labour productivity.

        If we’re Singaporean-centric, we would also welcome bringing in foreigners to do low-value jobs which then free up Singaporeans to do high-value jobs (is there a practical way to do that given that not all SGeans can move to high-skilled jobs, at least right now?). But bringing in foreigners to displace Singaporeans from high-value jobs to low-value jobs makes no sense at all.

        There is however a good case of bringing in foreigners to do high-value jobs which Singaporeans cannot do e.g. expertise in particular fields – if their inclusion creates high-value jobs for SGeans – but that theoretically won’t cause retrenchments.

    • 59 Belgium 10 February 2013 at 09:03

      @ eremarf and others: plan B is not a retorical question. It is a reality for my company today.
      Our main issue in Singapore is a lack of HIGH level resources, not cheap workforce. We need more master degree engineers, and they simply are not available in Singapore anymore. We pay a decent salary ( $ 8k per month) which is high in a global environment, yet at the end of the day, the cost for FT to come to Singapore is becoming increasingly high. Rent for foreigners is very high. Buying private property is not affordable. Becoming PR is no longer possible. Buying resale HDB as PR is no longer possible. What would you do if you were a foreigner? Every weekend, my Singapore staff are in JB scanning he houses.

      I would welcome a lot more Singaporean entrepreneurs as today they seem to beca rare species. But even if, Singaporean entrepreneurs will need both high level and low level staff. It’s a tough problem to have so in the end tough choices have to be made. It is upto Singapore and its Singaporeans, to make these choices.

      • 60 Fox 10 February 2013 at 15:13

        It appears to be that the problem is high rentals and the lack of affordable housing. That has nothing to do with anti-foreigner sentiments or anything. I don’t think it is right to ask Singapore to provide subsidized public housing for foreign workers.

        I’m not sure about what kind of engineers you need but a very large fraction of our university graduates do not even get to have engineering jobs given the decline of the manufacturing and IT sectors. There are relatively few hardcore engineering jobs left in Singapore. Besides, even PhD-trained electrical engineers in Mindef don’t get 8 K per month.

      • 61 Mr French 11 February 2013 at 18:21

        @Belgium, sorry to say I didn’t quite catch exactly what is your point. But i would say if you are paing 8k per month, the sitution for your foreign staff is probably not so bad.

        Typically people consider spending maybe 25-30% of monthly salary on rent affordable – this puts your staff at 2-2.4k per month. I think you can find a quite nice condo master room in Singapore for this budget, maybe even a whole unit if you are willing to compromise on location and modernity.

        As for buying, since people who rent are typically paying off the owner’s mortgage + extras, someone who can afford to rent can typically afford to buy as well, if they have the down paymant. A typical condo might be out of reach today, but your staff considering JB can probably consider woodlands or other outlying areas first.

        At the end of the day though, you are right, the cost of living in Singapore is getting more and more unbearable for more and more people. The reason being that supply of many goods and services does not match up with demand. Property is expensive because more people are coming in faster than government has chosen to build housing. This points to failure of government policy on bringing in too many people without calculating or taking care of infrastructure demands. Many people are horrified by the white paper because it seems to continue down this path. Global talent is mobile and the workers you seek, local or foreign, are not going to stay in or come to a country which suffers overcrowding, high cost of living, poor infrastructure etc. The government needs to accept and deal with this reality soon, or else high value companies such as the one you work for are going to struggle. FYI from my understaning of policy changes, the government has made no changes whatsoever to the availability of the sort of talent you describe.

      • 62 eremarf 12 February 2013 at 01:58

        @Belgium:

        Sorry I misunderstood your original post. Which I couldn’t make a coherent picture of (my own failing – I’m not great at comprehension).

        So thanks for clarifying again. So ultimately, it seems the problem that worries you is the cooling measures on property prices, that makes property very expensive for foreigners (esp if they cannot get PR/citizenship – so immigration policy is implicated as well). Which greatly raises the cost of living for highly skilled foreigners currently in, or thinking of coming to, Singapore. Which makes Singapore unattractive to businesses that rely on highly skilled and globally mobile labour. So firms might move out.

        Did I get that right? Assuming I did… how does this relate to the White Paper?

        1. Re: housing costs, etc – most people believe that a reduction in population will reduce demand, and hence reduce housing prices – that’s good for the problem you describe – right? (Although it might take a while to adjust?) I don’t really know how housing prices will change – but current housing price cooling measures seem important to prevent a bubble forming (or to prevent the bubble from getting bigger to where it must burst). The costs of a burst bubble probably outweigh the benefits from increased competitiveness from keeping housing affordable for highly skilled foreign labour (from society’s perspective).

        As for why there is currently a bubble that must be cooled, it’s not the $8k/mth engineers who are driving prices up – it’s all the cheap loans worldwide, from quantitative easing, low interest rates, etc (plus under-supply for our current pop), wielded not by FTs, but by foreign investors. It’s not the engineers’ fault – but all of us will suffer if we allow a bubble to form.

        In other words, I don’t see how local policy can avoid trying to cool the housing market. It’s an unfortunate side-effect that it makes Singapore more expensive for FTs, in the short run hopefully, (along with the intended targets: foreign investors who are flush with cash). But at least FTs don’t need to buy property – they can rent for now, and IF there is a bubble, rentals will fall – and they won’t be affected as if they had bought properties.

        2. Re: Immigration – revoking of ease of obtaining PR/citizenship for FTs who are in fact transient, and not going to put down roots. I think this is the legacy of an old exploit in the PR/citizenship system (poor policy making in the past?).

        It’s good to disentangle the two things – PR/citizenship, and cost of living for FTs. If cost of living was low, and Singapore intends to keep it low for FTs, it should NOT be via the PR/citizenship system. It should be introduced via other policies. It’s not clear, and it’s not fair, to not disentangle these two things.

        When PR/citizenship gets used (or abused?) as a policy to alleviate cost of living policy for FTs, Singaporeans’ emotions are sure to run high. Citizens are heavily invested in Singapore: it’s home – we are born here, live and love and die here, we make sacrifices to preserve our ways of life, our culture – our sons, brothers, fathers do NS, etc.

        Instead, Singaporeans who see the benefits of attracting FTs should initiate other kinds of policies to make Singapore attractive – not tied to PR/citizenship. And the search for a technical solution should be free of the emotional baggage of PR/citizenship. I don’t blame FTs for exploiting poor policies in the past – but FTs should understand why we now want to disentangle PR/citizenship policy from cost-alleviation-for-FTs policy.

        3. New problem not mentioned – cost of living in Singapore might increase if low skilled labour supply is tightened. This might then affect cost of living for expats, which affects your company.

        It IS something to think about. Hopefully, increasing productivity will allow us to provide similar goods and services at today’s prices. People will probably also have to make lifestyle adjustments to new prices of goods and services (things requiring labour get more expensive, but new alternatives would probably surface).

        But given Singapore’s current wealth inequality, I think changes in this area would probably affect the currently wealthy minority negatively while improving lives of the middle class and poor positively. If this makes Singapore less competitive than some highly unequal society out there – I think we’ll just have to make up for cost of living increases with other advantages of locating in Singapore, e.g. using central planning and subsidising infrastructure to create agglomeration benefits for particular industries, keep providing good public services to maintain safe, clean environments good for raising families in, etc.

        And even if we can’t be the MOST competitive for attracting highly skilled labour (caveat: it’s not EITHER competitive or not – it’s HOW competitive, in which industries), at least we will improve the productivity of our low and mid skilled workers. These people also produce value, and constitute a key part of most developed societies’ economies.

        Besides, with wealth equality, our society will produce more local high skilled labour and also new businesses due to good investment in human capital (health, education, strong families and safety nets so people explore more, innovate more, etc).

        So, ultimately, there is cause for you to be worried about your company’s future in Singapore – but it shouldn’t be about housing costs, or PR/citizenship rules. It should be whether Singapore can continue to make itself a vibrant, attractive location for highly skilled labour and high value-added industries (which involves a lot more than just costs of living).

        P.S. your perspective is a rare one in this White Paper debate. Most people when debating the White Paper are worried about low and mid skilled jobs, about infrastructure problems. I think you’ll find most Singaporeans are quite amenable to bringing in highly skilled (at $8k/mth!) labour which are locally unavailable or much more expensive.

  19. 63 Chanel 7 February 2013 at 10:41

    The PAP government has certainly perfected the art of obfuscation. Eg. PMET versus non-PMET jobs.

    To use an analogy, the government wants to give more heroin to an addict to “help” him to quit the harmful habit simply because it is hard to kick it off.

    We hear business associations asking for more cheap foreign labour so that businesses can improve labour productivity!! These associations don’t even see the obvious oxymoron.

  20. 64 MP 7 February 2013 at 10:48

    I find it hilarious that whilst the PAP MPs and ministers claim that the Population White Paper is not about setting a population target (notice the contradiction here?), they heavily critisized WP’s counter-proposal of a significantly lower population growth.

  21. 65 Jorg 7 February 2013 at 16:25

    The only way is *not* to compete based on price.
    That means we MUST transition FULLY to First-World working methods and approaches – that is 100% knowledge based and merit-based.

    At the moment, “Meritocracy” is merely a smoke screen to legitimize Cronyism – what better way to say a person merits something simply by association?

    When an entity decides not to compete based on price, his differentiation MUST be based on sophistication and value-to-price ratio, rather than being the lowest bidder.

    Apple’s products, when Steve Jobs was still around were highly resistant to price wars. They are price-makers not price-takers.

    In land-scarce Singapore, our strategy to compete on price is pure idiocy and mental-laziness on the part of the planners. Anyone with half-a brain will realize that we will lose (not just to China, but) to any country that has a bigger population because of the principle of “economy of scale”.
    Theoretically this means, ALL the SE-Asian countries could potentially trump us.

    The only way is through leverage in superior education and a higher sense of sophistication in the goods and services that come out of Singapore.

    This is possible, since South Korea, a few decades ago was poorer than the Philippines, but today has overtaken Japan as the leader in electronics and culture (e.g. Samsung, K-pop). It is highly possible that the Korean automobile industry might even trump Japan’s too. But that’s speculation.

    A country like South Korea, isn’t the largest country in Asia or in the world for that matter, but it is able to hold it own based purely on human capital in innovation and knowledge.

    High technology, innovation and sophistication will have to be the drivers that puts us out of competition with the lowest bidder. Like Apple (when Jobs was still alive), it differentiates itself enough never to get involved with price-wars and undercutting.

  22. 66 fpc 7 February 2013 at 18:17

    rubbish paper. tax singles more? why not homosexuals? rubbish… how different is this policy and those policies from pap that penalise singles like the hdb policies

  23. 67 l'ingénieur 9 February 2013 at 16:52

    Isn’t this our minimum wage? The Workfare Income Supplement?

    http://mycpf.cpf.gov.sg/Members/Gen-Info/WIS/WIS_Scheme

    • 68 eremarf 12 February 2013 at 04:18

      I tried to understand it. It’s a very complex way of providing a minimum wage. The complexity alone is a barrier to its implementation and uptake. To illustrate…

      Quantum paid out (annual) is highly variable ($103 in cash to $800 in cash) based on:

      a. Age – 4 categories.
      b. Income – 8 brackets, payouts increasing from $200 to $1k per month, then falling from $1k to 1.7k
      c. Payouts are partly in cash, partly in CPF, unless you’re self-employed, in which case it’s paid in Medisave.
      d. BTW, self-employed folks get two thirds what employees get. Talk about encouraging entrepreneurship.

      Complex enough?

      On top of that, you need to be reporting earned income, even if you aren’t eligible for taxation on your old income (less than $20k annually). That deters people whose cost of filing taxes (including learning how to, getting help on it, etc) is in excess of the quantum they would receive. People who don’t know how to file income (not necessary in the past, as they don’t earn enough to be taxed) would also be treated as unemployed, and not receive workfare.

      So, if our low income friends manage to clear all these hurdles, they finally gain these:

      Age 35-44, $200/mth (not the minimum income bracket, that’s for people earning $1.6k/mth):
      $103 in cash, $257 in CPF = $8.58/mth of cash

      Age 35-44, $1000/mth (max income bracket):
      $300 in cash, $750 in CPF = $25/mth of cash

      Age 60 & above, $200/mth:
      $172 in cash, $428 in CPF = $14.33/mth of cash

      Age 60 & above, $1000/mth:
      $800 in cash, $2000 in CPF = $66.67/mth of cash

      Assuming 40 hours of work per week (legal maximum is 44), that works out to 160 work hours a month. So in the worst case above, our young friend gets an additional $0.05 per hour worked, and in the best case, our old friend gets $0.42 per hour worked.

      And it’s even worse for the self-employed.

      Even if we factor in CPF, the best case (old dude earning $1k/mth) is $2800/year, which works out to an increase of $1.46 per hour. That’s the MOST er, stuff? (I hesitate to call it money when it’s locked up til old age), someone can get from this Workfare payout.

      How generous we are!!!! An additional 5 cents to 40 cents per hour worked in cash! In the best case, an additional 1.5 dollars per hour worked if we factor in social security payments (i.e. CPF)!

      This is the so-called “minimum wage” you talk about, l’ingénieur? Are you proud of it, as a Singaporean? As an engineer, do you find it a well-crafted, fine-tuned tool for solving our social problems? We make the people most likely to have problems handling bureaucratic administration jump through hoops to get it, thus denying them from the very first step. And the reward for wading through all that paperwork? A measly quanta, resulting in, IN THE BEST CASE, 42 cents more in cash per hour worked, and a final hourly wage of: $6.67 per hour in cash, plus an additional $1.04 in CPF.

    • 69 eremarf 12 February 2013 at 07:32

      Oh, and it’s fundamentally different.

      Cost of Workfare falls on government – cost of minimum wage falls on employer. If you believe textbook economics, minimum wages result in unemployment (http://en.wikipedia.org/wiki/File:Wage_labour.svg), so Workfare might avoid that problem.

      So Workfare (if we ignore how measly the handout is, and how hard to obtain it), might have some advantages to a minimum wage, or just improved labour bargaining power (if you believe orthodox economic theory). But higher wages due to minimum wage or improved labour bargaining power has the advantage of preserving workers’ dignities and self-esteem, as they won’t have to receive handouts (a very common problem if you believe PAP MPs, who like to tell stories about how their constituents reject welfare because they prefer dignity). And the cost of violated dignity and shattered self-esteem is hard to quantify.

      • 70 l'ingénieur 12 February 2013 at 18:25

        The shattering of self-esteem could be extended to any kind of means-testing – in principle, any form that you fill out declaring how little assets you have. “You ”

        Nonetheless, the WIS is the closest semblance to a minimum wage. To top it off, by being reviewed yearly, it is inflation adjusted! Belgium-style. Very elegant!

        As we already know, 400,000 citizens are drawing this, which means at least 20% of the pink ICs live below this relative poverty line. The payout will keep increasing because the wages never keep up with inflation. The seed of an institutional redistribution system. So long as it is not autonomous (via labour bargaining), you will create a Euro-style problem when you eventually take on debt to finance it. Once again, market failure a la COE style – just that the establishment refuses to acknowledge it, choosing to stick to its “meritocratic” principles. Meritocracy for them is about individualism – winner takes all, lottery style.

        You said it well. There is no replacement for labour bargaining. When you take it out, it comes back to bite you in a big way.

  24. 71 Hazeymoxy 11 February 2013 at 16:44

    According to the PAP model of running SG, a largish base of non-PMETs is required to support PMET ‘cos we’d need more food courts, cafes, restaurants and more shopping centres. All labour intensive and rather low value in my opinion. I say this broadly and at this point simplistically – a first world truly developed country won’t have so many retail and food outlets simply ‘cos labour is better employed in highly skilled jobs. Shopping and eating aren’t hobbies nor considered a sport to actively participate in.

    Since we have all this land to build more shopping centres and fancy condos, how about turning it over to some highly promising high tech SG companies to expand – create, manufacture, do R&D.

    We don’t need more cupcake or macaroon shops. We need people who can reinvent the machines to make the damn cupcake and macaroon. We don’t need more sales people to sell more luxury cars. We need people who can make the next electric hybrid car or a solar powered car. Our educational system was supposed to produce these people.

    • 72 eremarf 12 February 2013 at 03:27

      @HazeyMoxy: “a largish base of non-PMETs is required to support PMET ‘cos we’d need more food courts, cafes, restaurants and more shopping centres. All labour intensive and rather low value in my opinion. I say this broadly and at this point simplistically – a first world truly developed country won’t have so many retail and food outlets simply ‘cos labour is better employed in highly skilled jobs.”

      Indeed, indeed!

      Unproductive labour has no place in developed economies! Wanting a large non-PMET to PMET ratio is like insisting on hiring lots of servants to clean the house, wash the clothes, etc instead of buying vacuum cleaners, washing machines, house-cleaning robots, etc.

      It seems the PAP is more concerned with preserving social status (elites being served by people) than improving economic efficiency (everyone being served by machines).

      Just look at their implied metaphor of a social pyramid, with a non-PMET “base” and an implied PMET “peak”? This betrays the PAP’s elitism and support of elite privilege, and it creeps up on us and we don’t even realise it. PAP, stop reinforcing and reproducing our local social caste systems please.

  25. 73 reservist_cpl 18 February 2013 at 12:57

    I have always felt we need a roboticised economy.

    This kind of shit will never end unless robots take the place of the less well off and they get to do something better.

    I had a PSC scholar friend who claimed that we have an economic and not technological problem. That the Bangladeshi has a better life here.

    Well, he is more eloquent than me and had a better education in Sciences Po, so I gave up the debate.

    If technology could be employed properly we would have a good life here without the Bangladeshi and he would have a good life back home without having to slave away here. And he would be welcomed as a tourist without being seen as a problem causing “foreigner”.

    I find it degrading for a human to perform menial work unless they like to. Unfortunately not as many share my view.

    Oh, but I must point out, the lead carpenter’s job *is* a PMET job. I don’t see how you can interpret architectural drawings without being a professional.

  26. 74 eremarf 18 February 2013 at 21:11

    We have a distributional problem in this world. Production capacity isn’t the problem.

    Keynes predicted in his essay “Economic Possibilities for our Grand-children”:

    “Thus for the first time since his creation man will be faced with his real, his
    permanent problem – how to use his freedom from pressing economic cares,
    how to occupy the leisure, which science and compound interest will have won
    for him, to live wisely and agreeably and well.”

    http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

    But he was wrong.

    Obviously we can produce enough food to feed everyone, enough houses to shelter everyone, garments to clothe everyone, etc. It’s not about having more production capacity (i.e. robots, technology, what-have-you). We can already produce more than we need to live decent worthwhile lives.

    If we don’t fix the distributional problem – it doesn’t matter how many robots we have. Some folks would own all the robots, and the rest can starve and freeze to death for all they care.

  27. 75 whitelies 24 February 2013 at 09:24

    no more white lies! 2016 change! sg for sg folks!


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