“For this year our growth forecast is 13 – 14 percent. . . . but we cannot expect to go like this for the long term,” said Prime Minister Lee Hsien Loong at the National Day Rally speech last Sunday, 29 August 2010, referring to our Gross Domestic Product (GDP).
“Let’s just take three years: 08, 09, 010. [In] 08 we were plus one percent, 09 we were minus one percent. [In year] 10 if we are lucky, plus fifteen percent. . . . Divided by three to average it out, that means on average we have made over the last three years, 5 percent growth. It’s not bad but it’s not as spectacular as what we thought and it’s a realistic target of what we can sustain.”
Now, here’s the interesting thing:
In mid 2007, the total population of Singapore was 4.59 million. In mid 2010, as just announced by the Department of Statistics yesterday, it was 5.08 million. Over the three-year period, our total population grew by 10.68 percent. This to produce 15 percent growth over roughly the same three years.
A better measure would be the growth in total labour force of 2010 compared to 2007, figures which I am not yet able to locate. I am sure it will be higher than 10.68 percent, it might even be close to 15 percent.
Why do I say it is most probably higher than 10.68 percent?
Between 2007 and 2009 (two years) the Ministry of Manpower reported that the employment (of citizens and Permanent Residents) at year end increased from 2.73 million to 2.99 million, an increase of 0.26 million, or 10.95 percent. With the economic recovery, we can expect a further increase for 2010, demographics permitting.
In these same three years, the Department of Statistics reported that temporary residents (i.e. those who were not citizens or Permanent Residents) grew from 1.01 million to 1.31 million, an increase of 0.30 million or 29.70 percent. Now, the great majority of these temporary residents are here to work.
We’ve been adding a lot of humans to produce that 15 percent GDP growth. Our productivity growth (i.e. increase in output per person unit of labour) might be close to zero or even negative.
If productivity has not grown, then one could argue that we have not become richer per capita. We’ve just treaded water while becoming more crowded.
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The problem is that it is overall GDP growth, not the quality of growth, let alone quality of life, that is a key performance indicator for rewarding ministers and civil servants. It would hardly surprise me that priorities are skewed on account of this. There is no easier way to increase the gross GDP figure than to keep adding more and more inputs, like baking a bigger cake by adding more flour, sugar, eggs and butter. The Economic Development Board goes about wooing capital and the Ministry of Manpower just rubber stamps virtually every application for a foreign worker, from menial to executive.
We need to demand that ministers talking about the economy should go beyond gross GDP numbers, and talk about it in per capita terms, as well as focussing on statistical measures of productivity, and on median and spread of incomes. I would also like to see income data split by citizens, permanent residents and temporary residents, which currently I cannot find on any government website.
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Another figure that caught my beady eye was the plan to build 22,000 public housing flats in 2011, on top of the 16,000 this year. These are big numbers compared to the last ten years, data for which you can see in the post Housing for PRs, nobody in charge. In 2006, building hit a low of only 2,733 flats.
As Lee indicated, the surge in building numbers is a response to rocket-like rises in property prices, which in turn is due to shortage.
But I can foresee all sorts of collateral problems coming out of the 16,000 and 22,000 figures: Is there enough spare capacity in our construction industry to achieve this? We have starved the industry for years as the Housing and Development Board kept its annual building rate under 6,000 units per year. Meanwhile, we’ve had a sand supply crisis, which I believe is still not fully fixed.
So where is the needed sand going to come from? Where are we going to find enough bricklayers, welders, crane drivers, safety officers? Do we have enough earth-moving equipment, scaffolding, cement-mixers? If not, does that mean more foreign workers? More cost increases of construction inputs, pushing up inflation of flat prices?
Perhaps we do have some spare capacity coming on with the fortuitous winding down of the two casino projects, thus releasing manpower and equipment. But if so, it’s just plain luck.
Bottom line: our housing planners appear to be ones creating a boom and bust cycle; it is very unhealthy for the construction industry. By failing to plan adequately long-term, our government does not optimise the use of resources. In other words, it contributes to inefficiency a.k.a. low productivity.
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The third number that clanged about in Lee’s National Day Rally speech was the $9,000 give-away to National Servicemen. I see from other forum boards that people are wondering how this number was computed, but that’s not what I am interested in. What struck me instead was the poor connection between this give-out and the rationale that Lee used; it had something to do with giving form to a “citizens first” promise, which in turn was a response to rapidly rising unease with immigration.
Thus I really would be talking about immigration and Lee’s response. That alas is a lengthy discussion by itself, so I’ll leave it to Part 2.