Paradox of Singapore’s Economic Growth: Relatively Higher Average Incomes But Relatively Lower Human Development

By Abdul Gafoor, Social Correspondent

The recent publication of UNDP’s Human Development Index (HDI) revealed another paradox of Singapore’s economic growth strategy.

The HDI ranks countries around the world according to “human development” and this is a common and standard index used by economists all around the world.

The concept of human development according to the United Nations Development Program (UNDP) “ is a development paradigm that is about much more than the rise or fall of national incomes.

It is about creating an environment in which people can develop their full potential and lead productive, creative lives in accord with their needs and interests.

People are the real wealth of nations. Development is thus about expanding the choices people have to lead lives that they value. And it is thus about much more than economic growth, which is only a means —if a very important one —of enlarging people’s choices. “

In the ranking of average incomes, using GDP per capita (PPP US$) as an indicator, Singapore emerged in the 7th position ahead of OECD countries except for Norway. However in the overall rankings of countries in terms of human development, Singapore emerged in the 23rd position.

This clearly shows how Singapore having achieved relatively higher average income than many OECD countries has not achieved similar human development.

Australia has  GDP per capita (PPP US$) of $34,923 far below the $49,704 of Singapore’s, yet it ranks the 2nd highest in human development. HDI even makes a point about this in its website to illustrate how countries with similar incomes can have very different HDIs.

If one looks at the Western European and North American countries in the index, other than Norway, every other country had a GDP per capita (PPP US$) that is lower than Singapore. Yet all of their HDIs were much higher than Singapore.

The other countries that had high average incomes and relatively lower HDIs were oil producing countries like UAE, Brunei etc. Singapore was the exception.

This clearly begs the question why are we so blinded by our economic strategy to pursue higher incomes that we are putting in much less effort and focus on human development. Why are we being growth evangelists?

As Mahbub ul Haq, Founder of the Human Development Report puts “The basic purpose of development is to enlarge people’s choices.” This seems to suggest why Singaporeans despite having high average incomes do not find themselves having high level of choices in their lives.

Then again achieving high average incomes without achieving high level of choices, makes one only question the very purpose of chasing the bigger pie. The concept that the bigger pie will indeed provide greater choices is naïve and untrue.

Higher level of choices is achieved when one pursues creating more choices through investment in human capital. Higher level of average income is achieved when one pursues economic growth policies. The two are distinctly different.

That is why countries run a two legged race, one for each objective. Singapore runs a one legged race, imagining it has beaten the rest.

To read more on UNDP’s annual Human Development Report please go to
http://hdr.undp.org/en/humandev/

Paradox of Singapore Economic Growth: Economy has grown fast, labour income share remains dismally low

By Abdul Gafoor, Social Correspondent

A closer look at the share of Singapore’s economic pie that goes to workers as incomes throws up another paradox. Singapore’s economy itself has grown more than 30 times.

Despite the fact the country has been working hard with full devotion to continually continue high economic growth rate for over five decades, employee’s income share in GDP, has only reached around dismal 41%. In 2008 it reached 44% but is unlikely to remain at that level. If one compares this with the developed countries, that is more than 50% and healthy levels are around 60% or more.

What basically this means is that despite the economy growing continually and rapidly, the share of labour income has not reached adequate levels. The government, politicians and policy makers for five decades have been naively and stubbornly believing that by growing the economic pie at a fast and high rate continually, workers will enjoy their rightful returns.

The government, politicians and policy makers may argue average incomes have risen very high over the same five decades. That is true but each of this serve a different purpose.

Achieving high average income will give a higher standard of living if the necessary set of outcomes, which I discussed in earlier article, are achieved. Achieving a healthy or adequate share of GDP as labour incomes will empower the labour with choices and stability.

It will also allow them to spend adequately enough to make them a strong contributor to domestic demand. The reason why the government has been refusing calls to give greater importance to domestic demand given the high volatility of external demand is purely because of this. The workers are just not getting enough of the pie they produce to become a force within the domestic economy to reckon with.

Singapore’s continued chase for high economic growth rates will not change this situation in another fifty years. What is required is major changes to the economy and labour force.

Instead of blindly and foolishly adding cheap labour in multitudes to the production process, the labour force requires quality labour who have higher productivity. Instead of having six $800 foreign worker waiters manning a restaurant, the employer should aim to have three $1,600 highly competent local waiters who can do all the jobs and work with ease and competency.

Employers need to restructure work and jobs so that each employer can achieve high output in given 8 hour work day instead of achieving high output over long dreadful working hours. Competency and marginal productivity is what employers should aim to seek from their employees.

On the MNCs front, the government must not just aim to draw in companies that invest big dollars. It must ensure the companies are able to hire locals for high skilled jobs and/or also compensate the workers highly according to the job done. If MNCs are to come here, hire foreign labour for the high skilled jobs and locals or also foreigners for the average skilled jobs and expatriate much of the profits, what real gain does Singapore and Singaporean labour really have?

Singapore companies, led by GLCs, government associated companies and government agencies also need to restructure their organisation structures and compensation structures. They have to shed the primitive top power centric, middle empty structure and bottom heavy where CEOs and directors are paid hefty sums and the average worker is underpaid. They not only need to rebalance power structures, they also need to rebalance compensation structures.

However all these reforms will never ever happen in the lifetime of the current government. The elites will resist it. The politicians and policy makers will never see any merit in it and will never want to change the status quo. Rather they will chant the mantra of continual high economic growth endlessly.

About the Author:

Abdul Gafoor is a researcher based in the United Kingdom. He hopes to return to the Singapore he once knew as a child one day.

Avoiding and delaying “real change”

By Abdul Gafoor, Social Correspondent

Whenever I have a tea or meal with a Singaporean politician or policy maker we will always end up talking about need for real change in the Singapore system.

The conversation will start with denials and slowly and eventually he/she will admit there are flaws in the system though he/she will not admit to most of it or the most significant ones. But what will always revile me is when they will excusing themselves by saying Singapore is actually changing but slowly and that it requires time.

This is something I can remember having heard for the last ten years. Ten years is a bloody slow time to do things slow. As a matter of fact they have been pursuing change for last twenty years.

Let me ask every Singaporean politician and policy maker, how long more time do you need to fully effect change? It is very clear that they are not slowly and steadily pursuing it but instead are delaying and avoiding it.

Every politician and policy maker pretty much works on a broader regimental template and territorial boundary drawn up for them by people who do not want real change. They proudly call it synchronisation and synergy and other cliché terms when it essentially is pseudo central planning.

Among the taboo words, topics and concepts that politicians and policy makers in Singapore hate and detest for the last twenty years include “real change”.  But what is so ugly about the term. Had their pioneers not pursued “real change” in the 1960s and 1970s going beyond preserving their status quos, Singapore will have remained a developing country and never transformed into an industrialised country.

The greatest irony is that politicians and policy makers’ survival in power and office depends on the real change that they are avoiding and delaying. As much as they may think 50 years in power is a long time, it is actually a short period of time.

The British alone ruled Singapore for about 150 years. The Sri Vijaya conquerors ruled Singapore for two or three centuries. However MM Lee himself has said the next 50 years is not certain.

PAP likes to imagine that party renewal is the real change and is key to keeping them in office. In the elections from 2010 till say 2060, PAP can indeed continue like in earlier elections field scholars, former top officers in military, top civil servants etc. However their survival is not in that kind of party renewal but in how they can solve the problems of Singaporeans and make the dreams and aspirations of Singaporeans come true.

For that they need real change within the system. It is the system that is causing Singaporeans the problems. It is the same system that is standing in the way of the dreams and aspirations of Singaporeans. Of course some politicians and policy makers are well aware of it and are deliberately avoiding it due to the exorbitant political cost of undertaking the real change.

There are also some politicians and policy makers totally oblivious to this and prefer to imagine that all the discontent in the population is from troublemakers, psychopaths and anarchists, failing to realise there cant be smoke without any fire. 

Real change will involve radically changing the status quo. Power structures will have to be reshaped which means power structures of some people or groups will have to be curtailed.

Old ideas will have to be discarded not recycled and instead new ideas will have to be adopted. This will require huge courage to openly admit faults, flaws, imperfections and weaknesses in the system through an open and accountable system.

People for whom ivory towers have been constructed will need to be brought down from there. They will need to rethink how to evaluate people, performance, organisations and outcomes and move away from elitist methods, eugneics, self-conceived fixations and stereotypes .  Rewards and remuneration will need to change to benefit real performers and real achievers.  What all this means is a systematic shift and radical restructuring of the current system.

No politician nor policy maker has any courage to do that as that will involve clashing with their own breed and kind and swallowing their pride to admit what they worked on has become obsolete. Nobody wants to shatter their crystal image of the system nor rock the boat of their peer. Hence they naturally delay and avoid real change and pursue cosmetic ones and naively claim they are pursuing change slowly.

Strange that this may sound but the best thing that could happen to PAP in 2010 election is the opposition winning at 30%-40% of the seats (about 25-40 seats). The incoming opposition MPs will serve as a good reason for PAP to effect the real change that it cannot do so with such large majority.

There will be much less resistance within as then it will become pertinent for them to effect such real change or face eventual political extinction. PAP will not be able to achieve this either with its increased number of NMP /NCMP idea nor with the opposition winning less than 30%-40% of the seats.

A friend was asking me what can happen if PAP does effect real change perhaps between 2015/6 election or 2020/2021 election and whether it can still survive and/or retain full control. The earlier situation will not change during 2015/6 and so it will not be able to effect any real change. By 2020/2021 Singaporeans will be tired enough that any real change by PAP will be too late.

I personally do not wish to see PAP become extinct one day. No matter how right wing it maybe, it needs to stick around and add to the diversity which is critical for any political system to survive. If PAP should fall one day, we will need it then to be the opposition to check the then government. It is the balance of powers that we need in the country. We do not need another party to come into the parliament and take over the whole parliament and rule for another half a century.  

The whole thing is like a smoker who exposes himself/herself to health risks through his/her smoking habit and when he/she reaches 50 and his/her risks are astronomical. He/she faces the option of either giving up smoking to live long much longer or continue smoking to die much earlier. PAP has reached 50 now. Lets see what it decides.

About the Author:

Abdul Gafoor is a researcher based in the United Kingdom. He hopes to return to the Singapore he once knows as a child.

Why “No.1” Singapore fails to get No.1 in highest global human achievements

By Abdul Gafoor, Social Correspondent

The recent award of Nobel prize to a Hong Kong physics professor has invited some kiasu Singaporeans (who always have displayed an idiosyncratic attitude in not wanting to lose out to Hong Kong) to sit back and ask why has not Singapore created any Nobel Laureates so far.

Lack of No.1 global human achievements

Singapore also has not produced any Booker prize winners which is the highest literary award in the world. Despite engineering being a core area of Singapore, we have not produced any engineering marvel at the world level.

We also have not produced any poet, artist, filmmaker, dancer, song writer or singer that the world craves for. Singapore has yet to produce philosophers or intellectuals that the world recognises and cherishes.

Our  14% Muslim population has not won any global awards from Organization of Islamic Countries, which gives out some of the highest awards to the highest achieving Muslims in the world.  What Singaporeans need to ask is why “No.1” Singapore has not made any No.1 global human achievements in the last 50 years?

Infinite opportunities and choices

What allows a human to achieve phenomenally at the global level are the availability of infinite opportunities and choices. The term infinite here is qualitative and not quantitative and basically means the multitude of opportunities and choices that he/she can even imagine.

In some systems such as Hong Kong which has produced human achievers at global stage, the level of opportunities and choices may not be infinite but still sufficient enough. What limits the infinite opportunities and choices in Singapore are a set of problematic political, economic and social conditions.

Political conditions

Singapore being a nanny state selects opportunities for its people which means it limits from the infinite opportunities that its people can potentially have.

Singapore also makes choices on the behalf of its people which again means the state limits the infinite possible choices the people can make. In all, with the limited opportunities and choices, one cannot expect Singaporeans to achieve phenomenally at the global level.

Every Nobel laureate or exceptionally high global human achiever has a human spirit that is free, bold and is determined to push beyond boundaries. However in Singapore that has been curtailed by PAP so as to preserve absolute control.

Humans have only one spirit. They do not have two spirits- one for political affairs and another for non-political affairs. Therefore when one tie up the free human spirit for political affairs, which other spirit is the human going to use to push boundaries in non-political affairs.

Economic conditions

Singapore is a country that has one of the highest per capita income in the world, higher than even Hong Kong. There are many more Singaporeans who claim that our education system is “the best in the world that even U.S.  high schools copies us”.

We have at least a few generations of graduates from NUS since 1960 which form the highly educated class. Our National Education program has been around for at least a few decades and huge investment has gone into it.

In recent times our biomedical life-science initiatives have been using unthinkable amounts of our money. Basically huge efforts have been taken in education and R&D, yet why has that not produced any Nobel laureate or globally human achievers?

Using pragmatism as a chief mantra or guiding philosophy the state has limited opportunities and choices in the economy . Because of the odd way Singapore understands pragmatism and applies it, areas such as physics, chemistry, economics, literature and many other areas have never been given any due value.

Society itself also hence discourages its children from pursuing in these areas as there is little reward.  Rather Singapore, because of its adamant insistence to follow pragmatism, till today largely values only a few areas such as accountancy, business administration and finance, some areas of engineering, some areas of medicine, law, some areas of IT and marketing (and maybe a few more). In fact Singaporean recruiters, employers etc tend to recognise someone as a professional only if they are in these few areas.

This pragmatic approach to only focus on a few areas has resulted in under-investment in human capital in the other areas.

The government may be right in this approach during 1960s and 1970s but by 1980s it should have started to diversify and it is really sad that till today the diversification is cosmetic and/or little. Only if diversification into the wider areas continued will the economy itself diversify over time.

When a government focuses only on some areas, employment creation in those other areas naturally will then grow at snail’s pace over decades that you can hardly find a labour market for those area. Skills accumulation therefore never happens.

In fact if someone is in those areas due to their acquired skills abroad, firstly he/she will find it really tough to find a good job, and secondly he/she will not see career prospects in a job should he/she land in one. R&D also suffers in those areas due to underinvestment and is often virtually little or none.

Even within biomedical lifescience, there are so many areas where we are not funding adequately. Even within the focused few areas, R&D is not a big phenomenon. Without sufficient R&D throughout the economy, one can totally forget about highest level of human achievements which if it should happen will be pure lottery.

The way Singapore applies meritocracy also curtails the maximisation of human potential. This is because in Singapore, one’s merit is assessed based on past results not future potential results or one’s true potential.

If one aces at his early stage in life, he/she can go far in the subsequent  period even though during that period he/she fails miserably. That is the typical scholar story we all hear where they ace in school but fail miserably in real world.

If the system did not omit those who can ace in the real world but only achieve less than with distinction in school or who can only ace much later in school, there will be much more chances of seeing human achievers for many human achievers were not exceptionally great in early part of school or exams.

Social conditions

A champion is not born as much as some Singaporeans like to imagine. He/she is groomed by society. A system must also be safe for potential human achievers. Singapore is not one.

I have often seen the territorial and kiasu nature of Singaporeans which results in warding or killing off talent and human potential. You just need one kiasu Singaporean who wants to climb to the top. He/she will do everything possible to sabotage anyone in his/her path especially those better than him/her.

Each human achiever is created by the support of many ordinary people. When Singaporeans are so territorial and kiasu, what support do you see them lending to their peers at schools and workplaces? You hardly come across a Singaporean who wants to see the other, who has huge potential, go far and high. Often it is the opposite.

Many Singaporean bosses and teachers basically want puppets following their orders blindly. Global human achievers are never puppets in their lives. They are not anarchists or devils or troublemakers either. They are led by their curiosity, ingenuity and drive which will be curbed within the typical Singapore environment.

Singaporeans also have excessive ego and pride. You need a much more humble and harmonious environment to produce global achievers. For a potentially global human achiever to reach a highest outcome, what is required is many smaller outcomes and for each new outcome, one has to use the previous outcome/s which often was achieved by others. He needs the collaborative support of others.

Due to ego and pride, I have seen Singaporeans refusing to collaborate or use the successes of fellow Singaporeans. Instead they will destroy the successes of others and replicate it as theirs and continue from there. They destroy what is required for them to rise up and they destroy those who rise up.

When the territorial and kiasu nature combines with ego and pride, you get the “my way or the highway attitude” and the “you are with us or against us divide”. A Singaporean who has the potential to be the next Nobel Laureate  will need to wage a huge political battle with those in position and office in the environments where he has to work, form coalitions, wrestle opposing factions off their seats and then only be able to independently work on his stuff. Most high human achievers do not have such skills and hence naturally will get “killed” by such a system.

In a system where the state nannies and the society is so combative, the average Singaporean is going to be hardly motivated to aspire to go beyond horizons. Rather he will simply want to preserve status quo. Singaporeans truly lack inspiration though they have huge egos.

Are global human achievers really necessary?

The cynical Singaporeans will dismiss the need for global human achievers and claim they are a luxury that Singapore do not need for its survival. On the contrary, it is precisely global human achievers that we need in the country.

For every Nobel Laureates, there are thousands of human achievers on the secondary level and we desperately need at least those in the hundreds. It is those achievers that will bring about economic, social and political sustainability in the country.

After thoughts

Let’s not go too far to think about this. Let’s just take Temasek Review as an example which is a micro example.

This website has a potential to become an asset for Singapore by being a highly sophisticated news and analysis medium for all politicians, government policy makers, lobby groups, external investors and Singapore citizens.

In any other country this will have been achieved. However it will never ever happen in Singapore for the same precise reasons stated earlier.

Other articles by Abdul Gafoor:

>> Why Singapore’s “meritocracy” isn’t meritocracy

>> The paradox of Singapore’s economic growth: housing component

>> The paradox of Singapore’s economic growth: time and income

About the Author:

Abdul Gafoor is a researcher based in the United Kingdom. He hopes to return to Singapore he once knew as a child.

Why Singapore “meritocracy” isn’t meritocracy

By Abdul Gafoor, Social Correspondent

Singapore is a strange country where everything suggested, which is contrary what the government, politicians and policy makers claim, has to be “substantiated with evidence” even though the same government, politicians and policy makers are not required to substantiate their claims with any evidence. No other country has such an idiosyncratic attitude which was introduced by Lee Kuan Yew given his background as a lawyer.  He tries to make the country a court room where the rules apply to everyone except government, politicians and policy makers.

The claim that meritocracy exists is one of the various notions that PAP has successfully marketed to the people even without having gone the length to ever proving it actually exists. Other such successes include Singapore being a developed country, education system being one of the best in the world etc. However PAP has had its fair share of failures in some of its baseless claims such as in eugenics where in order to produce smart kids, graduate men should marry graduate women.

The reason why many Singaporeans want to accept this baseless claim that meritocracy exists instead of rejecting is because they are afraid to deal with the factual situation where meritocracy does not exists.

The majority Chinese are afraid that they will fall into the shallowness as the majority Malays of Malaysia. The minority Singaporean leaders are afraid that they have not responded to a situation for fifty years where their bright and smart have been sidelined.

The minority Singaporean masses are afraid to even imagine they may have been systematically marginalized in last five decades because it shatters their crystal image of their state. Furthermore since they are clueless of how to respond they rather imagine it does not exist pretty much like how a person at health risk refuses to go for a screening test because they are not sure how to cope if they are diagnosed with a condition.

I have talked to so many academics, writers and thinkers around the world and everyone tend to point out to two characteristic in Singapore which will never allow meritocracy to exist.

Firstly income inequalities across the ethnic groups. Most Singaporeans even policy makers do not seem to understand what this means. Income inequalities across the ethnic groups does not mean a Chinese, a Malay, a Tamil and an Eurasian are earning not the same dollar as lame cynical Singaporean critics will foolishly claim.

Income inequalities across ethnic groups mean, the difference in incomes across ethnic groups is too large and significant. This is too visible and obvious to deny.  Given this reality, meritocracy cannot exist  even if you say the highest marks get the scholarship blah blah. You will have to level the playing field before you let them compete.

With the perverse income inequalities, the minorities will not be able to achieve equivalent or better successes than Chinese masses in examinations and job interviews even though they may have the capacity and potential.

What many Singaporeans tend to naively say is that because the minorities do not achieve as much, that is why their representations in ministries, scholarships etc etc are lower than their population proportions and they claim therefore their “meritocratic” system based on “scores and results” qualify as meritocracy.

This then brings to the second reason why meritocracy cannot be existing in Singapore. The way Singapore implements meritocracy is invalid. You cannot use past “scores and results” which is the main method in Singapore used to award scholarships, jobs etc. What you instead require is past, present and future performance because meritocracy is supposed to be based on potential not past achievements.

What someone achieves in the past indeed shows his potential but what someone does not achieve in the past does not show his potential.  Therefore assessments have to be based on potential and for that past performance alone cannot be used. Secondly the proper assessments must be used for to evaluate a person for the job or scholarship.

In Singapore a government scholar typically gets to become a senior military officer or police officer not because he is brilliant in military work or police work but because he scored high marks in GCE O and A level examinations and managed to complete his degree on scholarship and survived through the fast tracked career. That is not meritocracy.

Singapore employers are also extremely subjective when assessing employees. I have seen far too many non-Chinese friends applying to banks only to be rejected. The reasons the employers give are that these friends do not have relevant experience if they are crossing over from say engineering industry. However many (a large number) of Chinese friends who were formerly working as engineers have crossed over into banking industry within the same banks and same departments which rejected those non-Chinese friends.

I also have seen non-Chinese friends with business and finance degrees not even getting interviews whereas their Chinese classmates do. Almost all my non-Chinese friends from JC who got straight As in GCE A Levels are now working as teachers as they could not find employment in the industry for which they were trained for. Likewise I have seen so many non-Chinese friends who have migrated being able to secure jobs in banks which in Singapore rejected them, in industries which in Singapore also rejected them.

What is clear is employers are not giving fair and equal opportunities to minorities in Singapore. What is also clear is that assessment and evaluation of candidates for scholarship and jobs in Singapore is not consistent. Race is a factor.

For many years, there have been calls to set up a labour laws and labour courts to address this just like in any developed and civilized country. Every PAP labour minister over last 50 years have refused. The fact they refused only shows they know the above problems exists and that they are not confident in tackling them.

Singaporean politicians, policy makers and ordinary people refuse to acknowledge these realities and instead insist on imagining Singapore offers a level playing field for all races. The problem is they fail to realize they are unnecessarily creating instabilities into the country with this. A small country like Singapore despite its size does have the capacity to offer sufficient opportunities to everyone in education and jobs.

Having a kiasu attitude and creating unleveled playing fields and believing the whole system functions as a meritocracy only makes Singapore an unsafe place because social unrest will eventually be the natural outcome as proven in so many cases around the world in just the history of the last 100 years.

Part of the problem is fueled by Malaysian Chinese who want to create an impression that what exists in Malaysia does not exist in Singapore. The forms of the problems that exist in the two strange twin countries maybe different but essentially they are the same. They are two sides of the same coin.

What change is required basically in Singapore or even in Malaysia is a leveled playing field for everyone. The governments will have to work towards eliminating income inequalities across the ethnic groups.

Opportunities for education need to be created such that dreams and potential be the criteria for selection. Opportunities also need to be created for promising students who are caught in the storms and shortcomings of their family backgrounds. These opportunities should be available, accessible, universal and abundant such that should any student with potential can reach and attain them easily. Sometimes opportunities should be extended to test to even identify where the brightest and smartest are.

In terms of employment same criteria for evaluations need to be put in place. The culture of rewarding and measuring a person through relationships should be stopped. Instead workplace should be about performance and potential. Legal safeguards must be put in place to make every employer a fair and equal opportunity employer.

Courts must be there to strike fear in those employers who want to select one over the other based on instincts, relationships and subjective evaluations. None of solutions I have said is utopian. They basically are the realities that exist in the developed and civilized world.

About the Author:

Abdul Gafoor is a researcher based in the United Kingdom

The paradox of Singapore’s economic growth: Housing Component

By Abdul Gafoor, Social Correspondent

Another paradox of Singapore’s economic growth is undeniably the housing component. A country that achieves continual economic growth, will see the prosperity extending to the housing sector hereby improving the lives of citizens.

The higher incomes due to the economic growth will allow people to rent or buy houses easier, change from one house to another easier either through rental or purchase, maintain condition of houses across time with greater ease and be able to leave behind property for the next generation.

People will also have greater freedom in relation to housing with stronger rent laws or home ownership laws that will develop along with rising incomes. With higher incomes, people can also focus on building a home and not just finding a shelter over their head. However despite the fact incomes have increased 42 times in the last fifty years, Singaporeans have achieved none of the above with its model of economic growth.

Highest home ownership rate but at the expense of retirement savings

Very few developed countries actually have pursued to achieve higher home ownership along with economic growth.

What basically all developed countries had attempted to do during their development phase was to make housing much easier on its people as their incomes rise.

They did this through larger availability of houses for sale or rental, more flexible rental and sale laws etc. The whole idea is to allow its citizens to have a roof over their heads in a sustainable way for long term.

Developed nations pursued this beyond their pursuit of establishing a framework for comfortable retirement. Singapore on the other hand pursued the objective of achieving high home ownership which it did. However it was only able to achieve it by compromising on establishing a proper framework for retirement.

Singapore combined its full hearted pursuit for high home ownership rate along with its half hearted pursuit of retirement. The final outcome has been a country with highest home ownership rate in the world and one of the worst framework for retirement.

Through the economic growth model pursued by the government, Singaporeans have achieved in buying a house but they are unable to retire comfortably in that house.

Housing but not a home

One of the expected outcomes of economic growth is that with higher incomes, people will be able to focus on building a home and not just a head over the roof.

The higher incomes is supposed to provide the financial means to support marriage, child bearing, child rearing and other forms of family development.

The higher incomes achieved through economic growth is supposed to also provide greater time and means to establish good relations with neighbors.

As income levels rise, neighborhoods are supposed to be more harmonious as people can spend more time with one another. However none of this have been achieved in the Singapore economic growth model.

Most Singaporeans may have a house but not a home. Neighbors in the neighborhoods or even the same block or stair level are stranger than strangers. Some of the crime ridden neighborhoods still remain crime ridden over the decades.

The house itself has become nothing more than a place to retreat to to sleep after work late in the night before getting up the next day to rush to work.

Own the house but not after your lifetime

With increasing incomes, people should be able to not only own a house but be able to transfer the wealth to subsequent generations.

Part of the whole purpose of seeking higher incomes, is to allow subsequent generations start off at a higher financial level through the passing down from earlier generations. However public housing in Singapore is only 99 years and though most Singaporeans own a house, they do not after their lifetime.

Even if they are able to bequeath their house to their children, their children will not enjoy it for long as the 99 years lease will expire.

Public housing sold at private housing prices

Not many developed governments have entered the housing market to assume the role of provider of housing.

In Singapore that has been the case. In most developed countries, the governments rather let the markets decide but they fill in the gaps and also regulate the markets.

Singapore government’s decision to assume the role of provider of housing, was partly to promote affordability which it did initially. However as soon as they started to assume the objective of profit maximization which contradicts affordability, they soon started to offer public housing at private housing prices.

One may argue private housing prices in Singapore is higher. We need to compare apples to apples. Should private sector were to provide housing for Singaporeans, the price of the same types of houses as what HDB has built will cost just as much or maybe lower than what HDB prices.

Therefore even though the Singapore government has increased the size of economic pie by more than 30 times, the wealth increase in the country has not been used sufficiently to make housing cheaper. Instead the prices have gone way much higher.

Its your house but you have limited rights to it

The very concept of owning my house means it is something to which I have my natural rights.

In Singapore vast majority of Singaporeans own a house but with limited rights to it. Comparing to the generations of Singaporeans who lived in kampong houses and other private houses and who subsequently moved on to HDB houses, their home ownership rate has not changed across the generations. However their rights to their houses have decreased.

Once again the reason why all the outcomes that Singapore should have achieved in housing along with its economic growth but which it did not is simply because the politicians and policy makers’ concern for the past fifty years has been about the digit change in real GDP growth.

They have been running like silly race horses with shields on their eyes just looking at superficially upping the real GDP growth. Till today they fail to pay any attention to what outcomes such as in housing must be achieved with higher incomes and economic growth. Instead they look at those separately as if these two are unrelated.

It is about time we shift our politicians and policy makers to Kranji racecourse and start weekday daytime and night races for I am sure they will run round in circles better than race horses.

About the Author:

Abdul Gafoor is a researcher based in the United Kingdom

The paradox of Singapore’s economic growth: Time & Income

By Abdul Gafoor, Social Correspondent

In a typical economic growth model, the assumption that is made about an economy that grows from a low income to a higher income is that the economic growth will bring along positive growth their real incomes and their leisure time.

Part of the growth in leisure time (each day is divided into either work or leisure) is due to the assumption that the higher incomes will allow a person to spend less time working.

The other part of the growth in leisure time is assumed to come from the fact that as the economy matures, technology improves, labour processes and industrial relations sophisticate then the working conditions including working hours will improve.

An average income of Singaporeans in 2008 was 42 times more than that in 1960, 19 times more than that in 1970, 5 times more than that in 1980, 2.4 times more than that in 1990 and 1.3 times more than that in 2000.

In fact the total income of Singapore doubles every ten years since 1960. However this economic growth does not lead to the above outcomes in Singapore.

That is because till today or rather especially today, the focus of politicians and policy makers is only in expanding GDP and not about achieving the above mentioned outcomes which is the very purpose of seeking economic growth.

In a typical country, real family and individual income will grow as economic growth continues. The term real not only refers to adjusting for inflation but actual ability to purchase i.e. buying power. However this is not true for Singapore.

In the 1960s a person earning $200 per month which is around 80% higher than the average per ca GDP will consider himself middle class, affluent and comfortable. That is also the case of a Singaporean earning around $420 per month in 1970.

An individual earning $1,500 per month in 1980 or 80% higher than the average per ca GDP may not consider himself middle class but he will still have considered his income as comfortable and sufficient. That was also the case for an individual in 1990 who earned $3,300 per month. However the story started to change since then.

Even as incomes continued to rise, fewer people were calling their incomes as comfortable or sufficient. Today a person earning $8,000 which is 80% higher than current per ca GDP even calls himself to be within the sandwiched class and neither as comfortable nor as sufficient.

In a typical country, as the country’s economic growth continues, the increasing individual income levels will allow fewer people in the household to work. However more people tend to work in reality due to the fact that the higher income of the breadwinner allows more time saving appliances to be purchased cutting time required for household work, part-time or full-time domestic helper to be employed etc which then gives the spouse and other members of the household more time to go and work.

One must note this group works out of interest and pleasure and not to supplement family income. However in Singapore the reverse is true. Since 1960 till late 1980s or early 1990s, a family could be run with a single income earner. Since 1990s that has become impossible.

Today it is unimaginable for a family to survive the cost of living without at least two earners in the family. Despite the increasing incomes, more family members have to work today to supplement family income to meet the minimum living needs.

In a typical country, as the country’s economic growth continues, the working conditions will also improve which will include working hours.

Basically labour will be used more effectively in every production process of a good or service. Furthermore with greater income levels, workers will be able to afford to spend lesser time for work. However this is also untrue in Singapore.

Up till the late 1980s or early 1990s, it was common to see people reach home by 5.30pm to 6.30pm. I remember very vividly as a child of seeing friends being picked up by their parents at school which normally will end after flag lowering between 5.45pm and 6.30pm. I also recall I can never invite any Chinese neighbor to play between 6.00pm to 7.00pm as Chinese families (and I mean the whole family including the working ones) will be having dinner around then.

Today I see the MRT being fully crowded at 10pm – 10.30 pm due to people going home just only then. Working hours without doubt have grown excessively.

Singaporeans also have been misled to believe the myth that if you work longer hours you are productive, which actually is opposite to the truth. Then there is the officially long hours and unofficially longer hours where the latter refers to work being brought home to do.

The overworked Singaporean is the reality of Singaporean workers today despite the fact their income is 42 times of 1960. This then leads one to ask whether it is necessary to work such excessively long hours to earn higher income when any proper developed economic system should be leading to shorter hours and higher income.

The cynicism that many Singaporeans have towards working shorter hours as being lazy and indolent is purely silly. Unless a person spend sufficient amount of time at home with his/her family, achieving replacement rate of fertility, promoting education amongst the kids, educating kids on values and ethics etc will be all impossible to achieve which has been the case for Singapore.

If one looked at the development cycle of other developed countries, one can find the larger working class who worked in the fields, mines and industries for longer hours during the earlier years then achieve greater family time due to shorter working hours when the country achieves economic growth.

Child bearing is an activity that requires income and time. That is why when a country’s economic growth continues and as leisure time and incomes increase, fertility rates will increase.

This is only untrue in several countries when the people decide to go for quality of kids than quantity of kids. One must note that in that choice they did not defer or decide not to having kids due to time or money which is the case of Singaporeans whose total income have doubled every ten years.

This is due to the fact that their ever increasing incomes is unable to keep up with faster increasing costs and the fact that working hours have increased instead of decreasing. The solution clearly lies in reverting to 1980s and earlier periods’ length of working days and making costs of living affordable.

In a typical country that is achieving economic growth, its population will be able to retire earlier using the higher incomes. The population also will be able to spend the longer retirement in greater comfort with the greater incomes. That is the true meaning of graceful ageing.

The only reason why retirement age has increased in developed countries is due to increasing life expectancy and lower fertility. It is rather not due to the ageing being unable to afford retirement which is the sad reality of Singaporeans.

As the economic growth of a country continues, the people will have greater amount of time and incomes for pursuing marriage. The only reason why in some developed countries marriage rates have fallen with economic growth is because with the higher incomes and greater time, individuals get greater variety o f choices in life and so they pursue the alternatives to marriage.

However in Singapore, the greatest if not one of the greatest reasons for avoiding or deferring marriage is affordability and lack of time despite the fact that incomes have risen 42 times since 1960.

In any typical country that achieves continuous economic growth, one can find that with the higher income levels and leisure time, they are more able to take care of their aged and/or sick parents, spend quality time with neighbours establishing greater sense of neighbourliness and devote more time for other pursuits such as travel, higher studies, research, innovation, spirituality, arts etc.

In Singapore despite incomes increasing multiple folds continually over four decades, Singaporeans today are complaining they are unable do all that as they cannot afford the cost and the time.

As much as politicians and policy makers brag about how many folds Singaporeans’ incomes have risen in last forty years, they fail to realize that such a phenomenal increase is void of meaning and purpose and have failed to bring about the outcomes that other countries have achieved with such increases in incomes.

As the politicians and policy makers continue to chant the mantra of continued economic growth for the decades ahead and aggressively invest for it, it will not lead to any better outcomes that it should rightfully bring about.

About the Author:

Abdul Gafoor is a researcher based in the United Kingdom

HDB hardware has improved, but not the software

By Abdul Gafoor, Social Correspondent

One of the characteristics of Singapore which the politicians and policy makers take great pride is the fact that Singapore has the highest home ownership rate in the world.

This is a far cry from the colonial era where some Singaporeans had the affluence to own houses whereas some were living in squatters.

The transformation of kampong houses and attap houses from the 1950s into concrete apartment flats in the 1960s is seen by some as progress and achievement.

The smaller and congested housing of the 1960s and 1970s which later evolved into bigger housing units in the 1980s is seen as a further continuation of this success.

However the main question that one should ask is if all these changes have put Singaporeans in a higher level of well being or less relative to pre-PAP era.

Whenever I talk to a Singaporean HDB dweller today, most of the time, depending on the age I hear him/her missing the housing types in which he/she lived in earlier decades.

A person growing up in the 1960s and 1970s often will account how vibrant their estates were despite the size of flats were smaller and how today the estates are dead where even the next door neighbour can be a great mystery.

A person growing up in the 1950s and earlier will account how close knit families were and how harmonious race relations in the kampongs and other areas.

This clearly show that despite the fact HDB houses are bigger, equipped more facilities, have more sheltered walkways, archs, pathways etc and better lifts etc, there is an absolute lack of character, life and emotion unlike earlier decades. To put it simple, HDB hardware has improved over the decades, but not the software.

What intrigues me is that many PAP MPs grew up in those earlier HDB flats or houses/kampongs before HDB and therefore are well acquainted with the intangible wealth of those dwellings and yet they have failed to sustain it up to today despite the fact they have stranglehold on power and authority in the country.

The weak argument that many will give to deny this is that due to modernisation of Singapore, the old had to go. However strong sense of neighbourliness, cohesive race relations, conducive atmosphere for childhood experiences etc all need not go with modernisation.

In the experience of many or most cities around the world, those were still sustained. Why then did it decay and die out in Singapore?

HDB estate improvements have largely focused only on the hardware since the 1990s. As pace of life started to get a lot faster, leisure time started to shrink, cost of living started to escalate, the life and well being of residents and neighbours in HDB estates started to suffer.

However PAP did not pay attention and was stuck blindly to improving the hardware aspects of HDB estates.

After spending billions of dollars and after making residents spend billions of dollars to achieve this, the average HDB dweller is not any much happier than in earlier decades and in fact longs to return to previous eras.

About the Author:

Abdul Gafoor is a young married researcher working in UK after leaving Singapore . He hopes to return someday to the Singapore he knew as a teenager.

The macro factors behind the Housing Crisis in Singapore

By Abdul Gafoor, Social Correspondent

Many Singaporeans have grown to agree and accept that the housing market in Singapore is in a crisis.

In a country of 600 sq km, where rental property is not quite an affordable option for majority of locals, purchasing a property has become not just desirable but a must.

Therefore this begs a close view of the macro factors that are behind the housing market crisis in Singapore

Wrong supply curve provided by the government

One of the main factors for the housing crisis in Singapore is the large number of buyers who have very poor purchasing capacity and are totally reliant on government for subsidy grants and subsidized loans.

If the government is to stop all subsidy grants and loans, the housing crisis will be doubly worse. That is why the government’s definition of affordability does not match that of the people.

What the government needs to do is to supply houses at the volumes and price levels at which people can buy without relying on subsidy grants and subsidized loans, which is the natural purchasing power rate of people and which is the real demand level.

Subsidy grants and subsidized loans do not improve affordability

Another chief factor that has brought the housing market into the crisis is the subsidy grants and subsidized loans.

What the government is trying to do is to create a superficial sense of affordability with the subsidized loans and grants but that actually erodes the affordability for all the rest as illustrated below.

A person on $5,000 income and $4, 000 take home income, probably has a maximum capacity to pay $2,000 mortgage using CPF and cash. However he may not have the means to pay $50K deposit for a $500K house, especially if he is only having worked for a few years. But with a subsidy grant, he can afford the deposit and hence the house.

In fact he may actually not afford $2,000 mortgage given high cost of living in Singapore where he needs money for other household expenses. But with a subsidized loan, he can afford it.

As a house seller, knowing that the buyer can afford $500K with all the subsidy grant and loan, why should I ask for a price of $400K. I can push it up to $500K.

Other house sellers (being Singapore) will follow suit and the buyer will have to offer me around there. After the first few buyers, HDB will push up valuation to $500K.

This impact of subsidy grants and subsidized loans pushing up prices and reducing affordability has been true not just in Singapore but every city around the world (though there are very few because other governments know this better as they are more wise).

Poor management skills: using rigid rules to achieve noble outcomes

The government may have been excellent as a third world country but it totally lacks the skills for a first world country. Its lack of management skills is another main factor behind the housing market crisis.

There are many noble outcomes that the government hopes to achieve with its million rules for the housing market. However the means that it uses which is the rules are too rigid, inflexible for a housing market that is so dynamic in terms of socio-economic factors and demographics.

Firstly the government uses the “kiasu” approach to rule making which is creating barriers instead of opportunities. For instance in the issue of creating 3 room housing for lower income, an opportunity based approach will involve identifying which applicants require help and could only afford 3 rooms.

Instead they use the rule based approach which basically set outs rules that prevent certain families from qualifying but a good proportion of those families genuinely can require that help to get 3 rooms. What has become so clear is that the government rarely achieves its desired outcomes with its rigid rules.

Conflicting objectives: profit maximization and affordable prices

Another key reason  why the housing market in Singapore is in a crisis the conflicting objectives of the government.

When PAP’s public housing program started off in the 1960s, it was chiefly provision of affordable housing. However in recent two decades, it also has adopted the objective of maximizing profits.

It does not take too much arguments for one to realize that these two are contradicting and conflicting objectives. The government can only have one, not both.

Indeed today we see the government making a handsome amount of money in public housing whereas prices are no longer affordable. The sacrifice of the objective of profit maximization is a fair one.

Firstly it does not mean the government will be loss running in providing public housing. Secondly the government can gain in so many other ways if its population can comfortably live in affordable housing.

Addendum by editor:

[It was announced lately that BBR Holdings has secured a S$104.2-million contract from the Housing & Development Board (HDB) to build seven blocks of flats in Yishun Neighbourhood 4. The work comprises 864 homes, a Child Care Centre, a roof garden, communal amenities and site works, as well as contingency works. (Channel News Asia, 17 August 2009)

Financial Consultant Mr Leong Sze Hian calculated that HDB may make a profit of more than $170,000 for each flat sold upon completion:

"Since there will be 864 HDB flats, the average cost per flat, inclusive of communal amenities, site works and contingency works, is about $120,602 ($104.2 million divided by 864 flats).

With the latest HDB new 4-room flats at Punggol (Punggol Residences BTO) selling at an average price of $293,000 (price range of $264,000 to $322,000 divided by 2), does it mean that the HDB stands to make a profit of about $172,398 per flat, or a profit margin of about 143 per cent?"]

[Source: Hardwarezone]

About the Author:

Abdul Gafoor is a young married researcher working in UK after leaving Singapore . He hopes to return someday to the Singapore he knew as a teenager.

Related articles:

>> Drawbacks of using STIR as a bench mark to assess housing affordability

>> HDB flats will be “severely unaffordable using the Median Multiple as a benchmark for housing affordability”

>> Part 1: Singaporeans do not own their HDB flats

>> Part 2: HDB flats are unaffordable to most Singaporeans

>> Part 3: Rising prices of HDB flats does not create wealth

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