“Singaporeans have low wages” – a compliment to the UBS study
It has come to my knowledge that there was an article written by a particular “Eugene Yeo, Consultant Editor” circulating on the internet – usually around hate sites and the such. It exploits a UBS study and uses the material to report Singapore has the lowest wages and domestic purchasing power amongst the Asian Tigers. (By the way, UBS is originally an abbreviation for the Union Bank of Switzerland)
The article is trying to convince the average reader that he/she does not enjoy a good quality of life as compared to other first world countries. How accurate and how well thought of is this article? Let us explore.
The article claims that the Singapore GDP (at PPP) per capita is higher than the Swiss. No doubt, yes, so our citizens should be earning more at a glance… but should we really? Economics distributes wealth to those who are more deserving (not necessarily the most hardworking) – this is only fair and is also the basis of a free market economy.
So the Swiss’ wages are higher than us, which shouldn’t be out of the ordinary because Swiss executives and business empires have the benefits of time, geography, business networks and have been trading well ahead of Singapore.
How many good Swiss brands can you think of? Nestle, Nescafe, Rolex, Patek Philippe, Credit Suisse, Davidoff, Omgega, Chopard, the new Nespreso, Longines, Tag Huer, Brietling, Tissot, Bally, Logitech…
Let us compare those with our own brands: Singapore Airlines, Tiger Beer, Creative… Osim, Breadtalk, Charles & Keith… it doesn’t take a genius to figure out which group of brands have more global impact and will thus pay more.
Low Domestic Purchasing Power
The article then tries to convince the user that a better way to measure prosperity in a country is this:
Annual Average Salary divide by Total Price of a Basket of Goods and Services
This formula reveals a few interesting facts, so let’s examine it’s factors.
a.) Using “Annual Average Salary”
The article compares Singapore with many countries that include Zurich and Luxembourg. I’m trying hard not to put our citizens down, but how do the quality of manpower from these places fare when compared with Singaporeans? The article then compares us with Tokyo and Seoul – Japan and Korea in my experience breeds some of the most incredible executives I have encountered. I’m sorry to do this, but perhaps it’s time to do some self reflecting to understand why our average salary is low, instead of blaming government policy as the single source of our woes. The majority of us are already paid more than a price floor (minimum wage) calls for in most countries.
b.) Using the Basket of Goods+Services
All the countries listed by the article have one advantage that we will never have: land and natural resources. They can build cheaper houses, drink cheaper milk, slurp cheaper spaghetti, eat cheaper beef and live in cheaper apartments that us in land scarce Singapore ever can. So therefore, their basket of goods/services is cheaper. The score of Hong Kong (58.1) comes relatively close to us (39.9) but we must not forget Hong Kong’s very big brother: China, given that they are the one and the same country, it is hardly surprising that they should have access to cheaper resources.
So if you use the formula above to calculate a “prosperity score” you get a figure that doesn’t really tell you the full story of it’s composition.
Agreed – the average Malaysian can buy more cars and houses with his/her salary, however, is it really fair to compare it with land scarce Singapore? In fact, it is because of this challenge that the progress of our country is nothing short of a miracle.
High Cost of Living
The article now tries to compare food prices in Singapore versus other developed countries. Before we even go into technical details, let us remind ourselves again that Singapore does not have enough land space to host any real farms. The opportunity cost of growing our own food, versus using that land for activities that return greater economic benefits is too high. So thus, food is more expensive here.
Higher cost of living is the result of progress – we shall explore this in another article (to keep this one short).
Thereafter, the article continues a blame game (usually discrediting just one source): graying population (already discussed earlier), “authoritarianism”, “repression”, foreigners (also already discussed) and then starts to compare us with Russia (of which it’s basis for comparison is ridiculous) – it naively suggests that Russians have the option of moving to the countryside where “the cost of living is lower”. I’ve lived in a countryside before: Living that far out, food is more expensive and not as accessible..and how much are you buying the land for? What about maintaining your house? You’d have to buy your own car and pay for fuel and maintenance for that also. Livestock doesn’t come cheap either if you’re thinking of farming. What about the bitter Russian winters, if you don’t spend on heating and warm clothes, you will die. At least in Singapore if you really want to live cheap, you can get by on several hundred dollars a month and still live comfortably (and the likelyhood of your freezing to death here is zero.)
There is also talk of growing income gap: I do not have enough space to discuss this issue yet, so maybe next time. But for now, it is a myth that the poor are getting poorer. The observable truth is: The rich are getting richer, and the poor are getting rich, but slower.
The article ends asking us to “look beyond economic indices and nurture a sense of belonging, pride and patriotism” but I beg to differ. If youngsters do not go through good education, if people are not equipped with skills, if the variety of jobs and interesting work are too few and people have difficulty with living basics, then everything else is just “feel good fluff” that doesn’t pay the bills.
I would be wary when someone is telling me that economics is not important when considering the policies of a country.
To end off with, I would like to suggest (in a tongue-in-cheek manner) the REAL indicator of any national progress is: The waist line. You see, it doesn’t matter if food is expensive or cheap, but if the people are willing and are able to splurge on obsessive eating, and not be engaged in enough activity to keep their sizes down…then they must be living in a society that is doing well enough for it to do so. (I’m not being technically correct about this, but it is an interesting observation though!)