Singaporeans have a strange attitude towards GDP. The lower it goes, the more relived we seem to be. We have associated economic growth with all the ills of a growing Singapore: packed trains, wage gap, crowded environments etc.
The man in the street is unfazed by our performance. He frequently complains why his salary isn’t rising as fast as the Straits Times Index (well, up until last year at least).
To put it very bluntly: a strong economy isn’t just about you and your wallet. The life and death of every sector of this island-state hinges on our performance, on our place in the world. Borrowing from Chinese wisdom, it is not about “eating rice or porridge”. It is more between eating rice or grass.
Economists have observed that in periods of recession and flat growth, youth unemployment rises. The state of an economy has a direct relationship to youth unemployment. When it comes to the crunch, businesses are not as willing to expand nor are they as ready to hire inexperienced younger workers. They are also most vulnerable to outsourcing and cheap sourcing. The rise in the use of freelancers further reduces the young worker’s opportunity to be employed.
Extended periods of unemployment increases the hurdles in a young person’s employability, this person then is in danger of being made irrelevant to the market. Japan’s youth joblessness, (which surged after the financial crisis of the 90s) remain high until today.
Low growth and slow growth are the most obvious cause. High tax on labour, unfair competition and high minimum wages are other contributors to the disease of unemployment.
And when there are too many young, unemployed people… social problems start to fester. They’re idealistic, restless, frustrated and angry. A very potent mix.
An increase in youth unemployment is a good predictor of social unrest; more than virtually any other factor, warned Raymond Torres, the International Labour Organization research chief. “The social contract is weakened because of unfulfilled promises,” he said.
Case in point: in recent weeks, New Delhi had been crippled by caste protests. These were driven by the powerful landowning caste whose sons can neither support themselves through farming nor secure the jobs of their choice. Protesters took to the streets demanding caste-based quotas for government posts. Protesters blocked rail lines and set trucks on fire. Police say 30 people died in the unrest.
Political rhetoric asks us “Yes, chase GDP but at what cost?”
The tough reality is this: strong GDP is hardly a choice. The cost of not getting our economics in order is social unrest.
Of late, netizens have been pretty upset at being told (again) by the Economist Intelligence Unit (EIU) that we’re amongst one of the most expensive in the world. Well, if you look who’s at the bottom I’m pretty glad we’re not anywhere near there. (FYI, it includes countries such as Harare, Phnom Penh, Tehran, Nairobi, Lagos and Dhaka)
As the country goes to Budget in a month, I hope that the Members of Parliament who are involved with manpower and unions move proposals that would drive up economic activity, especially for young workers and millennials. As it is, the economy is contracting. We’re seeing redundancies that are highest since 2010.
With fewer jobs, softer economic conditions and (some argue) mentally softer young workers, this country faces challenging times indeed.