Growth must improve welfare of Singaporeans: Sylvia Lim

Our ultimate aim of growth is to improve the welfare of all citizens. GDP is not an adequate indicator of welfare, and the government’s pursuit of growth in the recent years has had serious side-effects on the quality of life, and social cohesion.

This was the speech Non-constituency MP and Workers’ Party chairman Sylvia Lim delivered in Parliament yesterday.

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Each year, the government has certain GDP growth targets and plans the Budget and policies around it.  This year, the government has put in place a productivity target recommended by the Economic Strategies Committee.

Whatever measure is used, the ultimate aim of growing our economy must be to forge a higher quality of life for all our citizens.  Though not everyone has the same talents and capabilities, our growth must provide every person with a good standard of living and a sense of physical and economic security.   We may be a small country geographically, but within our borders, citizens should feel at home and valued as persons and not just for economic contributions.

Limitations of GDP as an indicator

There has been growing expert opinion that GDP does not measure social progress adequately.  In 2008, French President Nicolas Sarkozy appointed a Commission chaired by Nobel Laureate Joseph Stiglitz to identify the limits of using GDP as an indicator of economic performance and social progress.  Additionally, they were to advise on what alternative tools or information should be used which would be more relevant and helpful.

The Commission noted that GDP measured market production, but a larger GDP figure did not always mean that people were better off.  For instance, more traffic jams would lead to higher consumption of petrol and increase GDP, but the quality of life would have actually deteriorated due to pollution and inefficiency.

Secondly, it was important to look not just at the headline GDP figure, but to analyse where the benefits of GDP were going.  If GDP is ultimately for citizens’ welfare, then one important question is how much the local population benefitted from the GDP versus foreign persons.  To measure this, the Commission advocated tracking how much of GDP was made up of net national disposable income.

In an article in July 2009, entitled “Reassessing Singapore’s economic future”, economist Manu Bhaskaran noted that Singapore had one of the highest per capita incomes in the world, at US$37,597 in 2008. But Singapore also had a very unequal distribution of that high income — profits took about 46% of GDP, which was very high in comparison with most developed economies. The available data also showed that foreign-owned companies received almost half of the extraordinarily high profit share. That left “an unusually low share” of the GDP cake for the average Singapore citizen, whether he is an employee or a businessman.

Third, the Stiglitz Commission recommended a shift of emphasis from “production-oriented” factors to focusing on the well-being of current and future generations, i.e. toward broader measures of social progress.  In this light, other important factors to track include living standards for families, environment (present and future conditions), and the levels of economic insecurity in the population.  How unequal a society was must also be watched seriously.

Sir, in our quest for economic growth, we should also really reflect on what has happened to Singapore over the last 5 years.

The last 5 years

The Finance Minister hailed the period of so-called high growth from 2005 to 2008 as one which saw median incomes rise.  However, that was also the period of overheating when business costs escalated e.g. CBD office rents tripled (BT 24/2/10).  The period also saw about nearly 700,000 more people added to our population, mostly foreigners.  On a tiny island of 700 sq km, such an influx must create stresses and problems.

First, from 2006 to 2009, a short span of 3 years, the % of Singapore citizens in the population fell from 70% of the total population to just 64%, lower than 2/3.  Overnight, Singaporeans felt like strangers in their own neighborhoods, surrounded by people with different lifestyles, habits and accents.

Second, our population density at 5 million is about 7,000 persons per square km.  The crowds on public transport, the roads, and entertainment outlets are overwhelming.  Indeed, it was reported in the New Zealand Herald in January that the NZ government intended to target Singaporean migrants, using various reasons including our high population density.  Do we really need to grow our population to 6.5 million as MND is planning for?  Some of the most competitive economies in the world such as Finland and Denmark have populations of just over 5 million.

Third, there is competition for jobs.  Allowing in unskilled foreign workers depressed the wages of lower-skilled Singaporeans, especially the older and more vulnerable.

Fourth, the surge of foreigners has increased demand for housing exponentially, driving up flat prices as well as rentals.  Though PRs make up only 4% of HDB flat owners, certain real estate firms report that about 20% of their business is made up of PRs wanting to buy resale flats.   Private property owners too see resale HDB flats as good investments due to the high demand for rented accommodation from foreigners working and even studying here (ST Feb 13, 2010).

Such a huge inflow of people in a short space of time showed up in surging rental costs, higher inflation and worsening congestion. While I agree that we need foreigners here to augment our population and talent pool, the pace and scale of the influx in last few years was wrong.  I had already cautioned against this at the Opening of Parliament in 2006.  The government should have done better planning, graduated the inflows and planned for space and resources.  To many Singaporeans, the quality of life has fallen.

Income Gap

Meanwhile, there emerges a group of Singaporeans who just cannot keep up with the relentless pace of `growth’.  Our Gini coefficient has been rising steadily throughout the last decade and is now at 0.478, or 0.453 after government transfers.  This puts us in the league of developing countries and way below other developed Asian countries such as Japan and Korea.  Increasing numbers of distressed families are applying for rental housing, rising numbers are flocking to the CDCs for assistance, and the number of homeless is on the rise.  Poor families are much more likely to have relatives in prison or on drugs. I have seen how some of my students struggle to concentrate on their studies when their families run into serious financial problems and have to sell their home.  Some parents pressure their kids to quit school to work.

We should not dismiss increasing inequalities as inevitable.  While some inequality is needed to encourage ambition, greater inequalities have been shown to be linked to higher divorce and crime.  If inequalities are serious, and prolonged, it will reduce inter-generational mobility, leading to children born into poverty, with little hope of getting out.  In a recent book “The Spirit Level: Why Greater Equality Makes Societies Stronger”, the British social scientists Richard Wilkinson and Kate Pickett note that what makes a society cohesive is not whether it is overall rich or poor.  Wide economic inequality fosters societal breakdown by boosting insecurity and anxiety, leading to divisive prejudice between the classes, rampant consumerism, and all manner of mental and physical suffering.  Singapore was not mentioned in flattering terms in the book.

If inequalities in Singapore continue at such levels, we should seriously question whether our policies of promoting equality of opportunity are really working.

Conclusion

Our ultimate aim of growth is to improve the welfare of all citizens.  I have touched on why GDP is not an adequate indicator and how the government’s pursuit of growth in the recent years has had serious side-effects on the quality of life, and social cohesion.

We should go for a pace of growth which will enable us to remain united as a nation, where we can say that even our most vulnerable have a good standard of life.  If Singapore aims to be a distinctive global city, Singaporeans must believe in it too.

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

10 thoughts on “Growth must improve welfare of Singaporeans: Sylvia Lim”

  1. That was a very good speech by Slyvia – a good summary of all that has gone not so well with PAP policies.

    If you don’t mind me asking, did Slyvia write that speech herself …does the Workers’ party have a team of speech writers and researchers to do that?

  2. Good try, Sylvia. Eager to know what is the response to her speech.
    While we applaud the work of the best, the best measure of performance is always how the worst fare.

  3. Lucky – Yes Sylvia wrote most of it herself, with a little help and research from yours truly. We do have a few members who help with speeches and research. Join us and help us too! We need all the help we can get. :)

  4. Suddenly I read in today’s Shitty Times : “a low income family CAN receive transfers of up to S$460,000 over a lifetime”, presumably by courtesy of the PAP govt of today,.

    Notice they used the word “CAN” means that there is neither certainty nor responsibility if it is not true.

    There are 1001 things that many of us CAN do. We CAN strike the lottery if we are lucky. We CAN go to heaven if we are religious enough. We CAN be the Prime Minister if our father is powerful enough. We CAN be CEO of a company if we have the right connnections.

    Really beats me that when they run short of ideas, it seems that they CAN really be calculative if they choose to, never mind that it is their obligation in the first place.

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