Jan 02, 2014
ASK: NUS ECONOMISTS
By Davin Chor, For The Straits Times
To what extent have low blue-collar wages and rising inequality in Singapore been the result of foreign worker inflows?
THE link between foreign workers and local wages has been a hot-button topic. It is also clearly an issue in which many Singaporeans feel they have a stake. Rightly or wrongly, the slow growth in blue-collar wages and the accompanying rise in inequality over the past decade have been pinned on the influx of foreign workers.
This "conventional wisdom" was recently challenged in an article written by Professor Hoon Hian Teck - entitled Relook Link Between Low Wages And Foreign Workers - published in The Straits Times on Nov 27 last year.
His argument can be summarised as follows: The stagnation of wages at the low end of the income distribution began between 2000 and 2004. This was the result of the Singapore economy being hit by the bursting of the dot.com bubble and the Sars crisis.
However, the growth in the non-resident workforce only accelerated after 2005. Given this timing, it is argued, the influx of foreign workers could not have been the root cause of our blue-collar wage woes.
So did the presence of foreign workers not matter at all? Or is there still some truth to the conventional wisdom? The reality, I believe, lies somewhere in between.
I agree with Prof Hoon's view that there are deeper forces at play that are not fully appreciated in the ongoing debate on wages in Singapore. These issues have to do with the underlying economic restructuring that Singapore has to undergo to stay relevant in the global economy. As Prof Hoon points out, this is a process that has favoured growth in our services sector at the expense of manufacturing.
The stark reality is that these structural changes have also favoured skilled workers over their less skilled counterparts. Being "skilled" now means possessing computer literacy, or being able to use IT tools (such as e-mail and Microsoft Word) that drive any modern workplace. A worker with such capabilities would inevitably be more nimble in making a job transition between sectors than, for example, someone whose primary skill set was working on a specific production line machine.
Consequently, less skilled workers are now in a more vulnerable position. Even if we had hypothetically held constant the number of foreign workers in Singapore, our less skilled resident workers would still have had to play catch-up.
That said, one should not understate the effects of foreign workers on our local labour market. As the Singapore economy embarked on this restructuring, the upswing in the business cycle around 2005-2006 led to a rise in demand for labour. This demand was met by admitting larger numbers of foreign workers. But there were two key differences this time compared to past recovery episodes.
The first difference was that in the 1990s, our foreign worker policy could be described more as a "guest worker" policy. More workers would be permitted during the growth phase of a business cycle to accommodate the rise in labour demand. But these numbers would also be adjusted downward when recessions came.
For example, during the Asian financial crisis in the late 1990s and the Sars episode in 2003, the size of our non-resident workforce actually shrank. This helped to cushion the negative effects of these slowdowns on our resident workers, for example by sparing some of them from being laid off.
Since 2006, however, our non-resident workforce has grown through all phases of the business cycle, expanding even during the global financial crisis (although the rate of increase did moderate during those years). What this means is that the non-resident workforce is now a much more permanent part of the labour force landscape. It is therefore harder to ignore how non-resident and resident workers affect each other.
The second difference is that since 2006 we have also seen the entry of foreign workers into several non-tradable service sectors, such as cleaning, food and beverages, as well as the wholesale and retail sectors. These were industries that previously were staffed mainly by resident workers. But the pressing need for labour meant that foreign workers were eventually recruited too.
While wages did grow on average in Singapore after 2006, it is less clear that workers in all sectors benefited equally. More studies are needed to look at the detailed industry and occupational wage data to better understand how foreign workers affected the local workforce in these sectors. A natural hypothesis is that resident unskilled wages would have been even more adversely affected had government schemes such as the Workfare Income Supplement not been introduced.
If there is an underlying lesson in this, it is that there is a need to be careful and vigilant in the policies the Government adopts as the economy restructures. Foreign workers are an important complement to our workforce. But it makes sense to monitor their quantity - and quality - more judiciously to avoid unintended socio-economic consequences.
Equally important is the need to pursue policies designed to re-skill the resident workforce, so that low-wage Singaporeans will continue to play an active role in transforming our economy.
The writer is an associate professor in the Department of Economics, National University of Singapore.
[You may also wish to see point #4 of this article, which provides a perspective on low wages and unskilled workers.
The problem is that low skilled workers will always be at a disadvantage. If you have no skills or the skills you need to carry out the work can easily be taught in an hour or a day, then why should anyone pay you more than what any other "no-skill" worker is willing to work for? No-skill workers are plentiful. And when there are a lot of them, why should they be paid a premium. Workers are "selling" their labour, and employers are "buying" their labour, but if the labour is unskilled, the employers want to get a good deal and get labour as cheaply as it can.
But is that exploitation?
Let's take cleaners at a hawker centre. The "market rate" for cleaners is about $800 - $1000. However, paying this rate will mean few takers, because most of the unskilled workers are older persons with lower stamina and energy. They are less likely to be able to take up "3D jobs" - difficult, dangerous, and dirty/demeaning jobs. Cleaning is a difficult job in terms of the need for energy and stamina. You may also consider it dirty, and even demeaning. The work environment is also likely to be uncomfortable.
So the "younger" ones with the energy and stamina and the need to support the family will take up these jobs, even at the market rates. The older ones, with weak legs, and lower energy would never take up these jobs at whatever salary.
But what if you automate and mechanise?
Good question. Very few innovations have been introduce to the cleaning industry. The last one was probably the trolley for cleaners to clear the tables. But the solution is to approach the issue holistically. Trolleys are great ideas until you try to navigate the narrow spaces between chairs and tables. Automation and labour saving processes cannot be an afterthought. It has to be integrated into the system and infrastructure from the start.
BUT, here is the interesting contradiction: with scarce supply, prices should go up. There is a scarcity of low wage workers, particularly for cleaners. Employers have persistent vacancies. What have they NOT raise wages to attract more people into the sector? Is the supply of cleaners so inelastic? Is there some "ceiling" on what employers are willing to pay? Employers have said that they cannot raise salaries because then they can't make competitive bids, and they can't get contracts, and they go out of business.
Rather, it is best to not be the first mover. Let their competitors bid high, lose contracts, go out of business, and reduce competition, free up their cleaning staff to be hired by other cleaning companies, who can then bid competitively and continue to survive in the business.
Prisoner's Dilemma for the cleaning companies.
Well, now the govt has set de factor minimum wage for cleaners. Let's see how that works. It would seem promising. On paper.]
Friday, January 31, 2014
Terrorism : An Imaginary War
Jan 31, 2014
Don't fall for a terrorist's bait
WHAT happened on Sept 11, 2001, when Al-Qaeda suicide terrorists crashed aircraft into New York's World Trade Centre, was tragic.
But the United States' response the following day created a new set of problems, says Professor Mark Juergensmeyer, an expert on religious violence.
That was the day the US described the attack as "an act of war".
"It bit the bait Osama bin Laden had laid for the US. I thought to myself, 'Why on earth are we promoting the ideology of Osama bin Laden?'.
"By going for the military solution, we validated bin Laden's view with our own rhetoric and actions," he says.
The US decision later to invade Afghanistan and Iraq gave more credibility to Osama's propaganda and he painted a picture of America as an enemy of Islam and a vile foe that tortured captured Muslim terrorists.
A better option would have been to fight the terrorists using non-military methods from civil jurisdictions.
The US should have used the police to hunt down the terrorists and brought the perpetrators before the courts, he believes.
"People like Osama bin Laden should not be given the credibility of a great statesman who can engage in a war against the US.
"Bin Laden should have been regarded as a petty little burglar and a vicious killer that he was. He should have been brought to justice in a court of his peers and shown to be the simple little egomaniac that he was," he says.
But when the US fought him on his terms, it entered into war with him, turning the imaginary war in Osama's mind into a real one.
"The key lesson is not to buy into the terrorists' language and not bring the battle to their level.
"Once you do that, you lose," says Prof Juergensmeyer.
Jan 31, 2014
OLD WAR, NEW METHODS
Battling cosmic wars in the minds of terrorists
By M. Nirmala
"MR MARK, you just don't get it. All of you are like sheep!
"There's a war going on, a battle between good and evil. You just don't see it. Your government will not let you see it."
It was 1997, and the speaker was red-haired Egyptian terrorist Mahmud Abouhalima.
Mahmud had been sentenced to 240 years in jail for his role in masterminding the February 1993 explosion at New York's World Trade Centre, which killed six people and injured about 1,000.
Surrounded by a dozen heavily armed prison officers, the unrepentant terrorist was being interviewed in the United States by Professor Mark Juergensmeyer, an American expert in the study of religious violence, who is now 72.
The soft-spoken, silver-haired professor had just asked Mahmud why he resorted to terrorism in the name of religion.
Mahmud then leaned over to the don, a move that prompted prison officers to dive in to protect the visitor.
Mahmud sneered: "Mr Mark, we need to make you see. We need to take you by the shoulders and shake you until you are awake."
The professor then asked if that was why terrorists carried out bombings.
The convict leaned back, and gave a blood-curdling reply: "Well, now you know, Mr Mark. Now you know."
Terrorists, Prof Juergensmeyer explained recently in an interview with The Straits Times, see themselves as soldiers in a cosmic war who use terror tactics, including blowing up buildings and people, to draw people into the battle.
The problem is that the war is an imaginary one. It exists only in their minds.
This is why terrorists commit their acts: to make the war in their minds come real for others.
At the time of the interview, Mahmud was regarded as one of the most dangerous terrorists in the world.
He had also been linked to the plot to kill Egyptian leader Hosni Mubarak and the murder of the militant Zionist rabbi Meir Kahane.
"He has blood on his hands," says the academic.
An odd relationship
PROF Juergensmeyer, who is the director of the Orfalea Centre for Global and International Studies, has criss-crossed the world for over 30 years, studying religious violence.
His work combines sociology, politics and theology. He is also an affiliate professor of religious studies at the University of California, Santa Barbara.
Included in a long list of 20 books he has written is one titled Terror In The Mind Of God.
It contains interviews with Mahmud and others, including abortion clinic bombers in the United States.
The professor explains that in times of transition like today, people feel uneasy about issues such as who they are; who is responsible for the state of the world; and how safe they feel.
These issues of identity, security and accountability are the driving forces that propel a minority into terrorism.
The big change in people's lives now is globalisation, a development that has caused many people to ask questions about their own identity and responsibilities.
Such uneasiness provides fertile ground for religious extremists to plant their ideas about violence, says the professor.
A terrorist declares a cosmic war against those who stand in his way.
When his enemy fails to see his imaginary war, he goes berserk.
"It drives them nuts when we, and others from their own faith, do not see this war," Prof Juergensmeyer discloses.
Terrorists thus use terror attacks as a signal that the war they are waging has begun.
This happened when Japan's Aum Shinrikyo cult members launched a sarin gas attack on a Tokyo subway in 1995. Thirteen people died.
The attack rattled the Japanese public who had ignored warnings by the cult's leader that the world was coming to an end. It also signalled to cult members that they were heading towards Armageddon, says the don.
A vexing problem
PROF Juergensmeyer was in Singapore last week as a distinguished visiting fellow at a seminar on religious extremism and violence, organised by the Centre of Excellence for National Security (CENS).
The centre studies closely the growing number of religiously motivated incidents of violence in South-east Asia.
CENS chief Kumar Ramakrishna says religious extremist leaders like Myanmar's Wirathu and Indonesia's Abu Bakar Bashir also exploit nationalist sentiments to get their followers to commit violent acts.
For example, Wirathu has exploited the fear of Buddhists who believe that economically well-off Muslims, a minority group, will replace Buddhism with Islam in Myanmar.
"The case of Wirathu highlights the vexing nexus between non-violent extremist rhetoric and real-world violence," states Prof Kumar.
He says that some who study religious conflicts in the region downplay the role of religion in these struggles, in favour of placing more emphasis on what they see as essentially nationalist issues.
He argues that the issue of religion should be brought to the fore and dealt with by the authorities.
That is why the empirical findings of academics like himself on the issue are important, he says.
The visiting professor adds that terrorists who resort to violence are performing a form of street theatre, albeit a violent one.
"A good drama draws the audience into the play, and that is exactly what terrorists do each time," he says.
But one must never buy into their message, he warns.
Terror wars will end
THE professor, an optimist, predicts that the problem of terrorism will vanish one day.
Warriors in previous epic wars waged battle in the name of God to protect their land and people.
Since today's terror wars are imaginary ones, the battle can be won, provided countries do not play into the hands of terrorists, he cautions.
"Don't go for military solutions. Leave it to the police to hunt down the terrorists and the courts to pass judgment. When you don't exaggerate the problem, the problem will go away.
"Religiously motivated terrorism will one day dissipate as quickly as it was created, just like a summer storm.
"An image of cosmic war is like that. We must not get caught up in this imagined war," he says.
M. NIRMALA
Don't fall for a terrorist's bait
WHAT happened on Sept 11, 2001, when Al-Qaeda suicide terrorists crashed aircraft into New York's World Trade Centre, was tragic.
But the United States' response the following day created a new set of problems, says Professor Mark Juergensmeyer, an expert on religious violence.
That was the day the US described the attack as "an act of war".
"It bit the bait Osama bin Laden had laid for the US. I thought to myself, 'Why on earth are we promoting the ideology of Osama bin Laden?'.
"By going for the military solution, we validated bin Laden's view with our own rhetoric and actions," he says.
The US decision later to invade Afghanistan and Iraq gave more credibility to Osama's propaganda and he painted a picture of America as an enemy of Islam and a vile foe that tortured captured Muslim terrorists.
A better option would have been to fight the terrorists using non-military methods from civil jurisdictions.
The US should have used the police to hunt down the terrorists and brought the perpetrators before the courts, he believes.
"People like Osama bin Laden should not be given the credibility of a great statesman who can engage in a war against the US.
"Bin Laden should have been regarded as a petty little burglar and a vicious killer that he was. He should have been brought to justice in a court of his peers and shown to be the simple little egomaniac that he was," he says.
But when the US fought him on his terms, it entered into war with him, turning the imaginary war in Osama's mind into a real one.
"The key lesson is not to buy into the terrorists' language and not bring the battle to their level.
"Once you do that, you lose," says Prof Juergensmeyer.
Jan 31, 2014
OLD WAR, NEW METHODS
Battling cosmic wars in the minds of terrorists
By M. Nirmala
"MR MARK, you just don't get it. All of you are like sheep!
"There's a war going on, a battle between good and evil. You just don't see it. Your government will not let you see it."
It was 1997, and the speaker was red-haired Egyptian terrorist Mahmud Abouhalima.
Mahmud had been sentenced to 240 years in jail for his role in masterminding the February 1993 explosion at New York's World Trade Centre, which killed six people and injured about 1,000.
Surrounded by a dozen heavily armed prison officers, the unrepentant terrorist was being interviewed in the United States by Professor Mark Juergensmeyer, an American expert in the study of religious violence, who is now 72.
The soft-spoken, silver-haired professor had just asked Mahmud why he resorted to terrorism in the name of religion.
Mahmud then leaned over to the don, a move that prompted prison officers to dive in to protect the visitor.
Mahmud sneered: "Mr Mark, we need to make you see. We need to take you by the shoulders and shake you until you are awake."
The professor then asked if that was why terrorists carried out bombings.
The convict leaned back, and gave a blood-curdling reply: "Well, now you know, Mr Mark. Now you know."
Terrorists, Prof Juergensmeyer explained recently in an interview with The Straits Times, see themselves as soldiers in a cosmic war who use terror tactics, including blowing up buildings and people, to draw people into the battle.
The problem is that the war is an imaginary one. It exists only in their minds.
This is why terrorists commit their acts: to make the war in their minds come real for others.
At the time of the interview, Mahmud was regarded as one of the most dangerous terrorists in the world.
He had also been linked to the plot to kill Egyptian leader Hosni Mubarak and the murder of the militant Zionist rabbi Meir Kahane.
"He has blood on his hands," says the academic.
An odd relationship
PROF Juergensmeyer, who is the director of the Orfalea Centre for Global and International Studies, has criss-crossed the world for over 30 years, studying religious violence.
His work combines sociology, politics and theology. He is also an affiliate professor of religious studies at the University of California, Santa Barbara.
Included in a long list of 20 books he has written is one titled Terror In The Mind Of God.
It contains interviews with Mahmud and others, including abortion clinic bombers in the United States.
The professor explains that in times of transition like today, people feel uneasy about issues such as who they are; who is responsible for the state of the world; and how safe they feel.
These issues of identity, security and accountability are the driving forces that propel a minority into terrorism.
The big change in people's lives now is globalisation, a development that has caused many people to ask questions about their own identity and responsibilities.
Such uneasiness provides fertile ground for religious extremists to plant their ideas about violence, says the professor.
A terrorist declares a cosmic war against those who stand in his way.
When his enemy fails to see his imaginary war, he goes berserk.
"It drives them nuts when we, and others from their own faith, do not see this war," Prof Juergensmeyer discloses.
Terrorists thus use terror attacks as a signal that the war they are waging has begun.
This happened when Japan's Aum Shinrikyo cult members launched a sarin gas attack on a Tokyo subway in 1995. Thirteen people died.
The attack rattled the Japanese public who had ignored warnings by the cult's leader that the world was coming to an end. It also signalled to cult members that they were heading towards Armageddon, says the don.
A vexing problem
PROF Juergensmeyer was in Singapore last week as a distinguished visiting fellow at a seminar on religious extremism and violence, organised by the Centre of Excellence for National Security (CENS).
The centre studies closely the growing number of religiously motivated incidents of violence in South-east Asia.
CENS chief Kumar Ramakrishna says religious extremist leaders like Myanmar's Wirathu and Indonesia's Abu Bakar Bashir also exploit nationalist sentiments to get their followers to commit violent acts.
For example, Wirathu has exploited the fear of Buddhists who believe that economically well-off Muslims, a minority group, will replace Buddhism with Islam in Myanmar.
"The case of Wirathu highlights the vexing nexus between non-violent extremist rhetoric and real-world violence," states Prof Kumar.
He says that some who study religious conflicts in the region downplay the role of religion in these struggles, in favour of placing more emphasis on what they see as essentially nationalist issues.
He argues that the issue of religion should be brought to the fore and dealt with by the authorities.
That is why the empirical findings of academics like himself on the issue are important, he says.
The visiting professor adds that terrorists who resort to violence are performing a form of street theatre, albeit a violent one.
"A good drama draws the audience into the play, and that is exactly what terrorists do each time," he says.
But one must never buy into their message, he warns.
Terror wars will end
THE professor, an optimist, predicts that the problem of terrorism will vanish one day.
Warriors in previous epic wars waged battle in the name of God to protect their land and people.
Since today's terror wars are imaginary ones, the battle can be won, provided countries do not play into the hands of terrorists, he cautions.
"Don't go for military solutions. Leave it to the police to hunt down the terrorists and the courts to pass judgment. When you don't exaggerate the problem, the problem will go away.
"Religiously motivated terrorism will one day dissipate as quickly as it was created, just like a summer storm.
"An image of cosmic war is like that. We must not get caught up in this imagined war," he says.
M. NIRMALA
Wednesday, January 29, 2014
Avoid making meritocracy a dirty word, says Heng
TODAY
29 Jan 2014
By Siau Ming En
SINGAPORE — Society must avoid making meritocracy a “dirty word”, said Education Minister Heng Swee Keat as he discussed the subject of social mobility at a conference yesterday.
The minister was responding to a question on how Singapore could build an open and compassionate meritocracy at the Singapore Perspectives conference, organised by the Institute of Policy Studies (IPS)
“I think it’s important that in Singapore, meritocracy does not become a dirty word,” said Mr Heng.
Whether in schools or in the workplace, he said maintaining a system of selection that was based on a person’s performance and ability was “the right thing to do”. Every effort, however, should be made to help everyone “ride the wave of globalisation” and assistance should be provided to those who needed it so no one gets left behind, said Mr Heng.
He also noted the “special place” that the national language of Malay has in society here.
“I think in many of our schools, for instance, quite a number of students now take conversational Malay in the schools. And what we need to do is find more opportunities for them to learn,” he said.
During the dialogue, IPS Senior Research Fellow Dr Gillian Koh asked if a good pre-school education or the use of education platforms would help Singapore keep a healthy rate of social mobility. Mr Heng said even a first-rate pre-school system was not the “magic bullet” to ensuring social mobility. Nevertheless, he said all areas of education could be enhanced, from pre-schools to higher institutes of learning.
“(We need) to recognise that there are broader forces of work for the economy that we need to take care of. And unless we continue to restructure the economy, unless we continue to create good jobs, a good education system by itself does not solve the problem,” he said.
The education minister also said he was considering introducing computer programming in schools, not to make everyone a “programming geek”, but to help Singapore harness the impact of technology. Looking forward, former Aljunied MP Zainul Abidin Rasheed also asked Mr Heng how Singapore could balance politics, contest and consensus in a way that would help it continue to be a success story in the next five to 10 years. Mr Heng said while a greater contest sharpened the ability to deliver policies, he noted that it does not necessarily lead to “better results” for the society.
“Being able to work together, being able to take the country forward should not be a matter of just contest among political parties. I think it should be a collective effort, it should not necessarily be (an) antagonistic contest, (so) that we are able to harness the creative energy of people to solve any challenges,” said the minister.
29 Jan 2014
By Siau Ming En
SINGAPORE — Society must avoid making meritocracy a “dirty word”, said Education Minister Heng Swee Keat as he discussed the subject of social mobility at a conference yesterday.
The minister was responding to a question on how Singapore could build an open and compassionate meritocracy at the Singapore Perspectives conference, organised by the Institute of Policy Studies (IPS)
“I think it’s important that in Singapore, meritocracy does not become a dirty word,” said Mr Heng.
Whether in schools or in the workplace, he said maintaining a system of selection that was based on a person’s performance and ability was “the right thing to do”. Every effort, however, should be made to help everyone “ride the wave of globalisation” and assistance should be provided to those who needed it so no one gets left behind, said Mr Heng.
He also noted the “special place” that the national language of Malay has in society here.
“I think in many of our schools, for instance, quite a number of students now take conversational Malay in the schools. And what we need to do is find more opportunities for them to learn,” he said.
During the dialogue, IPS Senior Research Fellow Dr Gillian Koh asked if a good pre-school education or the use of education platforms would help Singapore keep a healthy rate of social mobility. Mr Heng said even a first-rate pre-school system was not the “magic bullet” to ensuring social mobility. Nevertheless, he said all areas of education could be enhanced, from pre-schools to higher institutes of learning.
“(We need) to recognise that there are broader forces of work for the economy that we need to take care of. And unless we continue to restructure the economy, unless we continue to create good jobs, a good education system by itself does not solve the problem,” he said.
The education minister also said he was considering introducing computer programming in schools, not to make everyone a “programming geek”, but to help Singapore harness the impact of technology. Looking forward, former Aljunied MP Zainul Abidin Rasheed also asked Mr Heng how Singapore could balance politics, contest and consensus in a way that would help it continue to be a success story in the next five to 10 years. Mr Heng said while a greater contest sharpened the ability to deliver policies, he noted that it does not necessarily lead to “better results” for the society.
“Being able to work together, being able to take the country forward should not be a matter of just contest among political parties. I think it should be a collective effort, it should not necessarily be (an) antagonistic contest, (so) that we are able to harness the creative energy of people to solve any challenges,” said the minister.
Tuesday, January 28, 2014
Rethinking ways of dealing with inequality
TODAYonline
27 January
An American philosopher, CL Stevenson, coined the term “persuasive definition” for attempts to smuggle in contentious views in the guise of defining terms. An example would be defining democracy in terms of universal franchise.
We now have a danger, not so much of persuasive definitions as of persuasive abstract nouns, the one most in vogue being “inequality”.
This has become a cliche subject in the social sciences. The assumption being smuggled in is that equality is a normal state of affairs, departures from which have to be justified.
In fact, this type of discussion actually harms those whom it is intended to benefit. For once it is realised that true equality is possible only in the grave (and not even there — Mozart was buried in a paupers’ cemetery), it is all too easy to divert attention from genuinely disturbing changes in the distribution of income and wealth.
Debating points against egalitarians are not hard to find. Whose income is meant to be equalised, the individual citizen or the family? Are those with limited capacity for satisfaction — whether for physical or psychological reasons — to be given more or less than the average?
RISING TIDE DOESN’T LIFT ALL BOATS
Non-egalitarians used to make great play with sums purporting to show how little the average citizen — or even those at the bottom of the income and wealth distribution — would gain if the better-off were deprived of their excess earnings or wealth. This led to the charge that egalitarians were motivated by jealousy and envy.
More positively, it was said that “a rising tide lifts all boats”. An unemployed labourer in the west has access to all manner of services, from television to modern medical treatments, unavailable to King Edward VII.
This line of defence is no longer available. Some estimates suggest, for instance, that there has been no rise in average United States real wages since 1970. In the United Kingdom, there has been similar stagnation or worse. Even in relatively egalitarian Scandinavian countries, there has been a squeeze on real earnings.
One can speculate forever on the forces behind these trends. One of the plausible candidates is the impact of new technology, which has put the squeeze on a mass of workers, white-collar as well as manual. But I doubt if this would have been enough without the impact of globalisation, which has brought billions of poorer workers from Asia into competition with their brethren in Europe and North America.
Some academics say that there has been an increase in inequality inside certain countries offset by greater equality between them. But that is only to redescribe the problem.
REMEDIES BETTER OR FOR WORSE?
Many of the remedies advanced by the left would only make things worse. And the right are inclined to copy them.
For instance, in Britain, we have had the strange spectacle of a conservative chancellor, who is not on the progressive wing of his party, urging a rise in the minimum wage. A medical acquaintance of mine, with no pretensions to economic expertise, immediately saw through this ploy: If earnings rose, more tax would be gathered. Even if many of those immediately affected were below the tax threshold, an increase at the bottom might raise the whole earning structure in nominal terms and thus benefit the exchequer.
There was a time when right-wing academics were quick to point out that an increase in the cost of labour would put more people out of work. In any case, tackling the problem by pushing up wages would increase costs and make matters worse.
This could be offset by devaluations. But what would then become of the inflation targets on which governments have set such store? And would real wages benefit? A devaluation is normally regarded as a way of cutting real wages by the back door.
Many of the other suggestions for easing the pressure on the mass of wage-earners belong to the list of worthy policies that have been espoused by most governments since the end of World War II, if not even earlier. Some of them echo the less successful aspects of Franklin Roosevelt’s New Deal, an example being the rebuilding of union strength.
I would look at much simpler ideas. Inequality on most conventional measures would be reduced if tax thresholds affecting the poor were raised and selected social security benefits increased. Whether the cash for these changes should come from more taxes on the middle and upper ranges or be paid out of budget deficits ought to depend on the economic conjuncture. How far one can use fiscal measures to distribute income and wealth more evenly depends in part on the geographical scale of the action. A government of a small or medium-sized country acting on its own does risk losing entrepreneurs to foreign lands where taxes are lower — but the more countries act in concert the less likely these bolt-holes are to be used.
The Financial Times Limited
ABOUT THE AUTHOR:
Sir Samuel Brittan has been an economic commentator with the Financial Times since 1966.
Monday, January 27, 2014
Tight labour market continues to push up number of job vacancies
27 Jan 2014
SINGAPORE: The tight Singapore labour market continues to push up the number of job vacancies.
The latest Manpower Ministry figures show that vacancies stood at 61,900 in September 2013 -- 9.7 per cent more than a year before.
Consistent with prevailing trends, the services sector continued to generate the bulk of job openings, making up four in five of all vacancies in 2013.
Overall, there were openings across all occupational groups.
SINGAPORE: The tight Singapore labour market continues to push up the number of job vacancies.
The latest Manpower Ministry figures show that vacancies stood at 61,900 in September 2013 -- 9.7 per cent more than a year before.
Consistent with prevailing trends, the services sector continued to generate the bulk of job openings, making up four in five of all vacancies in 2013.
Overall, there were openings across all occupational groups.
Adding diversity to the university scene
Jan 23, 2014
First there were two. Then the third came along in 2000. Today, there are six universities. With stiffer competition for students, each is now building up niche strengths, with some offering residential and overseas stints to all students.
By Sandra Davie Senior Education Correspondent
A-LEVEL school leavers and polytechnic graduates applying for a university place this year are faced with the difficult but happy problem of having to choose from a range of higher education options.
Parents are also struck by the myriad of choices available. Madam R. Saroja, an alumnus of National University of Singapore whose son is applying for a university place this year said: "When I applied to university in the 80s, it was just NUS or NTU (Nanyang Technological University), which was then Nanyang Technological Institute, and did only engineering.
"And since I wanted to do an arts degree, the only university I could go to was NUS.
"Compare that to my son who wants to do engineering or business, or combine both. He has six universities and 12 different degrees to choose from and all of them sound good. I wish I was back in university."
First there were two. Then the third came along in 2000. Today, there are six universities. With stiffer competition for students, each is now building up niche strengths, with some offering residential and overseas stints to all students.
By Sandra Davie Senior Education Correspondent
A-LEVEL school leavers and polytechnic graduates applying for a university place this year are faced with the difficult but happy problem of having to choose from a range of higher education options.
Parents are also struck by the myriad of choices available. Madam R. Saroja, an alumnus of National University of Singapore whose son is applying for a university place this year said: "When I applied to university in the 80s, it was just NUS or NTU (Nanyang Technological University), which was then Nanyang Technological Institute, and did only engineering.
"And since I wanted to do an arts degree, the only university I could go to was NUS.
"Compare that to my son who wants to do engineering or business, or combine both. He has six universities and 12 different degrees to choose from and all of them sound good. I wish I was back in university."
How to help the poor? Go figure
Jan 23, 2014
By Peter A. Coclanis For The Straits Times
QUESTIONS relating to poverty and rising levels of inequality are popping up with increasing frequency all over the developed world.
Concerns over poverty and inequality have roiled Singapore as well. Indeed, an increasingly lively public debate has arisen over these issues, their causes and concomitants. Few domestic issues are as important or potentially explosive as poverty and inequality. Few are also more difficult to get a handle on. It is extremely hard to reach a consensus on how to define, much less measure, poverty and inequality. It is even more difficult to understand the root causes and the most effective approaches to amelioration.
Whether one refers to minimum income thresholds, basic material needs, or civic inclusion and capabilities goes a long way in determining what proportion of a population will be considered impoverished. Then there is the question of whether to set a hard-and-fast poverty line or employ broader and more elastic concepts such as poverty ranges and bands in an attempt to include populations clustered around (above or below) some level of income or capability.
Even when there is agreement on the proper criteria to employ in calculating poverty levels, accurate measurement - and interpretation - of poverty figures will still depend a lot on demographic factors. Demography may not be destiny but the age structure of the population in question and the population in the denominator can make huge differences in poverty assessments.
In a country such as Singapore, household income figures would likely change significantly if households headed by retirees - currently about 6 per cent of the total number - were included.
By Peter A. Coclanis For The Straits Times
QUESTIONS relating to poverty and rising levels of inequality are popping up with increasing frequency all over the developed world.
Concerns over poverty and inequality have roiled Singapore as well. Indeed, an increasingly lively public debate has arisen over these issues, their causes and concomitants. Few domestic issues are as important or potentially explosive as poverty and inequality. Few are also more difficult to get a handle on. It is extremely hard to reach a consensus on how to define, much less measure, poverty and inequality. It is even more difficult to understand the root causes and the most effective approaches to amelioration.
Whether one refers to minimum income thresholds, basic material needs, or civic inclusion and capabilities goes a long way in determining what proportion of a population will be considered impoverished. Then there is the question of whether to set a hard-and-fast poverty line or employ broader and more elastic concepts such as poverty ranges and bands in an attempt to include populations clustered around (above or below) some level of income or capability.
Even when there is agreement on the proper criteria to employ in calculating poverty levels, accurate measurement - and interpretation - of poverty figures will still depend a lot on demographic factors. Demography may not be destiny but the age structure of the population in question and the population in the denominator can make huge differences in poverty assessments.
In a country such as Singapore, household income figures would likely change significantly if households headed by retirees - currently about 6 per cent of the total number - were included.
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