High rates of growth used to be a key pillar in the Singapore story. Today, the world economy is in a parlous state and the country’s outlook for this year has been trimmed to a low of 1 to 3 per cent.
While a technical recession was narrowly avoided, some remain worried about how to sustain this growth going forward.
Yet, an increasing segment of Singaporeans question whether growth is still needed.
More seem amicable to letting things slow down, and giving more focus to questions of equity and work-life balance. Not without reason.
The last decade of heady growth had ill effects. Price and asset inflation have stretched affordability. Studies show that Singaporeans work longer hours than even their Hong Kong and New York counterparts. Yet, salaries for many — new graduates and also middle-level, middle-aged workers —show little increase.
Singaporeans resent the pressure from a restructuring economy as well as from the foreign workers coming in who are willing to work for less. Criticism is also voiced about the social costs of money-spinners like the casinos and those who flip property.
Yet, can we live in a future Singapore without growth?
QUALITY OF DEVELOPMENT
The current euro zone crisis must be considered, where the outlook is, for a few years, of no or slow growth. This is not just about macroeconomics in public sector deficits and bank loans.
Underlying this will be a generation of young just coming out from university, for whom job opportunities are few and far between.
Singaporeans can and should re-examine growth. But there is reason to debate not in terms of the pace of growth but rather on its sources.
In moving ahead, the next phase for Singapore should be more about the quality of our development, both socially and economically, rather than sheer quantity.
We have pursued the economics of more, increasing inputs of land, labour and capital. But now, new strategies must be put in place to build growth from different sources, especially on efficiency and higher productivity. This will usher in the end of cheap labour.
Despite the recent decision to seek more construction workers from the Philippines and Sri Lanka to diversify sources of such labour, overall, the flood of foreign workers will slow, even if the country remains more open than many others.
As the numbers of foreigners we accept is reduced, their skill levels should come up, as should their wages, training and basic protections.
For Singaporeans, they should be given every opportunity to fill the best jobs their skills and ambitions allow. Work-life balance choices must also be made acceptable so that more can contribute at both office and home, and not face a stark either/or choice.
Wages should also move up, in line with other global cities. Increasing productivity and improving work attitudes will be critical so that higher-paid workers are worth the dollar, and not simply overpriced and uncompetitive.
We must be careful not to move from the old ethos of “cheap and good” to the disaster of “expensive and lousy”.
If this can be done, there are social and economic benefits. Inequality and cost of living issues will be better addressed. With more disposable income, Singaporeans will also be able to afford to spend more, and help stoke domestic demand.
While wages go up, the cost of land and, therefore, of rents must be monitored. Otherwise, many businesses — especially start-ups and local businesses — will find it too expensive, and entrepreneurship and innovation will be stifled. What government agencies do in letting and selling lands need to be reconsidered.
Another strategy will be to push out into the region. This has, of course, already started since the 1990s, with a growing network of Singapore-connected industrial parks.
But another wave of deeper economic integration is needed with our neighbours. This must go beyond the Iskandar region in nearby Johor to enable connectivity with many other parts of the Association of South-east Asian Nations as the near abroad. This will require the Government to provide frameworks and the private sector to seek opportunities, as well as the Singaporean worker to become portable, willing to work for spells abroad.
The higher-value parts of businesses will hopefully remain in Singapore, including industrial jobs and a core of non-tradeable services. Singaporeans must gear up and be given the opportunity to prove themselves in those jobs.
THE NEXT LAP
But Singapore will also need to cater to professionals from the region and further abroad to work here.
Singaporeans can be both nationalistic and cosmopolitan concurrently, rather than insecure and insular. This is provided our infrastructure is expanded to avoid the sense of crowding out that triggered resentment.
While Asia is rising, few in the region are developed, post-colonial economies with demonstrable innovation and enterprise to build their own brands and global champions. Singapore must be poised to take this further step forward.
These are but some of the strategies for this next stage — not only for growing the economy but creating a considerably different one. To get there, many transition measures must allow companies and individuals time to adapt.
The next steps will not be easy as there are few clear examples ahead to show the path. Singaporeans have to be ready to face and overcome obstacles ahead. Aiming for growth is not merely an economic ambition but essential for the society and our politics.
Younger Singaporeans should have real hopes for a future that is better than their parents’, and economic growth, driven by the right quality of factors, is a necessity.
Simon Tay and Nicholas Fang are, respectively, Chairman and Executive Director of the Singapore Institute of International Affairs (SIIA). On Jan 17, the SIIA will hold its Annual Members Circle to discuss key trends ahead for Singapore in Asia and the global context. This article first appeared in TODAY on 10th January 2013.