A Model Dilemma - Singapore confronts perils of urbane society

THE BENEVOLENT authoritarianism of Lee Kuan Yew led Singapore to the top of the tree in Asia – its per capita income is higher even than that of the United States. But success brings with it a slew of political and social problems, offering a textbook lesson for other Asian cities  . . .

THE FOUNDING father of independent Singapore, Lee Kuan Yew, can be justifiably proud of how his island nation has turned out over the past three decades.
Singapore is now a developed nation. It had the world’s 10th highest per capita income of US$51,709 in 2012 — ahead of the United States at US$49,922 and Japan at US$46,736 — and is still inching up the ladder.
Home ownership stood at 91 per cent in 2012. Singaporeans enjoy living in the greenest city in Asia— if not in the world. Singapore has dealt with challenges like lack of water by aggressively recycling waste water, through conservation programmes and by building desalination plants.
It manages its waste efficiently, in some instances turning waste into energy, and it takes proactive action to manage the use of energy, the emission of greenhouse gases and so on.
In all these areas, Singapore either imports, or has developed its own cutting-edge technologies. It has pioneered solutions to urban problems, as with controlling its car population through a peak hour levy. Its public transport system and public housing programme are shining examples of efficiency.
The list of Singapore’s achievements is long. And the lifestyle of the average Singaporean is the model to which many of its neighbours would aspire.
Yet in this highly-urbanised State, with its enviable standard of living, the Government is facing a conundrum — a tricky set of mostly social and political problems.
In Singapore today, other Asian countries will find a microcosm of the issues facing all highly successful countries — and unfortunately, money alone will not be able to solve them.
Land is scarce, labour is in short supply, citizens are demanding, and nimbyism is at its finest. So what is a Government to do? Governing is becoming more difficult, with constant chatter on social media threatening to undermine every move taken by authorities.
How Singapore sorts itself out in coming years will provide textbook lessons for Asian cities hoping to aspire to its achievements.
While it has been able to manage its economy skillfully through the global crisis, often sooner than its neighbours, Singapore’s leaders are losing their grip on the electorate.
The 2011 general election sounded an alarm bell, with an unprecedented number of Opposition parties voted into Parliament. The ruling party continued to lose seats in by-elections early this year. Who knows how the next election will turn out, although the majority People’s Action Party, acutely sensitive to the challenge to its longevity, is on a charm offensive.
Social media and the Internet have combined to be the bane of life for governments around Asia. Citizens on social media have discovered it gives them power to influence elections.
In response to public criticism, Singapore’s previously authoritarian Government is leaning to populist policies — and to sounding out public views on important national issues.
One of these is population growth. Singapore needs to address the twin problems of shortages in both skilled and unskilled labour, and a rapidly greying society.
The release of the Government’s Population White Paper in February this year, projecting a population increase to 6.9 million by 2030, unleashed a storm of protest from Singaporeans.
Opposition parties fanned the controversy, saying that Singapore’s population should be capped at six million. Singapore’s population has risen by one million in the past decade to 5.4 million (at June 30 this year).
The reasons for public discontent? Land is scarce, housing is already expensive, and there are strains on infrastructure — roads, schools, trains, hospitals are all overloaded. This is desspite the fact that Singapore is one of the largest spenders (on a per capita basis) on infrastructure projects anywhere in the world.
The debate continues to rankle the Singapore Government.
As a sop to its critics, the Government has started to clamp down on imported labour — in perhaps the first sign of migration protectionism as highlighted by Richard Dobbs of McKinsey & Co (see report pages 8-11).
In fairness, the Government also sees labour rules as a means of pushing up productivity by forcing companies to upgrade — rather than continuing to rely on cheaper imported labour.
Businesses in Singapore — from larger multinationals to Singapore’s own SMEs — have protested vehemently against the cutback on foreign workers, warning darkly of the adverse economic impact. Business needs workers for jobs which Singaporeans are now too well educated to want. Some 50 per cent of Singaporeans are now university graduates, or have professional qualifications.
Singaporeans shy away from lowly-paid office jobs, let alone being prepared to wait on tables, serve at check-out counters or sweep the road and tend to parks and gardens.
Not unexpectedly, the catering and retail sectors were the first to be affected when the screws were tightened on the employment of foreign workers.
Singapore is already an early adopter of automation in manufacturing, and it ranks highly in the employment of robots in its factories.
Now, Singapore businesses are exploring new ways of using technologies to resolve their staff crises. One restaurant chain is said to be assessing the feasibility of using an automated chopping and cooking system.
Labour costs are high in Singapore, in part because of the country’s mandatory superannuation scheme, known as the Central Provident Fund. Employers are required to contribute to the employee’s CPF, based on age, amounts ranging from 6.5 per cent of basic fixed salary for those over 65 years old to 16 per cent for the rest of the workforce.
Because Singaporeans are prone to job-hopping — in a high employment market — employers offer a range of other benefits to retain staff. It is unsurprising, then, that where they could, employers have been using foreign workers, who are prepared to work for less or are prepared to carry out tedious jobs.
Of the almost 1.5 million foreign residents holding various types of work permits to live in Singapore, 211,000 are domestic workers. They do the household chores while Singaporeans attend to their high-paying jobs. Singaporeans farm out the changing of nappies and care of their elderly to their Filipino or Indonesian “maids”. Another 306,000 foreigners, mostly from Bangladesh, work on construction sites — jobs long ago abandoned by Singaporeans. Thousands of Mainland Chinese now drive the buses which ply Singapore streets. Indians are the IT workers.
Perversely, those who complain about crowded trains are the same people who hire foreigners to do their domestic chores, or buy meals cooked by foreigners at their hawker centres, and are served by foreigners at supermarket check-outs. Singapore would likely stop functioning if these workers walked out en masse tomorrow. When Chinese bus drivers went on strike earlier this year, it caused considerable angst and disruption.
The Government extracts a levy on every one of these workers. The levy for each domestic worker is S$265 a month — more than one-third of the wage of the domestic helper.
That money goes into the Government coffers, and is, in turn, funnelled back to building schools, roads, and greening of the City State.Singapore is not alone in using cheap labour from poor Asian countries. Malaysia, Hong Kong and Taiwan all employ foreigners for domestic and “dirty and dangerous” jobs.
Export of labour has been a boon for poor countries, which benefit from inward remittances. Their incomes provide a key source of Government revenue, and are important to countries like the Philippines and Sri Lanka.
The major suppliers of workers to wealthy Asia (and the Middle East) are India, the Philippines, Bangladesh, Laos and Myanmar. Last year, the Philippines received US$23 billion in remittances from its workers overseas — up from US$16.6 billion in 2008.
Newcomers to this market are Myanmar, whose remittances rose from US$54 million in 2008 to US$127 million last year, and Laos, up from US$17 million in 2008 to US$110 million in 2012, according to World Bank data.
For all other Asian cities and city States, it may be well worth watching Singapore closely as it deals with the problems of urbanisation and of being wealthy. Life is not necessarily easier with money and status.