25 reasons why profit per employee contracted at annual rate of 9.5%?

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I refer to Christian S. Pedersen’s article “Singapore’s productivity challenge” (Straits Times, Jun 8).

It states that “Having expanded at an average of 7.7 per cent since independence in 1965, gross domestic product (GDP) growth decreased from 4.7 per cent in 2013 to 2 per cent in 2015 and 1.8 per cent last year.

At the core of this tempering of growth is a slowdown in productivity. Though wages continue to rise, overall labour productivity is on the decline. For the top 100 companies on the Singapore Exchange, return on equity shrank from 24 per cent in 2011 to 11.4 per cent in 2015, while return on capital decreased from 9.8 per cent to 6.8 per cent. Profit per employee contracted at an annual rate of 9.5 per cent over this period – not only due to operational costs rising, but also due to a fall in revenue generated per full-time worker.

A recent analysis by the Ministry of Trade and Industry shows that real value added per worker declined by 0.5 per cent in 2014, and by 0.1 per cent in 2015.

Many Singaporean organisations would benefit from increased workforce engagement to get more out of their talent, encouraging more contributions to shaping the company’s future. Involvement in planning, rewarding innovative ideas about product or process improvements, and giving a bigger voice to the young would improve preparation for the future.”

How can we expect Singaporeans to be productive when we –

… Constantly fear that our jobs may be replaced by foreign workers – in the two years from January 2015 to December 2016 – employment growth was 11,400 for locals (citizens unknown?) and 37,300 for foreigners, but granted an estimated 60,000 new PRs and 40,000 new citizens in the same two-year period

… Have our wages depressed by foreign workers who may be willing to work for lower pay – foreign workers are paid as little as about $25 a day

… Have one of the longest work hour week in the world

… Have had hardly any real increase in the median basic pay in the 14 years or so till 2014 – 5 out of the 8 major job categories had negative wage growth and 3 of 8 had near zero growth – (note: I am unable to analyse this particular statistic since 2014 or so, because I am unable to find the statistics for the “8 major job categories” anymore)

… As found in survey after survey, to be one of the most unhappy or discouraged people in the world

… Are subject to the relentless rise in the cost of living – recent increases include water, childcare fees, university tuition, Service and Conservancy Charges (S & C C), car parking fees, healthcare fees, etc

… Have a Government that continues to from a cash flow perspective – not spend a single cent on healthcare, CPF or HDB

… Continue to accumulate relatively, the largest Budget surpluses (per capita) in the world – about $20 billion a year, according to IMF fiscal reporting guidelines

… Have the lowest government spending as a percentage of GDP (19%), amongst the developed countries

… Have probably the lowest public spending on healthcare as a percentage of GDP (2.1%) among developed countries in the world – more than one million successful applications for Medifund in a year from Singaporeans who couldn’t pay for healthcare fees in Class C and B in public healthcare institutions – one of the lowest ratio of public (about a third) to private healthcare spending in the world

… Have the second highest Gini (worse income inequality) in the world

… Have one of the lowest retirement adequacy as a percentage of last drawn income in the world, despite having the highest pension contribution rate of 37% in the world

… Probably have the most expensive public housing in the world, measured by price over income

… From a relative total cash flow perspective – pay a combination of the highest taxes, indirect taxes, social security contributions, etc – but get the lowest relative social benefits in the world

… Spend an estimated $400 million on foreign students at all levels of education, at the expense of more education spending on Singaporeans

… Have the second lowest fertility rate (TFR) in the world

… Have probably the highest percentage of foreign students (estimated 37%) in public universities in the world – mostly funded by Singaporean taxpayers’ money – only an estimated 3% of scholarships went to Singaporeans

… Have on a relative basis among developed countries – the highest percentage of low income workers (about 8% – 172,900 resident workers earn below $1,000; about 19% – 407,400 resident workers earn below $1,500)

… Have one of the highest poverty rates in the world as measured by the percentage of workers earning less than half the median income – about a fifth of the total Singaporean workforce

… Have PRs who on the average earn about 48% more than Singaporeans

… Have the bottom 20% of households spending more than what they earn, and a real decrease in increase in income over increase in expenditure, for all households, according to a Department of Statistics’ Household Expenditure Survey – very high relative household debt in the world

… Have 87,000 needy beneficiaries who successfully applied for financial assistance under ComCare (not counting the unsuccessful applications) – we also have probably the lowest relative welfare spending in the world

… Have been ranked as the most unemotional people in the world

… Have 74,400 unemployed or long-term unemployed residents, in a country that has no basic unemployment or welfare benefits – widespread age discrimination as statistics show declining real wages from around the mid-thirties age of workers

… Have the lowest real rate of return historically (since 1999 if not earlier), of all national pension schemes in the world – probably the only country which keeps so much of the excess returns from national pension funds (estimated to be more than 3% per annum), instead of returning it to the people

Most Singaporeans may not be aware of the above, as we have a media that is ranked 151st in the world for Press Freedom.

We are also uniquely, probably the only country in the world which in recent years – had a cartoonist arrested for investigations into sedition, a blogger sued by a government agency for defamation, a blogger sued by the Prime Minister for defamation, and several new laws that arguably curtail freedom of expression, such as the Protection from Harassment Act, Administration of Justice (Contempt of Court) Act, etc

Finally, Singapore may still continue to be the only developed country that is ranked in the bottom 10 or thereabouts in the world, for the least number of United Nations Human Rights Conventions signed and ractified.

Leong Sze Hian

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.