Mr Leong Sze Hian
“Stranger than fiction” news?
When Richard Wan, the Editor of TR Emeritus alerted me to the article ‘Here’s convincing proof that Singapore’s restructuring is on track‘ (synopsis from DBS Group Research), talking about the real median income is rising, the first thought that came to my mind was – is it another what I call stranger than fiction type of news?
You see, reading the news in Singapore can sometimes be quite amusing – a Uniquely Singapore experience – often it tickles one’s intelligence – if you know what I mean.
Real median income growth = Success of restructuring?
Lo and behold – the article states that:
“So this brings us to the ultimate end goal of this entire restructuring exercise. The restructuring is aimed at increasing the real median income of Singaporeans by 30% in the current decade. Therefore, a better gauge on the success of the restructuring would then be the improvement made in the real median income.”
3.1% p.a. real median income growth?
“In this regard, real median income has increased by an average pace of 3.1% per annum since the announcement of the ESC recommendations.”
Real median growth of 30% next 10 years on target?
“At the current pace, real median income will be 35% higher than what it was in 2010. This is precisely what policymakers have aimed for. By this measure, restructuring is smack on track.”
Real median income growth was – 0.6 & – 2.3% in 2011, 2012?
The real median income growth (excluding employer CPF contribution) in 2011 and 2012 wasminus 0.6 and minus 2.3 per cent respectively.
So, how did the article get “real median income has increased by an average pace of 3.1% per annum since the announcement of the ESC recommendations (in 2010)”?
Including employer CPF contribution?
Was it using the real median income growth (including employer CPF contribution)?
Even PMO said its not appropriate?
In this connection, I wrote a letter to the media, “asking why a real median income growth rate of -0.6% for 2011 was used in the calculation of the National Bonus for political office-holders, and the Prime Minister’s Office and MOM came out to clarify:
“MOM’s 1.0% real median income growth rate for employed Singaporeans included the employers’ CPF contributions while the -0.6% real median income growth rate used by PMO for the National Bonus calculation did not include it.
PMO said it had computed the National Bonus payout using income figures sans the contributions as it was felt that changes to employers’ CPF rates are decided by the Government and, hence, should not be linked to the payout for political office-holders.” – TR Emeritus link, Apr 7, 2012
So, even the PMO concedes that the real median income growth (excluding employer CPF contribution) is the more appropriate measure.
14.5% lower & not 35% higher next decade?
Therefore, instead of “At the current pace, real median income will be 35% higher than what it was in 2010. This is precisely what policymakers have aimed for. By this measure, restructuring is smack on track.” – may be it should be “ At the current pace, real median income will be 14.5% lower than what it was in 2010. This is precisely what policymakers have not aimed for. By this measure, restructuring is smack off track .”
Both productivity and income have failed?
As to “The change in productivity has averaged -0.6% per annum in 2011-12 and has dipped further to -2.0% in 1H13. This is a far cry from the original target of 2%-3% set by the ESC, according to DBS, which then begs the question: Is restructuring working.
“The answer is yes, restructuring is raising productivity and real incomes,” said DBS” – since both productivity and real median income growth (as I have pointed out above) have both failed miserably – restructuring can’t by any stretch of the imagination be working well.
Consequently, I would like to suggest that the Economic Strategies Committee (ESC) reassess itself and its strategies.
Leong Sze Hian
Leong Sze Hian is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, Wharton Fellow, SEACeM Fellow and an author of 4 books. He is frequently quoted in the media. He has also been invited to speak more than 100 times in 25 countries on 5 continents. He has served as Honorary Consul of Jamaica, Chairman of the Institute of Administrative Management, and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors degrees and 13 professional qualifications. He blogs at http://www.leongszehian.com.