08 Oct No ‘free lunch’ for Singaporeans
This post is written as a brief comment to unemployment statistics from the Ministry of Manpower.
“Historically, the unemployment rate for Singapore Citizens has been higher than that for PRs and is consistently far higher than the overall unemployment rate. The most recent figure of 4.6% is lower than the ‘natural’ rate due to policy action.
First, foreign labour has acted as a ‘shock absorber’ but the ‘headroom’ for this factor is diminishing.
Second, massive wage support intervention as well as government risk backed working capital loans has literally ‘bought’ time. This cannot continue at the same levels infinitely.
In addition, the trade offs in terms of creating entrenched moral hazard, hindering restructuring, propping up zombie firms, creating ‘gaming’ opportunities are so large that ultimately the cost benefit analysis of continuing are valid, not in terms of economics or prudent policy, but only in terms of politics.
Singaporeans must understand that there is no such thing as a free lunch.
And the ‘lunch’ we are enjoying now, despite the awful truth of trade factors, is very expensive and not entirely healthy from a long term view.
The test for the 4G is whether they have the stomach for tough calls or are only capable of signing cheques that the fiscal balance cannot cash, because present politics matters more than future economics and workforce culture.”
– Devadas Krishnadas