Category Archives: Business & Economy

New laws on labour trafficking: the need for defining conditions in SG

Bar on what is forced labour should not be set so high that new law ends up nailing no one

Labour

A group of Bangladeshi men arrive in Singapore expecting to earn a basic monthly salary of $600 plus overtime because that is what they were told back home when they were recruited to be construction workers. The amount is stated in the approval letter from Singapore’s Ministry of Manpower (MOM) which they receive before they board the flight. Within days of arriving, however, their employer gives them the lowdown: their basic pay will be $520, and they will have to sign a fresh contract reflecting the reduced terms. Having taken loans of more than $3,000 to land their jobs here, the men sign on the dotted line. If they refuse, they know, they might be sent home penniless to face a huge debt.

They start work and soon learn that other workers have been similarly deceived by the same employer, who also makes them work extra hours without overtime pay. There are illegal deductions too and some months their basic salary dips to below $200.

This is a hypothetical case, but such practices are not uncommon here, say migrant worker advocates who deal with foreign workers in various states of distress. If migrant workers facing such multiple forms of abuse complained in Europe, the United States, Canada or Australia, their allegations, if true, could be prosecuted under laws banning human trafficking. In those countries, the law covers vulnerable migrant workers who are deceived or coerced into commercial sex or labour and exploited.

Singapore is planning a dedicated law to combat human trafficking, but judging by discussions so far, such cases may fall outside its purview. Public consultations on the Prevention of Human Trafficking Bill, likely to be introduced in Parliament by November this year, ended on April 18. It covers sex and organ trafficking, which are already illegal here, as well as labour trafficking which is not prohibited under current laws. Continue reading

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Is the Internet facilitating inequality?

 JAN 28 2014, 4:34 PM ET
Reuters

In the 1990s, the venture capitalist John Doerr famously predicted that the Internet would lead to the “the largest legal creation of wealth in the history of the planet.” Indeed, the Internet has created a tremendous amount of personal wealth. Just look at the rash of Internet billionaires and millionaires, the investors both small and large that have made fortunes investing in Internet stocks, and the list of multibillion-dollar Internet companies—Google, Facebook, LinkedIn, and Amazon. Add to the list the recent Twitter stock offering, which created a reported 1,600 millionaires.

Then there’s the superstar effect. The Internet multiplies the earning power of the very best high-frequency traders, currency speculators, and entertainers, who reap billions while the merely good are left to slog it out.

But will the Internet also create the greatest economic inequality the global economy has ever known? And will poorly designed government policies aimed at ameliorating the problem of inequality end up empowering the Internet-driven redistribution process?

As the Internet goes about its work making the economy more efficient, it is reducing the need for travel agents, post office employees, and dozens of other jobs in corporate America. The increased interconnectivity created by the Internet forces many middle and lower class workers to compete for jobs with low-paid workers in developing countries. Even skilled technical workers are finding that their jobs can be outsourced to trained engineers and technicians in India and Eastern Europe.

That’s the old news. Continue reading

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Singapore through Headlines (And some Arctic Ice)

Interesting read from Remembering Singapore    – while the headlines were largely dominated by some sensational murders (I recall my mother being terrified of me talking the public bus home in the late 80s and early 90s), some give us a sense of our tenuous, checkered history and the palpable threat against our nation in its earlier days.

Here’s another event that seems to have missed the headlines from last year (by-election loss, population white paper, corruption trials, haze, little india riot) –

Polar politics and the melting Arctic

A comparison between use of the North East Route (blue) and an alternative route through the Suez Canal and Singapore (red)

Polar Politics – TODAY Online

Singapore’s recent accession to the Arctic Council as an observer has, understandably, raised eyebrows, given how it is more familiar with monsoons than frost. That said, there is good reason why this city-state at the Equator is casting its eyes so far northwards.

The Republic was one of six countries — the others being China, India, Japan, South Korea and Italy — whose applications for permanent observer status were accepted on May 15, at the annual ministerial meeting in Sweden of the Arctic Council — comprising Russia, Canada, the United States, Denmark, Norway, Sweden, Iceland and Finland.

The Arctic is warming at twice the rate of the rest of the world, and melting of the glacial ice has accelerated over the last decade through natural variation, greenhouse gas emissions and other human-induced changes.

According to scientists, the vast majority of ice in the Arctic today is “first-year” ice. The long-term implications of these environmental changes for Singapore, whose highest point is the 163m Bukit Timah Hill, cannot be over-emphasised.

WHY INTEREST IS GROWING  Continue reading

Will taxing the rich more really help the poor?

Rachel Chang, Straits Times, 6 April 2013

THIS year’s Budget announced an intention to spend more on the poor – but also to collect more from the rich.

In raising “wealth” taxes on those buying investment properties and conspicuous consumption items such as luxury cars, while in turn promising more social spending, Deputy Prime Minister Tharman Shanmugaratnam seemed to some to be playing Robin Hood – which has drawn a polarised reaction.

While some hailed it as fair redistribution, others worried that it marked the start of a chipping away of Singapore’s capitalistic, competitive environment.

In any case, the latest “wealth tax” hikes are more symbolic than revenue-generating, because they bring in measly amounts compared to the broad-based taxes like the Goods and Services Tax (GST) or income tax, say experts and observers.

The tax hike for investment properties will bring in $72 million more a year, while that for luxury cars is about $150 million. This is a fraction of the $6.9 billion collected in income tax last year, says Ms Jill Lim, tax partner at Deloitte Singapore.

Ernst & Young transaction tax partner Russell Aubrey notes: “It’s really more of a social measure about equality than a revenue measure.”

But to further tax the rich to fund social spending in the years to come might be a political and economic battle that the Government may not have the stomach for.  Continue reading

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Why China won’t Rule

Robert Skidelsky, Published on May 22, 2012

LONDON – Is China poised to become the world’s next superpower? This question is increasingly asked as China’s economic growth surges ahead at more than 8 per cent a year, while the developed world remains mired in recession or near-recession. China is already the world’s second largest economy, and will be the largest in 2017. And its military spending is racing ahead of its GDP growth.

The question is reasonable enough if we don’t give it an American twist. To the American mind, there can be only one superpower, so China’s rise will automatically be at the expense of the United States. Indeed, for many in the US, China represents an existential challenge.

This is way over the top. In fact, the existence of a single superpower is highly abnormal, and was brought about only by the unexpected collapse of the Soviet Union in 1991. The normal situation is one of coexistence, sometimes peaceful sometimes warlike, between several great powers.

For example, Great Britain, whose place the US is often said to have taken, was never a ‘superpower’ in the American sense. Despite its far-flung empire and naval supremacy, nineteenth-century Britain could never have won a war against France, Germany, or Russia without allies. Britain was, rather, a world power – one of many historical empires distinguished from lesser powers by the geographic scope of their influence and interests.

The sensible question, then, is not whether China will replace the US, but whether it will start to acquire some of the attributes of a world power, particularly a sense of responsibility for global order.

Even posed in this more modest way, the question does not admit of a clear answer. The first problem is China’s economy, so dynamic on the surface, but so rickety underneath. Continue reading

The Middle Class Goes Global

Published on Feb 24, 2012

PARIS – In the twentieth century, the American dream of a middle-class life inspired the world. Now, in the twenty-first, we are moving at high speed toward a world based on a new geography of growth, with millions of people in the east and the south moving out of extreme poverty to become potentially powerful middle-class consumers. Whether the dreams of this new global middle-class are realised or turn into a nightmare depends on several factors.

In today’s shifting world, with GDP in roughly 80 developing economies rising at twice the rate of per capita growth in the OECD, the club of the world’s richest countries, middle-class citizens paradoxically complain and protest regardless of whether fortunes improve or decline. Moises Naim, a former Venezuelan minister of trade and industry, even warns of a possible ’emerging global war of the middle-classes.’

While anger over pay cuts and unemployment make sense, it is harder to understand the current protests in fast-growing countries like Thailand and Chile, where standards of living are improving. What is going on?

High growth in Asian and southern countries has meant greater export earnings and rents from natural resources. Unfortunately, this blessing can turn into a curse. In China, former Communist leader Deng Xiaoping’s vision – ‘let some people get rich first’ – has led to impressive economic growth and poverty reduction; but it has also undermined the self-proclaimed ‘harmonious society,’ as recent protests and labor conflicts indicate.

Indeed, it is telling that, in the spring of 2011, Beijing’s municipal authorities banned all outdoor luxury-goods advertisements on the grounds that they might contribute to a ‘politically unhealthy environment.’

Rising inequality, lack of civic participation, political apathy, and a dearth of good jobs, particularly for the young, comprise the Achilles heel of emerging-market countries’ current development model. A Gallup poll on subjective well-being in Tunisia and Thailand shows that, while income levels and social conditions in both countries improved between 2006 and 2010, life satisfaction dropped.

Homi Kharas, a senior fellow at the Brookings Institution in Washington, DC, defines today’s global middle class as households with daily expenditures of US$10-100 per person (at purchasing power parity). This represents approximately two billion people, split almost evenly between developed and emerging economies. In its Perspectives on Global Development 2012 – Social Cohesion in a Shifting World, the OECD forecasts that, by 2030, the global middle class could total 4.9 billion. Of these, 3.2-3.9 billion will probably live in emerging economies, representing 65-80 per cent of the global population.

These people will demand more and better services, a fairer division of growth’s benefits, and more responsive political institutions. The current wave of protests could be just the beginning of this trend.

So, what should be done? Continue reading

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The Bad Society: How much inequality is acceptable?

 protester, wearing a Guy Fawkes mask, stands among the Occupy Wall Street demonstrators. Protesters opposed income inequality among other things. — PHOTO: REUTERS

LONDON – How much inequality is acceptable? Judging by pre-recession standards, a great deal of it, especially in the United States and Britain. New Labour’s Peter Mandelson voiced the spirit of the past 30 years when he remarked that he felt intensely ‘relaxed’ about people getting ‘filthy’ rich. Getting rich was what the ‘new economy’ was all about. And the newly rich kept an increasing part of what they got, as taxes were slashed to encourage them to get still richer, and efforts to divide up the pie more fairly were abandoned.

The results were predictable. In 1970, the pre-tax pay of a top American CEO was about 30 times higher than that of the average worker; today it is 263 times higher. In Britain, the basic pay (without bonuses) of a top CEO was 47 times the average worker’s in 1970; in 2010, it was 81 times more. Since the late 1970s, the post-tax income of the richest fifth has increased five times as fast as the poorest fifth in the US, and four times as fast in the UK. Even more important has been the growing gap between average (mean) and median income: that is, the proportion of the population living on half or less of the average income in the US and Britain has been growing.

Although some countries have resisted the trend, inequality has been increasing over the last 30-40 years in the world as a whole. Inequality within countries has increased, and inequality between countries increased sharply after 1980, before leveling off in the late 1990’s and finally falling back after 2000, as catch-up growth in developing countries accelerated.

The growth of inequality leaves ideological defenders of capitalism unfazed. In a competitive market system, people are said to be paid what they are worth: so top CEOs add 263 times more value to the American economy than the workers they employ. But the poor, it is claimed, are still better off than they would have been had the gap been artificially narrowed by trade unions or governments. The only secure way to get ‘trickle-down’ wealth to trickle faster is by cutting marginal tax rates still further, or, alternatively, by improving the ‘human capital’ of the poor, so that they become worth more to their employers.

[observe rebuttal] This is a method of economic reasoning that is calculated to appeal to those at the top of the income pyramid. After all, there is no way whatsoever to calculate the marginal products of different individuals in cooperative productive activities. Top pay rates are simply fixed by comparing them to other top pay rates in similar jobs. Continue reading

Why our jobs are getting worse

There’s a good reason why so many of us no longer like going to work. There’s not much call for thinking these days

Admit it: you’ve got a bad case of post-holiday stress disorder. I could offer up pop-psychology tips for smoothing the transition from beach to workstation – but most of them are crap. My favourite bit of heal-yerself glibness is the advice to have a meal from the country of your holidays, as if a trudge down to the local Thai will transport a wage slave in Kensal Rise back to Koh Samui faster than he can say “green chicken curry”.

The truth is that you’re probably right to hate being back in harness. It’s not just that, from here, the days get wetter and shorter, that there are no more bank holidays till Christmas or that sacrificing the surplus value of your labour to The Man is really no fun (although that last point alone surely justifies more than one sharp kick to the office LaserJet). Those are all-important, but something more specific is going on. Our jobs are getting worse.

It used to be easy to divvy up the labour market: there were the McJobs, and the rest. The task of politicians was to keep the number of tedious, routine occupations down, and to enable as many good jobs to be created as possible. Except that the reverse appears to be happening. More and more prized careers are becoming McDonaldised – more routine, less skilled, and with the workers subject to greater control from above.

Take supermarkets. Jobs there could traditionally be split between the unskilled, low-paid drudgery of stacking shelves and sitting on tills – and the trained butchers and fishmongers and store managers. But when the sociologist Irena Grugulis and a team of researchers recently studied two of Britain’s largest supermarket chains, even the managers reported that they had little room for manoeuvre. Continue reading

Relationship between level of education and earnings – flawed?

GREATER standardisation and computerisation of white-collar work and an increase in graduate numbers might be challenging the notion that ‘learning equals earning’.

So say British social scientists Phillip Brown, Hugh Lauder and David Ashton in their book, The Global Auction: The Broken Promises Of Education, Jobs And Incomes. Speaking to The Straits Times, Professor Brown, 55, from Cardiff University, said a university education is better seen as an opportunity to pursue subjects students are passionate about and find intellectually exciting.

Changing how they choose, he added, ‘would also offer Singapore a better chance of creating a new generation of innovators and inventors who go that extra mile because they are doing it out of genuine interest rather than simply for the money’.

Policymakers worldwide regularly link tertiary education to individual and national economic advancement. A knowledge-based economy, in fact, promotes the belief that more highly educated workers are needed to do the world’s thinking, while workers in emerging economies are limited to low-skill, low-wage jobs in manufacturing or service work, such as in call centres.

The thinking was this: Going to college equals writing a cheque with a lifetime guarantee of a well-paid job.

Yet underlying assumptions to this might be flawed. When he and his fellow authors spoke to business leaders and policymakers in China, India and South Korea, as well as those in the United States, Britain and Germany, they discovered there was a global auction for high-skill, low-wage work.

Employees may want to increase the value of their labour and earn higher wages, but companies wanting to maximise profits aim to lower their labour costs. So they will go where they can find workers with the skills they need, but who are prepared to accept more modest wages. Continue reading

Singapore: tough choices and trade-offs

Leslie Koh, Straits Times, June 17 2012

TRY putting your finger on one current hot-button issue – whether foreigners, Nimby, transport or housing, and up pops the word – ‘trade-offs’.

It is almost a mantra now, used repeatedly by national leaders.

Most recently, Prime Minister Lee Hsien Loong laid out the trade-offs involved in opting for slower economic growth. He acknowledged that growing too fast causes ‘stresses and strains’ but warned that slow growth would mean fewer new investments and good jobs.

National Development Minister Khaw Boon Wan too said the Government had made the ‘tough choice’ of bringing in more foreign workers in 2005 and 2006, to draw investments and create jobs, although this led to the current infrastructure crunch.

‘Sometimes we have to take a decision which has both negative as well as positive consequences. We have to weigh and make the trade-offs,’ he said.

Indeed, this concept of balancing ‘trade-offs’ appears to be the basis of how Singapore tackles these pressing issues.

Essentially, the process seems to work like this: The Government lays out the stark choices that Singapore faces; it then tries to arrive at a consensus with the citizenry on which option to take – or it persuades them that one is better than the other.

Naturally, the final answer will not always go down well. There will always be a group of people who will lose out or remain unconvinced.

As Mr Khaw said in a recent interview with The Straits Times, voters need ‘to understand the larger picture and accept the need for trade-offs’. On its part, the Government needs ‘to explain more, engage more, and earn the trust and confidence of the people’.

In speeches and dialogues, ministers have been explaining the tough choices that Singapore faces, and trying to convince their audience that the Government is taking the better path.

That seems to be a fair approach to ensuring consultation while avoiding the policy paralysis that would result from trying to please everyone, which some countries are experiencing.

But the approach does not seem to be working too well, as each attempt to explain the trade-offs seems to bring on a new wave of anger and criticism.

Some economists, for instance, argue that the fears of slow growth are misplaced. Others argue that economic growth does not require a growing population or more foreign workers. Yet others contend that welfare and high growth are not exclusive. Continue reading