I would like to introduce myself as a young Singaporean, 20 years of age to be specific. The election rallies has been on-going for almost a week. Prior to this, I’ve been a very politically neutral person. The upcoming election drew my attention: many claims by the oppositions and their fellow supporters has been something that I would like to call ‘sugar coated’. Remember what each and everyone of our parents told us about that weird uncle that will offer you a candy? Yes, nothing is free in this world. Everything good comes at a price, often higher than what most people would like to believe in. I would like to take this chance to share my analysis to the various issues addressed. I hope it serves as a good platform to educate fellow voters who have very little knowledge regarding the concept of Economics.
1. The opposition, together with its supporters, has been campaigning about the implementation of a MINIMUM WAGE. What is this minimum wage supposed to do you might ask?
Well, to put it in simple terms, a person by the name of Ah Roy could be worth $500/month based on his skill sets. With a minimum wage, an employer has to pay perhaps $1000/month for Ah Roy who is only worth lesser. Indeed, many of you might be delighted with the idea of this. But remember what responsible parents will educate their child about? There’s NO FREE CANDIES in the world, everything comes at a price. And in this case, it is a price to society.
The picture above is a simple model of Demand & Supply that I’ve drawn out myself. I shall skip the basics of explaining why the curve is shape this way. If you really have no idea, maybe you would like to verify with a friend/your children that whatever I drew are based on Economics fundamentals that have been studied and PROVEN.
As we can see, when a MINIMUM WAGE is placed above the market price for labour, the Supply of Labour > Demand of Labour. For the sake of some, I’ll explain in simple coffee-shop layman terms. When the wage of Ah Roy increase (due to a minimum wage), more Ah Roys will want to apply for such jobs (duh). Simultaneously, the boss of Ah Roy will feel that Ah Roys are too expensive. Having a fix budget for labour cost, they will decrease the number of staff (Ah Roys), leading to a fall in demand. USUALLY, they’ll replace this Ah Roys with technology, such that they don’t have to pay the high price for Ah Roys. What happens? DEMAND > SUPPLY : UNEMPLOYMENT (as seen in the picture). Kindly take note that when bosses decide to replace Ah Roys with technologies, it is a permanent drop in demand.
Think about it: would you rather have a competitive wage that is average (staying employed), or be unemployed for perhaps a few years, looking for a job that overpays you? 🙂
2. So many Singaporeans has been complaining and making a big hoo-haa about the foreign talents here in Singapore.
Before we proceed further, ask yourself this: Are you unhappy with the low-skilled construction (bangala) workers, or the highly-skilled and highly-educated foreign talents? In this section, I’ll explain my take on foreign talents. Don’t worry, point 3 will cover the low-skilled workers.
So, as all of us should have known by now (unless you’re very ignorant), Singapore is experiencing what we call a ‘greying population’. The current generations have not been reproducing (giving birth) at a healthy replacement rate. Hence, the %%% of the older generation is increasing. What does this means? We have a shrinking workforce that isn’t enough to replace the older generations who are retiring. In SIMPLE ECONOMICS, there is a FALL IN SUPPLY OF LABOUR.
As seen in the picture (that I drew myself) above, a fall in supply of labour (generally high-skilled) would increase the price of labour. While many of you out there have your eyes gleaming when you see that (shiok ah, got more pay), let us think about it from an investor’s/boss’s perspective. Imagine you are the CEO of OCBC. How do you think you will feel when the cost of employing someone increases? Will you be cheering with your fellow bosses? 🙂 Or would you consider pulling out your office in Singapore, and relocating to a country with a more reasonable wage (such as Hong Kong)?
So, when investors and MNCs pull out from Singapore, many of us would say goodbye to our pay cheque. Unless you’re so sought-after that some other companies offer you a job straight away.
Therefore, the Singapore government do not really have a choice, but to maintain our supply of high-skilled labour with the help of foreign talents. Well, let us not be irresponsible and shirk off the responsibility for a declining replacement birth rate.
Point to consider: would you rather have a few more foreigners around, that might compete with your job, or would you rather have no job such that no one can compete with you? Imagine major MNCs and investors pulling out of Singapore due to the high labour cost. I wouldn’t want to imagine further.
3. The issue of low-skilled workers in Singapore.
Many concerns has been raised about how you have to squeeze with these smelly, barbaric…. (I’ve smelled Singaporeans who are equally as bad though). Well, of course the government can stop these foreign workers from coming into Singapore. They could introduce a new employment policy, definitely. Then who will continue to build our MRTs, our HDS, our offices? Maybe we could get your son to do it, or maybe your father? 🙂
Many are concerned with squeezing with them in the train. Well, how to you expect them to travel to work? Will you pay them to take the taxis to work? If so, let us not complain about an increase in housing price from that.
It is indeed true that the MRT system in Singapore has been experiencing too much of breakdowns. I strongly believe that there is something that LTA and SMRT has to work on. No doubt, there is a flaw in the system. But I would like to offer a different point of view. My teachers taught me to have a balanced point of view (trust me it is essential for a MATURED BEING).
Let us compare ourselves to Hong Kong. One of the 5 tigers in South East Asia. If anyone of you reading this have went to Hong Kong before, you would realise that taking a bus there could cost up to SGD$4 – SGD $7. Taking their MTR (similar to our MRT) is just as equally expensive. Well, the crowd is pretty much the same, it gets quite squeezy during their peak hours too. I mean, what do you expect in a small country? But of course, their trains and buses are pretty efficient with a low break down rate.
So my question to you: do you want to pay $7 for a bus ride? 🙂 Have you heard of the saying – you get what you pay for?
Therefore, while it is human nature to complain when something happens, let us broaden our insights by travelling more and looking at other countries around us.
Trust me, being thankful is a key to staying happy.
5. HDB prices.
It is true that HDB prices have soared over the decades. Young Singaporeans have to work 10-20years (based on average income) to service their housing loans. Indeed, it is a heavy burden to the young.
But think about it, how much did your parents made during the last transaction when you moved house?
It sounds as though Singaporeans are paying for something that they do not have ownership of. 10 years later when you have finished servicing your loan, who does the house belongs to? It is YOUR ASSETS.
Even though it’s harsh, but you’re actually contributing to your own ASSETS ACCUMULATION. When you want to sell it 10 years later, I believe you’ll be earning profits from that transaction as well. Or would you prefer property prices to fall such that you’ll lose maybe $50,000 – $100,000 when you sell your flat?
Point to note: Do you want an increasing property price or declining one? Don’t expect the best of both world, because nothing is FREE (my parents taught me that when I was in P1).
6. COE, ERP….
Well, the cost of a COE in Singapore could easily get us a BMW/Mercz in let’s say Australia. The cost of car is actually pretty affordable (in case you didn’t know it by now), but it is the cost of the COE that jerks up the price. Many of us have been complaining about this.
Have you went to Thailand and witnessed their traffic jam? Imagine everyone owning a vehicle in Singapore, including the bagala worker that built your house. Imagine them driving to work. Imagine the toilet aunties driving their own HONDA to work. Well, I guess we might have to leave our house 2 days in advance to be punctual for work. 5 million cars in Singapore, wow.
Question for you: Would you rather pay the COE and ERP, such that there is only a slight jam (by slight, I mean you won’t be stuck in the jam for more than half an hour usually). Or would you rather pay $20,000 for a new car, and take 2 days to travel from Yishun to Orchard? 🙂
As we can see, there are indeed many issues that we are currently facing. I could offer you short term solutions as well, but are they really in the interest of Singapore? Do these ‘solutions’ really benefit Singapore in the long run?
Try to think about the issues, and the solutions from a long term perspective. Maybe the opposition rallies will become an amusement show for you 🙂
Let us vote wisely this year. I would like to emphasise that talk is cheap, and I would say that with a resounding yes.
A young 20 Year Old Singaporean