Singapore restructuring: defining success more broadly?
AS the pains of economic restructuring become more evident, questions have once again been raised over whether the growth Singapore is sacrificing in the short-term will pay off. Specifically, will the targets of 2010 be met?
The government's answer to that now, it seems, is that success should be defined less by the attainment of a certain number - whether this is GDP, wage or productivity growth - and more by factors not so easily quantified: quality of life, diversity of opportunities, jobs that meet aspirations, social inclusiveness.
When the national drive towards productivity-led growth was launched in 2010, clear targets were set for the decade ahead: productivity should rise 2 to 3 per cent a year and the median income should rise 30 per cent over the ten years till 2020. Soon after, amid the clamouring for curbs on foreign worker inflows to be removed, industry groups such as the Singapore Business Federation said that the productivity target looked out of reach. By 2013, official documents such as the Population White Paper were describing the 2-3 per cent productivity goal as "an ambitious stretch target".
It does look like one. Labour productivity has crept up a mere 0.2 per cent on average over 2011-2013. Median wages are rising in line with the target, but that leaves businesses in the unsustainable situation of higher labour costs with no offsetting productivity gains. In fact, market economists have also pointed out that the lower growth Singapore's leaders are now signalling - compared to the 3-5 per cent annual pace the 2010 Economic Strategies Committee had envisaged would take the economy to 2020 - also implies that Singapore is likely to fall short of the initial productivity goal.
Prime Minister Lee Hsien Loong, for instance, said last month that growing 2-3 per cent a year over the next decade would be "not bad", and earlier this month said that Singapore is now aiming for 3 per cent growth a year, typical of developed economies.
"Despite drags on headline GDP growth, we sense policymakers prefer to judge the success of restructuring through the creation of good skilled jobs and higher wage share of national incomes," said Citi economist Kit Wei Zheng, in a recent note.
A broader definition of restructuring success is not bad. The shortcomings of measures such as GDP and productivity are well known. In Singapore's case, productivity - measured as output per worker - is very much a function of the ebb and flow of an open economy's GDP. So the disappointing productivity growth is at least in part a statistical reflection of the weak global recovery.
In a sense, broadening the definition seems in line with the government's current efforts to steer attitudes away from over-valuing paper qualifications, creating more pathways in education to more diverse jobs. But the "redefined" goals must not mask, say, any structural problems behind the weak productivity numbers. Productivity has to remain central - it is the primary source of sustained economic growth, the prerequisite for a vibrant economy with diverse jobs and opportunities, and a good quality of life.
