Commentary: Singapore should focus on economic growth rather than redistributing a smaller pie as it reopens
SINGAPORE: When Singapore was hit past the full brunt of the pandemic over 2020, the Government provided huge policy support measures for households and companies.
This not only prevented workers from being displaced but stopped growth-oriented companies from ceasing operations birthday.
This support has continued in sectors recovering at a slower pace such as aviation and the tourism industry.
In guild to accomplish this, Upkeep 2022 saw the roll out of four supplementary budgets in quick succession to tide the country over needed COVID-19 restrictions.
Nevertheless, there are questions over the sustainability of such an arroyo given the Singapore economy's wrinkle of 5.4 per cent in 2020.
Resorting to tapping on past reserves have besides raised concerns over financing extra government expenditure. Despite stronger growth forecasts, the Authorities announced at Budget 2022 it will also depict S$1.7 billion more than from the reserves.
THE PANDEMIC'S FOCUS ON HELPING THE BOTTOM
There is no doubt the boggling assistance has placed a floor beneath the lowest income households over this recession and saved many from destitution.
In February, Deputy Prime number Government minister Heng Swee Keat highlighted that income inequality measures in terms of the Gini coefficient in Singapore fell from 0.398 in 2022 to a historic low of 0.375 in 2022 due to "massive transfers" and schemes aimed towards supporting lower-income groups.
Such transfers took the course of connected subsidies to lower–income groups such as the Workfare Income Supplement (WIS) scheme, top-ups to earnings and CPF accounts, equally well as i-off financial support for households experiencing a loss of income that tap on the COVID-xix Support Grant, not to mention waivers on HDB loans and support for charities.
About of this increase in social expenditure has been funded by reliance on Net Investment Return Contributions (NIRC), Singapore's largest acquirement source that has exceeded all forms of taxes including the appurtenances and services taxes (GST).
DILEMMA BETWEEN FOCUSING ON REDISTRIBUTION AND FOCUSING ON GROWTH
Nonetheless, some critics argue public policy should focus more than on redistributive measures to assist low-income families.
But how much is enough? In Singapore, the top 10 per cent of income earners contribute nigh lxxx per cent of all personal income revenue enhancement.
These are redistributed through schemes such every bit Workfare, GST vouchers, as well as ongoing subsidies for the lower and middle-income households in education, housing and healthcare among others.
As Ong Ye Kung highlighted in 2022 as Education Government minister, low-income families (up to the 20th percentile) receive almost S$4 in benefits for every dollar of tax that they pay. Centre-income families (from the 41st to 60th percentile) receive S$2 for every tax dollar.
This rate of distribution is higher that the S$i.3 to S$1.40 that middle-income households received for every revenue enhancement dollar in the Britain, The states and Finland.
Moreover, any such redistributive focus should be counterbalanced with an attendant focus on economic transformation and growth to expand acquirement streams.
Given that the global economy is facing resurging rates of COVID-xix infections due to the Delta variant, Singapore'due south growth prospects face strong headwinds and could be varied and unpredictable.
China'due south growth forecasts have been slashed by investment banks final week. While U.s. GDP growth rose at 6.5 per cent year-on-yr in the second quarter, this came well beneath expectations.
In such an environs, wanting to have more to redistribute in the future requires our economic system to ready our sails when the winds pick up, and enable every Singaporean to reach their fullest potential. Nosotros need to abound the pie so each portion can be bigger.
This is why Prime Minister Lee Hsien Loong's National Day message focusing on inclusive growth is a useful one. His emphasis on supporting low-wage workers to reskill to seize new opportunities to achieve job progression and income wage strikes a businesslike tone.
GOING DIGITAL THE Near STRAIGHTFORWARD Mode TO BOOST GROWTH
In Singapore, the lingering adverse economic touch of COVID-nineteen coupled with maturing weather that have slowed growth even before the pandemic, had thankfully resulted in earlier government policies to restructure the economy.
The challenge is transforming the economy to meet challenges of Industry four.0 through digitalisation to create higher-value, higher-paying jobs.
Information technology was fortuitous that the digitalisation bulldoze started in earnest a few years before the pandemic because it enabled more businesses to work remotely and safely when firms had to make that overnight bound with the imposition of a circuit billow last April.
Companies that embraced digitalisation were better prepared to source culling revenue streams on e-commerce platforms, transform their business models to reduce operational costs and reach out overseas remotely to explore new market opportunities and merchandise collaborations.
("I experience pitiful seeing my dining room empty ... But y'all must get over that to run the business organisation and work in reality." Summertime Hill SG chef-owner Anthony Yeoh talks about fresh challenges these past 18 months on CNA's Heart of the Matter.)
Two in five who implemented digitalisation initiatives in 2022 experienced stronger revenue growth than non-adopters, a UOB report on small-scale and medium enterprises released in March shows. Those who had digitalised their entire business or multiple areas reported stronger growth than those that went digital only in one expanse.
In dissimilarity, half dozen in 10 that did not adopt whatsoever digitalisation saw a reject in their 2022 revenues compared to a year earlier.
At that place is little wonder why when digitalisation can power trade-oriented Singapore SMEs' search for new growth opportunities exterior of our pocket-sized domestic market and even reach consumers in Singapore, irrespective of whether COVID-nineteen restrictions come downwards.
BUT NEW BUG BEARS OF GOING DIGITAL HAVE EMERGED
However, the procedure of digitalisation has also raised concerns even as it has enabled work to keep – primarily over remote-working for noesis workers.
More workers in Singapore have returned to work this by week. Firms know remote working has its limitations given the isolation, longer hours and disability to physically see co-workers. A survey conducted past Microsoft in late 2022 found that Singapore workers topped the list in Asia facing increased burnout.
This same survey highlighted 37 per cent of respondents in Singapore citing a lack of separation between work duties and personal obligations impacting their well-existence.
Authorities around the globe accept issued wellness advisories and provided resources for workers to manage stress over their work commitments. Calls for a iv-mean solar day work calendar week, a mental health day off and others advocating for a rebalancing of work and life have grown.
This concern over public health must be tackled. Companies must support knowledge workers better when stiff morale is a prerequisite for a productive, innovative and resilient workforce.
The pandemic has already showed that economical activity and public health (social distancing) become manus in hand.
Our vaccination rates must stay high to reach "herd immunity" levels for Singapore to go on lifting curbs on economic activities like dining in, working in offices and safely open for foreign travel to abound the economy.
KEEPING THE ECONOMY GOING
One example of how government assistance has been disquisitional to keeping warm specific strategic capabilities for when the pandemic blows over is this: Changi Aerodrome staff have maintained our aviation hub running despite the wholesale collapse of air travel.
Being gear up on the draw will put Singapore in a strong position. The winds are picking up when Singapore merely announced on Thursday (Aug nineteen) the start of quarantine-free travel to Germany and Negara brunei darussalam for fully vaccinated travellers. Lilliputian wonder Singapore Airlines had prepared to increase its flight capacity in recent weeks.
There is no doubt our demographic and economical trends will require more spending for redistributive policies going frontward but we need to residuum this with economical growth as our economic system transforms for a post COVID-nineteen scenario.
Singapore'southward Gross domestic product growth forecast has been upgraded to 6 to vii per cent final week, on the dorsum of news that the economy rebounded in the second quarter of 2022 past 14.vii per cent.
We should ride on this positive momentum to grow our revenue streams. In a volatile and uncertain world, Singapore must shore upward our reserves to be better prepared to encounter the challenges of the side by side global crisis.
Dr Faizal Yahya is a Senior Research Fellow at the Institute of Policy Studies, Lee Kuan Yew School of Public Policy, National University of Singapore.
Source: https://cnalifestyle.channelnewsasia.com/commentary/singapore-growth-help-low-wage-workers-income-households-282426
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