A person walking around Singapore would be hard pressed to notice any economic troubles in this wealthy city. Skyscrapers and luxury condominiums keep getting built at an increasing rate by foreign workers and unemployments remains at the incredibly low 2% which is one of the lowest in the world. If he decided to take Uber, he might notice a number of highly skilled professional working as an uber driver between jobs but that would be easy to dismiss as simple anecdotes. However, below the flashy facades of this rich city states economy, several problems are starting to brew and immediate action is needed to prevent them from creating a lost decade in Singapore.
The data tells a very pessimistic tale about Singapore’s economy as GDP plunged by more than 4% last year with only a small 2% recovery this year reminiscent of a dead cat bounce. The incredibly low unemployment hides the huge underemployment problem in Singapore where many Highly skilled workers are unable to get anything more than menial low paying jobs due to an oversupply of skilled workers and the shortage of unskilled workers. Singapore’s GDP per capita of $55,000 USD seems high even compared to other OECD countries but a more careful analysis would compare Singapore to other cities as the country’s population is almost 100% urban. This gives a far less rosy view of GDP as cities such as Munich,New York and Sydney have a GDP per capita on the order of $65,000 USD giving Singapore’s a decisively poor result compared to other global first world cities.
Ever since the 2011 general election where the Opposition caused the PAP to realise they still exist within a democracy and fall back to earth. Singapore’s governance has gotten less pragmatic and instead more focus towards keeping the PAP in power. This has caused many Investors including Temasek(Singapore Own investment company) to shift investments away from Singapore towards Dubai and other global hubs as the PAP abandon it’s characteristic pragmatism in exchange for keeping it’s dominance of power. Singapore’s political stability has always made it a safe haven for money in the region and has caused it receive more Investment from abroad than any other country in the region. However, the era of generous FDI might soon come to an end as Trump attempts to clamp down on money flow outside of the united states cutting off a major investor and Dubai’s rise creates competition for global cities able to turn the blind eye towards the source of the investment
Singapore also faces a huge structural inequality which has often been ignored by the government despite the constant harping on meritocracy. While the Wealth lines are quite fluid and it’s possible for someone at the bottom to rise to the top via skill, the divide between the haves and the have not’s is simply staggering and only hidden by the prevalence of HDB’s which hide the most visible signs of inequality. Singapore has one of the worst post-tax GINI indexes for a first world country of 0.412 compared to the 0.345 found in the united states, the poster boy for first world inequality. This has been caused by the fact that the gulf between high paying high skilled jobs and low-skilled jobs is simply humongous with little government effort other than workfare to mend the gap. This has caused many in Singapore to pursue Tertiary college education at all cost’s realising it is the only way to breach the divide but that has only caused an oversupply of high-skilled workers. The government needs to reduce the Pay gap between college professional jobs and normal jobs in order to end the oversupply and provide transitionary training to those who have already sacrificed everything in an effort to obtain it.
Singapore will remain a first-world nation for the foreseeable future but in order for it to retain its place as a global city that manages to take care of its citizen urgent reform is required. The use of Negative income tax or other measures to reduce the difference between high paying and low paying jobs is needed to address the over-supply of college workers and the incredibly high under-employment rate. The government needs to acknowledge that several sectors the formerly contributed huge parts to the economy are going to disspaer soon and plans must be made to transtion workers to other field of employments. Otherwise a Lost decade is dawning and like in japan it could take singapore decades to recover form it