http://afr.com/p/world/singapore_has_growing_pains_going_9tkc4UnPe1MllQTAVwvASN
Singapore is a real live case study in the growing pains of an economy trying to shift further up the development scale.
This is the Highlights
The Singapore budget has underlined the irony of the situation where even the Asian country with the highest GDP per capita and built
on immigration has now found itself highly dependent on cheap imported labour and faces a backlash from its citizens about too many foreigners.
The NIMBY aspect of this irony was underlined by the surprisingly large anti-government protest two weeks ago against a plan to increase
immigration to maintain economic growth.
But the budget makes the economic policy concession that by relying on cheap mostly imported labour the government has allowed some industries to continue operating at low productivity rates, which doesn't necessarily serve the long-term national interest.
So it is now tightening the supply of foreign workers and even trying to push up wages in particularly low productivity sectors such as construction and some other services so business will pay more attention to higher productivity through training and innovation.
It has taken the shock of a severe public backlash against the five decade-old People's Action Party government to get to this point, so it
is hard to know whether it or the politics of self preservation or long term economics is in the driving seat.
For example, Capital Economics' Daniel Martin says: "Achieving a significant improvement in productivity growth will be difficult
since Singapore's performance in this area has already been reasonably good compared with other countries at similar levels of development"
And Singapore Institute of Management associate professor Randolph Tho says the country is walking a dangerous tightrope in
hoping that pushing up cheap labour costs will produce a productivity dividend.
In fact with the budget conceding the economy is operating close to capacity, higher inflation is likely to
be the short-term outcome of the productivity push, which will only make the anti-immigration crowd more grumpy with the government.
We have the highest paid civil servants in the world with an entitlement attitude & do you really think they will ever cut back on any of their wasteful spending
