So with the Brexit (the UK leaving the EU for those living under a rock), it became quite clear that the Leave and Remain groups were divided across age and wealth with older and/or poorer folk voting to leave while younger and/or richer folk voting to stay.

The main grouse seems to center around the loss of industries and jobs in certain regions of the UK that was once relatively more prosperous (see here) and now that the Leave group has won, ugly scenes of racism and xenophobia has been reported over many regions in the UK.

So how does Singapore fit into the picture? Well, apparently some people saw parallels in UK leaving the EU with Singapore leaving the Federated states of Malaysia. The outcome of Singapore gaining independence is well-known and I guess that’s the glimmer of hope that some Leave supporters had even though they didn’t fully understand the circumstances that Singapore faced then.

Given that Singapore is pretty much facing some headwinds (like an ageing population, the slowdown in growth that developed countries face etc.), I thought I’d do some crystal ball-gazing and attempt to see what lies ahead for Singapore.

(1) Stratification has happened and will get worse

Just like the UK, I think social stratification in Singapore has and will, continue to get worse. In fact, this is one of the major reasons for the Singaporean government’s U-turn on foreign worker policy.

However, that doesn’t really seem to have solved anything because the last time I checked, we still have been having problems with productivity.The government has reported that median incomes have increased and low wage workers have seen increases in their real income but unless Singapore decides to increase the amount of welfare provided to its less well-off citizens, we can’t expect those with less education, skills and thus lower-paying jobs to see structural improvements to their income situation.

On the contrary, if cheaper workers start to get too expensive (which isn’t entirely implausible since there is much less inflow of cheaper foreign labour and wages of lowers workers such as security guards and cleaners get raised), businesses will start finding that replacing workers will robots will make more and more monetary sense.

Even further up the value chain, software can now replace what are lower level white collar jobs such as bookkeepers, reporters and legal assistants. In short, the returns to labour and the returns to capital may start to diverge further ala Thomas Piketty’s argument.

(2) Some of Singapore’s older folk need to take it easy

The government’s push for hiring older workers sounds like a good plan but for some sectors, it’s just a waste of resources. Consider the push for the retirement age to be moved from 62 to, in the near future, 65 to (eventually?) 67. Any worker near the age bracket that isn’t ready to retire is going to have a huge problem even if he or she is able to delay retirement by a few years. These workers don’t even need an official retirement age because retirement would mean jeopardising survival.

On the other hand, there are a fair number of workers in the middle to upper middle class that are hanging on to jobs not because they need the money but because otherwise, they would be bored at home. I do not see the reason why workers in this category need to given re-employment contracts till the age of 67. Furthermore, certain industries are facing falling demand and these excess resources often do not get put to their best use or they carry on with a sense that they just have to keep doing things as they have for the past 30 years. Now, there are some older workers that are still able to pick up new skills or the use of new platforms but in general where I am, most of them do not.

It is this category that I say should be asked to become net consumers instead and that should be their way of contributing towards society- as grandparents to take care of their grandchildren, as consumers of exercise and healthcare, as consumers of consumption goods such as holidays and experiences such as dining or the arts, focusing on charitable enterprises etc. Whatever it is, these group of workers certainly should not be holding back on consumption and in terms of production, should be passing on their craft rather than still be treated as a unit of labour.

(3) Political leaders need a bigger paradigm shift

In light of the points made above, the Singapore government has a tough task ahead- how do we embrace (and even be at the forefront of developing) automation and new technologies while ensuring that inequality between the owners of capital and labour, especially those replaced by technology) do not grow?

While labour gets scarce due to our ageing population, how do we ensure that our dependency ratio does not get out of hand? Evidently, this is the main reason for our continual upward revision of the retirement age.

The only way to reconcile the above is to have the government make a huge paradigm shift and that mainly means that they don’t demonise the word ‘welfare’ as much as they have in the past.

Our social safety net needs to be wider and deeper so that more people develop the appetite for innovation. It needs to be bigger to ensure that we don’t develop a luddite-class of people who fear being replaced by technology. The same goes for pushing people ready for retirement to enjoy the next 20 or so years of live without fearing if they’ll run out of money for survival. It’ll also reduce the worry about having too high a dependency ratio if we embrace greater use of automation and technology.

Obviously, I write this without any reference to numbers and as the saying goes, the devil’s in the details. I’m not one who’s smart enough for the details* but I’m pretty sure that if we go along the broad arguments that I’ve made, we would be on the right path. Otherwise, [insert favourite higher power’s name here] help us all.

 

*I imagine this would entail some calculation that involves: the fiscal burden involved (amount spent on welfare nett of amount saved from some other areas), gains in productivity over the foreseeable future, gains from investment of investable assets as well as other factors I have not considered here.

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