Prepare for slower economic growth, higher unemployment

ON LABOUR Day – and ahead of his May Day Rally later in the morning – Prime Minister Lee Hsien Loong is readying Singaporeans for tough economic times in 2016. “Compared to expectations in October 2015,” the Monetary Authority of Singapore (MAS) said in its Macroeconomic Review released last Wednesday on April 27, “the Singapore economy is now projected to expand at a more modest pace this year, against the backdrop of a less favourable external environment.” In his May Day message, before the rally scheduled at 10.20am, the prime minister also added that economic growth is expected to remain at one to three per cent in 2016, and in addition to external factors such as slowing growth in China and keener global competition, he flagged Singapore’s ageing population and a tight labour market as key challenges.

As such, higher unemployment and slower wage growth are expected.

“Transformation” appears to be the the core of Prime Minister Lee’s message. In his words, it is “the need to ensure that Singapore continues to offer the right jobs, our workers have the right skills, and there is a good match between the two.” It is the same theme Finance Minister Heng Swee Keat used in March to characterise his inaugural Budget statement and the initiatives which followed, such as the $4.5 billion Industry Transformation Programme. What is less clear, however, is whether Singaporeans are prepared for tough times ahead, whether workers have been – or will be – receptive to measures such as SkillsFuture, and whether the recommendations from the Committee on the Future Economy will be adequate.

For instance, one may not necessarily find signs of a troubled economy in the local supermarkets. Purchases from these stores totalled $2.3 billion last year in 2015, which is the highest spending in a decade and almost double the $1.2 billion in 2005. The higher costs of goods and the fact that groceries are – according to economist Francis Tan, interviewed in ST – “something people cannot live without, [which means their demand] remains stable despite ups and downs in the economic cycle” should be taken into account, though three other trends may be interesting: how supermarkets may have displaced more traditional shops in the heartlands, how supermarkets have thrived despite a fall in overall retail sales in recent years, and how these brick-and-mortar stores have not lost ground to online competitors.

In other news Law and Home Affairs Minister K. Shanmugam – in an interview with ST – re-affirmed Singapore’s zero-tolerance approach to drugs. He elaborated on this stance at a special session of the United Nations General Assembly two weeks ago on April 20, and emphasised the effects of deterrence: “The results speak for themselves. We are relatively drug-free, and the drug situation is under control … Our stance on drugs has allowed us to build a safe and secure Singapore for our people.” The minister also added that young Singaporeans who travel abroad may experiment with drugs overseas and even bring these habits back, therefore necessitating focuses on education programmes, counselling, and rehabilitation.

 

Featured image from TMG file. 

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