Income gap will narrow as foreign FT take higher value jobs
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HO CHI MINH CITY - SINGAPORE's income gap will not continue to widen indefinitely, Minister Mentor Lee Kuan Yew said yesterday.
While incomes of the top 10 per cent have shot up, they will eventually be dampened by competition from emerging economies - the same forces that are now putting a lid on lower-end salaries.
Thus, after another decade or so, a 'new balance' or 'steady state' would emerge, he predicted. One ominous scenario: incomes at all levels depressed by labour from China and India.
'If we're not careful, the new steady state in 15 years will be an abundance of Chinese engineers, scientists, Indian scientists and so on, and you may well find the Singaporean chaps at the top will go down,' he said.
'And we at the bottom, the bottom ones will stay put, because we're competing with the lower end. But the top end, we may not be able to compete with high-quality Chinese scientists and engineers. That's life.'
Mr Lee said that the widening gap between rich and poor at present was unavoidable: 'You can't freeze your society in time'.
'That's the way the globalisation at this stage is working out,' he added.
The issue of the widening income gap has preoccupied Singaporeans recently, with the Singapore Government pledging to do more to help the bottom 20 per cent whose incomes have stagnated.
Among other measures is Workfare, an income support scheme to help low-wage earners.
While the Singapore Government will buffer the gap, Mr Lee said yesterday that Singaporeans must ensure that they can still fight for the top-end jobs when the 'new steady state' emerges.
Explaining why professionals and other skilled workers would eventually feel the pinch, he noted that developing countries are training more people for top jobs. This will force wages of Singapore's bigger earners down.
He cited the example of Singaporean hotel managers in Ho Chi Minh City and Hanoi. They probably earned two or three times what they would in Singapore, plus perks.
'But in 10 years, will they be required? The locals have learnt the job,' he noted. 'So the managers in the hotel chains will say, right, you either take local pay or you go home to Singapore. So it will equalise. How long will it take to equalise? Depends upon how fast each country climbs up the educational ladder.'
Mr Lee expects Chinese wages, especially in the coastal cities, to go up in a decade.
'Singaporeans who go there with hardship allowances will either lose the hardship allowances and stay on, or come back to Singapore. So it will equalise. How long will it take? 10 years? Maybe. Five years? A bit too short,' he said.
(Straits Times 21 Jan) -
meh ...all excuses lah. If other countries train their locals for top jobs , how come Singapore don't train locals for the top jobs but tell locals to teach FT and then retrench?
...at least I am out of Singapore so I don't need to worry about that.
Still there are lessons to be learnt - have a skill where there is a chronic shortage and don't teach anyone anything or else you will be replaced. Always be that person in demand. Always make sure you can run out somewhere else to welcoming arms. Never shut one door. Always have 3 doors open.
If they want me to teach , they pay me higher to teach so that I can laugh my way to the bank and retire comfortably or else I am just telling people how to operate the system without telling them WHY you do it that way. -
sure.. sure..
the income gap will decrease as the people pay the FTs less..
the gap decreases and the locals are still left with a pittance...
then you get the highly qualified wandering the streets without jobs they are qualified for..
sure... sure...
good one lau lee -
Mr. Lee's analysis is completely incorrect.
The wages of engineers and scientists in Singapore are not behind the rise in the income gap. In fact, engineers and scientists are relatively poorly paid compared to other professions here, such that many people with degrees in these fields are leaving to join more lucrative industries.
Data from IRAS used by the Government to peg ministerial salaries would further prove my point.
The income gap in Singapore is caused by the people in the 'service economy' who are pushing money around in Shenton Way or doing some other rent-seeking activities. And within the next 10-15 years, the Chinese will not be catching up in this area as quickly as they would in science and engineering. As for the Indians, their top talents in finance and other service sectors jobs are already working for US firms and hence already earning top dollars. Whatever the developments may be, there are no foreseeable reasons to think that they will narrow the income gap.
regards,
obiterdicta -
Yes, let's just wait 15 years for the income gap to narrow.
In the meantime, all the unemployed and poor can sit around the kopi tiams, lim kopi and watch EPL soccer matches live every weekend on TV until the day finally arrives. -
Originally posted by fymk:meh ...all excuses lah. If other countries train their locals for top jobs , how come Singapore don't train locals for the top jobs but tell locals to teach FT and then retrench?
...at least I am out of Singapore so I don't need to worry about that.
Still there are lessons to be learnt - have a skill where there is a chronic shortage and don't teach anyone anything or else you will be replaced. Always be that person in demand. Always make sure you can run out somewhere else to welcoming arms. Never shut one door. Always have 3 doors open.
If they want me to teach , they pay me higher to teach so that I can laugh my way to the bank and retire comfortably or else I am just telling people how to operate the system without telling them WHY you do it that way.
so true... -
hmm.. labor competition - lower wages - hence closure in income gap. That makes sense. What about the middle/lower income jobs, wouldn't these jobs face competition from foreigners as well, then what will become the value of these jobs? Or is it that everyone would just have to deal with lower wages to sustain our competitability?
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minister's pay are not competitive.
maybe the ministers should consider bridging the gap between their jobs and their pay first. -
nahs i know i may get kidnapped for this, but i'm pretty sure he's going towards a wrong direction..
indeed, his intentions are to accept foreign workers (who are smarter better more diligent healthier more courteous and definitely not kiasu) do i need to say more? for instance, economists - economics is a much sought after subject for university in college students now (personal observation).. singapore, as desired of our ministers, definitely is on top of SEA nations, and we would definitely keep it that way.. we can't deny the ageing population of singapore, thus foreign labour is the solution before our "long-term solution" comes into effect.. so, why hire the average economists when we can always get the cream of the crop.. so these top economists would bring along their families to singapore, earning FAT incomes (so much for bridging the gap between rich and the poor) having such GREAT income, GREAT knowledge and GREAT influence in the company/firm, they'll definitely impart such knowledge and experience to their children.. with the influence they get in their work, getting their children into the company wouldn't be a problem.. besides, with such great economists as parents, they would most probably be among the top in the pool of singaporean economists for the future.. having more sgreans doesnt mean having them become BETTER than foreign labour.. in fact, this scenario just might cause greater problems! with university degrees but lower ability, sgrean graduates would lose out in terms of job opportunities..
forgive me if anyone thinks my hypothesis/analysis is bad, i'm trying my best here hahas =x hope my language doesnt sound too kiddy.. -
If by income gap you mean the difference between the top and bottom 1%, then certainly scientists and engineers do not feature. Whether in Singapore or London, the highest paid are the traders, fund managers, bankers..These jobs tend to recruit from very selected sources: Oxbridge and LSE in the UK, Ivy League colleges in the US. For a time, at least, these top jobs are relatively safe from the Chinese and Vietnamese.Originally posted by ObiterDicta:The wages of engineers and scientists in Singapore are not behind the rise in the income gap. In fact, engineers and scientists are relatively poorly paid compared to other professions here, such that many people with degrees in these fields are leaving to join more lucrative industries.
What the MM is saying is that our middle income groups, like the engineers, the middle level managers and scientists will face competition from the Vietnamese in 10 years or so. That's probably about right...
In some ways, Vietnam is developing faster than China and they are not competing for the low-end manufacturing jobs. For manufacturing, they have attracted Intel there and for service industries, they are drawing architectural plans rather than running call centres. I will not be surprised if we see Vietnamese managers, engineers, scientists and doctors in the next decade.And within the next 10-15 years, the Chinese will not be catching up in this area as quickly as they would in science and engineering. As for the Indians, their top talents in finance and other service sectors jobs are already working for US firms and hence already earning top dollars. Whatever the developments may be, there are no foreseeable reasons to think that they will narrow the income gap.[/b]
I agree that the threat from China in the near future will be in science and engineering, rather than the finance sector.
If you visit the biomedical research labs in Stanford, Cornell, Harvard...you will find many of their scientists and more significantly, many of their PhD students and postdocs are all Chinese. I have just met a Chinese professor in Cambridge and the head of one of our research labs in Singapore is Vietnamese. And there are many more such talent in the countries they left...True, at the moment most are working in US and Europe, but as the top institutions there fill up with more Chinese talent, eventually competition will force out some of them who will have to look towards Singapore as a second choice. Our engineers and scientists will be in danger of losing their jobs then.
Will it take 10-15 years? I don't know. Although judging from how keen their students are in science and technology, I wouldn't be surprised if it will be sooner.
The income gap between the middle and lower income groups will narrow.
As for those right on the top, those in the finance sector may be safe from competition for some time, but not forever. The top traders, fund managers, bankers and CEOs will see their salaries rise even higher for a longer time. But that will also change.
China has been earning huge amounts of money on its massive trade with the US and now has a foreign reserve in excess of 800 billion USD, of which three quarters are in US dollars. There have been indications that the Chinese may be shedding some of their US dollars soon. Can you imagine the impact to the US and world economy the Chinese were to dump 20% of their US dollars in the market?
The movers of the global financial system in the future may well operate from Shanghai, rather than London or New York. I cannot believe that with its economic might, the Chinese people will not take top positions in the financial sector. Their brightest students will increasingly be seen in Harvard, Wharton, Oxbridge and LSE..more Chinese will fill the ranks of Morgan Stanley.
Our bankers, traders and fund managers should earn all they can while they can....I believe they too, will be replaced by the Chinese. After all, in the 30s and 40s, Shanghai was already a regional financial centre whilst Singapore was still the backwaters of Asia.
Britain has seen the rise of wealthy Indian immigrants like Lakshmi Mittal and I wouldn't be too surprised if one day, local banks like UOB and OUB will fall into the control of Chinese bankers. -
Put it this way. Right now there is a huge income gap between the average Singaporean worker and the average Vietnamese worker. That income gap will reduce in time as their workers catch up on the education ladder. Not all their workers will get to University and certainly not all our workers will be PhDs. A new equilibrium will be established in time as their workers catch up with us on productivity. The level of that equilibrium and how quick it will be set will depend on how quickly their workers catch up in education and how much further we can stretch our workers.Originally posted by Quincey:hmm.. labor competition - lower wages - hence closure in income gap. That makes sense. What about the middle/lower income jobs, wouldn't these jobs face competition from foreigners as well, then what will become the value of these jobs? Or is it that everyone would just have to deal with lower wages to sustain our competitability?
In time, the average Singaporean worker will not earn much more than the average Vietnamese worker. One of my old professors in NUS was among the batch of medical students in our first medical school, the KEVII College of Medicine. At that time, the salary of the European doctor was many times more than one who was locally trained. Now that many of our doctors are equally qualified to work in the UK, there is not much difference in salary between the Singaporean and the British doctor (allowing for taxes etc). We may see that with regard to the Vietnamese if they catch up with us in skills and education.