Singapore’s economy and job market appear to be rosy; the unemployment rate reportedly fell to a three-year low of 1.9% in March, and the economy grew 14.5% last year. News reports like these seem to foster a climate of optimism with regard to job opportunities and competitive wages – until you read the fine print.
Even with falling unemployment, a rosy job market, and a good economy, the prospect of high or even competitive wages for job seekers and employees is dismal. Real wages fell to 2.7% in 2010. In early June this year, ECA International reported that goods and service commonly purchased by international assignees cost 3% more in Singapore than in Hong Kong, and Singapore has overtaken Hong Kong in the list of the World’s Most Expensive Cities. The supposed “gulf of discrepancy” between Singapore’s economic growth and workers’ salaries is widening, and it is exacerbated by rising inflation in the country.
There is a lack of a source of comfort for job seekers and employees. One of the major local news media, Channel NewsAsia, ran an article at noon today titled: “Job seekers need to keep realistic salary expectations.” In the article, the reporter interviewed the General Manager of Hays, a recruitment firm, as he advised candidates to have “realistic salary expectations” or else they’d be grossly disadvantaged. This echoes the view of the Prime Minister Lee Hsien Loong, as he urges Singaporeans to have “realistic salary expectations…and adapt to different working conditions” in his May Day message in 2009.
But what is considered “realistic”? More importantly, what should “realistic” look like in the midst of spiraling inflation, costly housing and rising education costs?
The Wall Street Journal reported that Singapore’s consumer price index rose 5.5% in January from last year, as it accelerated at a rate faster than what analysts would expect. Housing prices (which account for 25% of the index) rose 5.3% on higher accommodation costs and electricity tariffs. Resale flat prices have skyrocketed nearly 40% from 2007 to 2009. Under the Design, Build and Sell Scheme (DBSS) this year, flats at Centrale 8 in Tampines were initially priced at S$880,000, but prices were slashed to S$778,000 following a public outcry over the obscene prices.
Granted, inflation is a healthy indicator of economic growth, and preventing wages from increasing rapidly can help Singapore’s economy remain competitive. But “realistic” wages, supported by recruitment firms and employers, tend to favor low(er) wages to expand the profit margin. Falling real wages in the midst of spiraling inflation against the backdrop of a robust economy doesn’t seem reasonable – definitely not for job seekers or employees.