Snippets of the Message
3. The US government has acted boldly to stabilise the economy. They hope growth will be back on track by the second half of this year. But there is a possibility that the financial problems will worsen, and push the US economy into deeper trouble. Then Europe and Japan would be more seriously affected, and the impact on Asia and Singapore much more severe. This is one big uncertainty that we must be prepared for.
4. Our first priority is to keep the economy competitive and growing. This means continually upgrading and diversifying the economy, to make ourselves more resilient to external shocks. We are strengthening our ties with the vibrant Asian economies, and tapping new areas of growth. Industries like tourism, construction and marine engineering continue to do well, and will buffer us from the effects of a US recession. We still expect to grow by 4-6% this year. But we must watch closely how the situation in the US unfolds, and be ready to respond if things take a turn for the worse. We have the resources and the ability to do so.
5. With continued growth this year, the labour market will remain tight. In both manufacturing and services, many vacancies are waiting to be filled. As major projects like the two Integrated Resorts come on stream, many more jobs will be created, from frontline operations to supervisory and managerial positions.
8. Besides the uncertain economic outlook, another major issue is the rising cost of living. Like other countries, Singapore is affected by higher global inflation. We cannot insulate ourselves completely from worldwide price increases. However, the policy of the Monetary Authority of Singapore (MAS) to keep the Singapore dollar strong has moderated the impact of imported inflation and helped to maintain the purchasing power of workers’ salaries.
Yes, being a small and very open economy, we're pretty much a price taker in the global economy. Traditional exchange rate policies, such as those that depreciate our currency to make our exports relatively cheaper to increase the demand for it, which will in turn increase our export revenue, would not benefit Singapore as much. This is mainly because we have practically no resources besides our people and whatever production we do are imported. So with a stronger S$, we're able to curb imported inflation as what our PM has said and reduce costs of production. Furthermore, we have quite a vast storage of foreign reserves that we can use to moderate our exchange rates.
11. I hope that workers and employers will take into account these important factors in their wage settlements this year. They should aim for sustainable wage adjustments, and put increases into variable bonuses as far as possible to make our wage structure more flexible. Realistic settlements will address the concerns of workers, and yet allow companies to respond quickly to sudden changes in the economic environment.
Yes. I know the rising cost of living is a pain in the neck. My family is feeling the heat as well. However, we have to look at this issue from a broader perspective. We're at the moment experiencing a rising inflation rate due to the rising costs of fuel and food necessities. Most Singaporeans are complaining that everything is rising in cost but wages are not increasing. (I admit I do feel that way too.) However, if wages were raised in order to keep real income from decreasing, without any increase in output level, this rise in wages would probably lead to a cost push inflation and would not be beneficial to us in the long run. Variable bonus is one of the keys to this problem.
So far, I believe we are doing quite well. I agree with what PM said, we have the ability to sustain and tide through this global crisis (Maybe not so much of a crisis yet.). However, we Singaporeans must stick together and work hand in hand to make this happen.
Retrieved from: http://www.channelnewsasia.com/annex/PrimeMinister_MayDayMessage2008.pdf on 30 April 2008.
This post is simply my reaction to reading the May Day Message, I have no association with any of the names or organisations mentioned in the above extract.