Respected Swiss bank UBS recently released the results of its worldwide study titled “Price and Earnings 2009″ (here)– and perhaps unsurprisingly, Singapore received a very unflattering report card.
While the World Bank reports that our economy has the highest per capita GDP (PPP-adjusted) in Asia at $49,288, our people do not enjoy a quality of life commensurate with these statistics. In fact, according to the UBS study, some indicators suggest that Singaporeans are not much better off than those in Third World countries.
While Singapore has a GDP (PPP) per capita that is higher than that of Switzerland, we are far below the Swiss when it comes to wages.
The UBS study found that employees in Copenhagen, Zurich, Geneva and New York have the highest gross earnings. With its extremely high gross wages and comparatively low tax rates, Switzerland is one of the most employee-friendly countries in the world. The net wages used have been deducted for taxes and social security.
Zurich and Geneva have wage indices (gross) of 119.8 and 107.5 respectively. In contrast, Singapore has a wage index of only 31.3, comparable with Moscow (30.9), Tallinn (28.7) and Johannesburg (26.7)
In the Asia-Pacific region, Singapore is exceeded by Tokyo (83.0), Sydney (74.1), Auckland (44.1), Hong Kong (42.3), Taipei (35.5) and Seoul (32.3).
Low domestic purchasing power
Where does an average income buy the most products and services? Wages alone do not determine the standard of living in a particular city or country.
A better way to measure prosperity is to divide the average annual salary by the total price of a selected basket of goods and services (as used in the UBS study). This tells us how much purchasing power local wages have.
Again, Zurich (106.9), Sydney (95.9) and Luxembourg (95.4) topped the list. Its citizens have the highest domestic purchasing power.
Singaporeans have a low purchasing power of only 39.9, comparable to Kuala Lumpur (39.5), Warsaw (34.0) and Bogota (33.7).
Other countries in the Asia-Pacific region which are ahead of us are Tokyo (82.2), Auckland (68.9), Taipei (58.9), Hong Kong (58.1) and Seoul (57.4).
In other words, though the cost of living is higher in Tokyo, the average Japanese has a domestic purchasing power more than twice that of an average Singaporean. Though Malaysia is still a developing country and has a GDP (PPP) per capita of only $14,215, less than 3 times of ours, the ordinary Malaysian citizen has about the same domestic purchasing power as the Singaporean.
Long working hours
People work an average of 1,902 hours per year in the surveyed cities, but they work much longer in Asian and Middle Eastern cities, averaging 2,119 and 2,063 per year respectively.
European cities had the lowest working hours per year. A global comparison showed the people in Lyon and Paris spend the least amount of time at work:
1,582 and 1,594 hours respectively.
Singaporeans spent on average 2,088 hours at work per year with 11 days of vacation.
This is less than Hong Kong (2,295) and Seoul (2,312), but more than Tokyo (1,997), Taipei (2,074), Sydney (1,747) and Auckland (1,884).
Singaporeans also took the least number of holidays after Hong Kongers (10 days/year).
High cost of living
Singapore was ranked the second most expensive place to live in after Tokyo, surpassing Hong Kong for the first time.
Let us compare the food prices in Singapore and other developed countries, since food is a basic necessity.
In the UBS study, a basket of 39 food items is put together and weighted mainly according to Western European consumption habits. The average worldwide cost of the basket is USD385. In Asia, Tokyo topped the list with an index of 124.7, followed by Hong Kong (96.5), Singapore (89.4), Seoul (89.0), Taipei (67.9) and Sydney (66.3)
The high cost of living coupled with low wages and domestic purchasing power condemns the average Singapore worker to an ignominious, monotonous and stressful working life. Singapore workers have to work harder to earn the same amount of money and save for a longer period to purchase the same product.
In 1991, Goh Chok Tong, then the Prime Minister, promised Singaporeans that we would be able to achieve the “Swiss standard of living” within a decade. Ten years later, we have a living standard which is closer to Russia than Switzerland. Like Singapore, the Russians has a low wage and domestic purchasing power and Russia, especially the city of Moscow, has one of the highest cost of living in the world.
Yet, in 2001, during his National Day Rally speech, Mr Goh said:
“I was also quietly satisfied that we realized our vision of reaching the 1984 Swiss standard of living last year.”
Have we really achieved the Swiss standard of living?
Though, we do not have economic indicators for Switzerland in 1984, we have the figures in 2009 and it appears that Singapore is heading towards a Russian standard of living, rather than Switzerland’s.
Let us compare the indices for each category:
|Domestic Purchasing Power||39.9||49.4||106.9|
|Amount of hours of work required to buy an iPod Nano||27.5||36.0||9.0|
|Price of Services||72.5||65.0||110.9|
As the above figures have shown, the Singapore worker has more in common with the Russian worker than a Swiss worker.
Like the Russian worker, the Singapore worker has low wages and domestic purchasing power which is aggravated by the relatively high cost of living in their respective countries.
In fact, the Russian worker has a higher domestic purchasing power than the Singaporean worker though his wage is slightly lower. And don’t forget Russia is a vast country. If one cannot survive in Moscow, they can move to the countryside where cost of living is lower. There is nowhere for Singaporeans to move to.