As Singapore retains its title as the world’s second freest economy, its reputation as one of the world’s most flexible labour markets is also gaining ground.
Going by the latest data from a United States think-tank, on matters of labour freedom, the Republic scores 98.1 — trumping even Hong Kong, the world’s reigning freest economy.
According to The Heritage Foundation, flexible rules mean “the non-salary cost of employing a worker is low, and dismissing a redundant employee is not burdensome”.
The Republic has consistently ranked among the top three in the world on labour freedom. But in these tumultuous times, is such leeway for companies necessarily a plus, from the perspective of Singapore workers hit by mounting job and wage insecurity?
Heritage Foundation policy analyst Anthony Kim noted how “rather than pursuing higher levels of flexibility, some countries went in the opposite direction, while Singapore has been maintaining very such high levels”.
The US, for example, recently raised the minimum wage, widely regarded as a policy that can distort the labour market.
But at least one economist, Centennial Group’s Manu Bhaskaran, thinks employees here are more disadvantaged than those in developed countries where “union power is stronger and there is less market flexibility for companies”.
There, he added, “labour does gain — they have greater protection from job losses, more compensation in case of retrenchment, and courts tend to sympathise with workers more”.
However, NTUC deputy secretary-general Halimah Yaacob argued that “iron-clad” measures to protect workers are meaningless if employers can work their way around them.
She knows of employers in countries with anti-retrenchment laws who — when times are bad — cook up reasons such as “misconduct” and “poor performance” for dismissing staff.
“It’s all a question of balance. The law must provide a balance between flexibility for employers and protection for workers — and then provide an ecosystem to support and strengthen a worker’s bargaining system,” she said, referring to Singapore’s unique brand of tripartism where the government, employers and union movement work as one.
Take, for instance, the tripartite guidelines for managing excess manpower — which, while not “enshrined in law”, is a good way to ensure companies do not resort to retrenchment at the first sign of trouble, she said.
UOB economist Ho Woei Chen said the upside of flexible regulations is that in good times, people like mums and retirees find it easier to work part-time.
“Of course, when it comes to a downturn, the government does safeguard corporate interests,” she said. Over the long term, this would make companies more willing to invest in Singapore — leading to more jobs.
Slippage on 3 fronts
Out of 10 components of economic freedom, Singapore slipped on three fronts — monetary freedom, government size and freedom from corruption — which contributed to an overall 0.2-point dip in its score, on the 2009 Economic Freedom Index published by The Wall Street Journal and The Heritage Foundation.
But a closer look reveals the indicators may not be a reflection of current reality.
Government size — which considers state spending as a percentage of GDP — is based on data from 2005 and 2006, as that’s the latest available for all 179 economies ranked, said Mr Kim.
The report also noted how Singapore’s plans “to list state-owned energy and telecommunications enterprises have stalled in recent years”. This was part reference to delays in Temasek’s sale of its three power generation companies — but fails to take into account the successful sale of all three, as of last month.
As for monetary freedom, points were deducted from Singapore’s score “to account for policies that distort domestic prices”. Mr Kim clarified that what this referred to, was the risk of its government putting in place price controls. As it turns out, Singapore has been one of few Asian countries that has not done so.
Still, the main drag on the Republic’s index ranking remains its financial freedom.
Government involvement in the banking sector is what is holding its score down overall, said Terry Miller, a director of the foundation’s Centre for International Trade and Economics.
10 economic freedoms of Singapore*
Moving up
Moving down
No Change
*Numbers in brackets refer to global averages. Source: Heritage.org
Source : Today – 14 Jan 2009