Thursday, September 16, 2010

Blogging Break

I've been busy, and will continue to be busy for the next few weeks, so no blogging for the next few weeks.

Just got back from Bali over the Hari Raya weekend for a short paragliding holiday. I managed to get two flights in, which was helpful in exorcising the previous bad experience I had in Bali. 

I met some wonderful people on my trip and made new friends, both pilots and non-pilots alike, so it was an enjoyable trip.

But now with the holiday over, work looms, and this week, I'll be moving house as well, so there's lots to do and no time to bitch about read local news, much less blog about it.

Updates will come later when the time and opportunity to write present themselves again.

Saturday, September 4, 2010

Implications of No Retirement Age

Frontpage article on the Straits Times today - MM Lee: If a man is fit, let him carry on working.

The issue of raising, or even doing away altogether with the retirement age, has been bandied about for quite a while now. Let's begin with a quote from MM Lee, his answer to the last question of the interview the Straits Times did with him (of which a transcript can be found in the Straits Times): 

Q: Some Singaporeans disagree with your view that they should not retire but keep on working. They argue that the end of life is a happy retirement, not more work.

A: Those who want to engage in new pursuits, and develop new interests which they could not do so because of work, can do so. They will have no income and may run out of their savings and CPF monies earlier.

The most important thing, something that must always be kept uppermost in mind, is that the government does not want to own the "retirement problem". More to the point, it does not want citizens, for lack of their own funds, becoming destitute, so that the government is placed in the uncomfortable position of either having to loosen the purse-strings, or risk appearing heartless and stingy (and self-aggrandizing, with the massive ministerial pay packets it's famous for).

[Here, of course, we ignore the inconvenient fact that cabinet ministers in Singapore are one of the few groups of civil servants still eligible for pensions.] 

Every other argument in favor of raising or abolishing the retirement age, including the rapidly ageing workforce, is a red herring. We've already imported foreign workers by the planeload. And the government has no qualms in importing more. As many as are needed to keep growth high. The recent speeches are just platitudes to placate the masses.

Once you comprehend the motivation behind why MM Lee desires to abolish the retirement age, things become much clearer.

Capable people whose skills are in demand, no matter what their age, are likely to be able to find employment no matter what their age. MM Lee falls into this category (although some would argue that he's manufactured his own need, but I digress). Such people are also likely to have sufficient financial resources to retire as and when they wish.

The real problem is those who can't afford to retire, and must continue working until the day they die to make ends meet. If they're unemployable beyond a certain age, due to some pesky thing called a retirement age, where is the money going to come from to feed and clothe these people? Heaven forbid that it be government.

Please note: In this post, I do not intend to make a stand for or against abolishing the retirement age. I am merely exploring motivations and implications. It just so happens that in exploring motivations, it is difficult not to arrive at the conclusion that the government shall we call it, mercenary.

Somebody needs to pay for the retirement of citizens who cannot afford to not work even in their twilight years. Correction. Let me rephrase that. Somebody needs to finance the decommissioning costs of labor inputs who have outlived their productive life span, are passing into senescence, and who happen to have the statutory status of "citizen" on this island called "Singapore, (Inc.)".

There, that sounds suitably technocratic.

And there is a simple solution for that. Abolish retirement. Make people pay their own way from cradle to grave. And their employers too.

But realistically speaking, employers face massive problems with no retirement age, as amply covered in the Straits Time today. Those problems are serious and real. And besides, foreign direct investment, business and enterprise, these are the lifeblood of the Singapore economy. When push comes to shove, it is far easier to shortchange citizens than businesses here in Singapore. That's why corporate taxes were cut while GST was raised simultaneously in 2007.

Just two days after my last post, I have new predictions to add to my list. What else will the PAP do after being returned to power in the next elections?

1. Further reduce or even eliminate employers' contribution to CPF for workers after the age of 62. 

2. Raise the age at which CPF can be withdrawn for retirement purposes (currently 55).

3. Other tweaks to the CPF scheme, such as raising the minimum sum, or requiring a larger amount to be set aside in Medisave. Perhaps more unusual changes, like permitting Medisave to be used for occupational therapy. Or an income-withdrawal matching scheme - you can only take out of CPF an amount that is proportionate to income you earn after 62.

4. The laws requiring employers to retain employees after 62 will certainly be passed at some point, and they will be enforced. But the terms under which employers extend employment to the elderly are likely to be relaxed and weighted in favor of employers. Employers may be free to offer a starvation minimum wage, few benefits or temporary contracts. It's not like the people who need the work are in a position to bargain. I mean, what are they going to do, petition the government for more equitable terms?

Aside from these predictions, there are other implications of abolishing the retirement age.

1. The civil service is going to lead the way. On paper, retaining staff with years of expertise sounds great. So does abolishing seniority-based wage structures. Admittedly, I have interacted with only a few senior civil servants in a personal capacity. But those few I have met all seem to have a very hard time relaxing their grip. It's almost a pathological condition. Having a very large group of people, all with considerable egos, jockeying for position in what already seems like a highly adversarial environment, seems like a hazardous position for bystanders. Like ordinary Singaporeans. 

In my job, I've frequently been placed in the ludicrous position of helping to devise 5-year "roadmaps" every 2 years. Every person of "note" desires to put their personal stamp on their new appointment. Personal fiefdoms and what I like to call "turf issues" are remarkably common. If KPIs for civil servants and growth at all costs got us to where we are today, I hesitate to imagine what the future will hold when we have a civil service even more stuffed with highly driven, opinionated and competitive Type A's. Add crotchety, curmudgeon-y, and every other bad elderly cliche to the list.

2. With employers being compelled to retain older people, that means less labor flexibility, which, oddly enough, is sharply at odds with the national labor philosophy. That could ricochet all the way down through the generations. The Straits Times article mentioned Japan. Could we develop a freeter underclass as well?

3. Lots of people won't think too much now about the abolition of the retirement age. They're either too young, or think that they will be financially secure enough to afford voluntary retirement anyway, years from now, so the point is moot.

I am not even 30, but my opinion is different. The economy now is as good as it gets. Fiscal stimulus in developed countries can only go so far, and China's economy is a house built on sand. Normal people are now stretched to afford housing or the lifestyle they aspire to even in such a benign environment, having to take on massive amounts of debt (at currently low interest rates). What happens when all those finely laid plans are turned to dust? Things may appear far less sanguine years into the future.

Thursday, September 2, 2010

Some thoughts on the National Day Rally Speech

I didn't watch the National Day Rally speech on TV. Well, actually, I don't watch local TV, period. Local TV infuriates me, especially when it's a local politician talking-head.

But I skimmed through the details in the paper the next day. Mostly to find out what the "giveaways" were. I put giveaways in quotes as they're not freebies, not really.

As an NSman, I'm eligible for the $9000 CPF credit. Well, not exactly, I'm eligible for only a fraction of it actually. Figures. It's not what I've done for you yesterday that matters; it's what I can do for you today or tomorrow that matters. Very investment banking-like, it's yet another characteristic of the PAP government that hews close to the mentality of bankers. The irony, of course, is that the PAP government never fails to remind us of what it has done for us in the past, and that Singaporeans should be grateful. Well, I think I'll take a leaf from the PAP politician's book from here on. In fact, I've subscribed to that school of thought for quite some time now.

What can you do for me TODAY, PAP, that should make me want to put you back in office? Platitudes can be dispensed with. Show me the money. Otherwise, if I can't get an equitable slice of the pie, I would much rather the whole pie fly out the window. Or end up creaming your face. Think Ultimatum Game.

It's hardly a secret that elections are coming. The whole targeted NS credit is just another election sweetener - targeting the most disenchanted and reactionary segment of the population (the male youth) that has the least to lose and has the shallowest roots (no HDB loan, no career as yet, and no desire to settle down, especially in Singapore, in the near term). The NS credit is even clever in a way, with tiered rewards corresponding to how settled in and unlikely to rock the boat a citizen is.

What's interesting to think about, of course, is what's going to happen AFTER the upcoming elections. The PAP government giveth with one hand, but it has always taketh with another hand also. Long has the PAP government counted on Singaporeans having a memory a little shorter than an election cycle. 

Let's have a thought experiment. A prediction game if you will. What do I think the PAP will "take away" after it has been returned to power?

1. GST. The GST offsets from the latest hike have just expired in 2010. That means that GST is fair game again for a hike. Perhaps not too likely, given the hue and cry the last time, but hey, when has unpopularity ever been a reason to stop the government from doing something it badly wants to do? YOG is the most recent example of that.

2. Hospital charges. The last big hike was perhaps in 2008. With the opening of the new Khoo Teck Puat hospital, the government can (honestly!) claim that they've been DOING SOMETHING. That sounds like a fine justification for an increase in charges, innit?

3. Local transportation. Not public transport; the distance-based thingy was a pet project that had only just been recently completed. Nope. If local transportation's going to get more expensive, it's going to be for drivers. No wait, it's not going to be more expensive, at least for [insert arbitrary figure greater than 50% here] of drivers. That's why it's full steam ahead for satellite-based ERP.

4. Ministerial salary increases. Hey, with the economy steaming ahead at double digit percentages, never mind the transient nature of globally-coordinated fiscal stimuli carried out through MORE sovereign debt and money-printing quantitative easing,  there's no better time to pay our ministers even more, especially since they may need to take a pay cut later on when the sugar high of fiscal stimulus inevitably wears off. Kind of like retailers marking up merchandise and then discounting it again.

5. The press has gone to town with those wretched students who bilk their parents out of their CPF money for tertiary education. You know it's serious when they devote an editorial in the Straits Times to it. And the government has never liked it when there's even a remote risk of people not being able to afford their own retirement. Expect curbs in the future on usage of CPF money for tertiary education.

I might add to this list in the future. And I will certainly reproduce this list from time to time if and when any of the predictions materialize.