Comments, opinions and an occasional ramble
Ganging up on Low Thia Khiang
Poor WP MP Low Thia Kiang got verbally roughed up by six PAP MPs yesterday in a discussion on the new Job Credit scheme.
I sympathise with Low because I think he was unfairly attacked. However, Low seemed to have set himself up for attack by being so skeptical of the Job Credit scheme. I think he could have at least given the scheme some due credit. The scheme WILL work for some companies.
I think problem with Low’s argument is that he was not comparing apples with apples. It seems to me the Job Credit scheme was never designed to save jobs for companies that are on the verge of collapse. The scheme is meant to help sound companies lower their costs so that they can continue operating even when demand has dropped significantly. Of course, such sound companies are, in Low’s jargon, already ‘profitable companies’ that doesn’t need help.
Instead of attacking the Job Credit scheme, Low could have proposed something else to help companies that are in dire straits. That would have been more constructive and prevented the PAP MPs from hounding him like a pack of wolves. However, with the Job Credit scheme, I think the government has already made up its mind on which companies are worth helping. These companies are those with the ability to weather the storm.
It is hard to fault the logic on the government because it doesn’t quite make sense to put unsound companies on life support when the same amount of resources could be put to better use with a sound company. The problem is, should the government make decisions on which company to help based on such cold, hard logic? The people who are employed in unsound companies are clearly no less worthy of help than people who are employed in sound companies.
It’s a tough choice to make. Logically speaking, I agree with the approach the government has taken but I think the government could also offer plans to help workers in unsound companies who are in danger of retrenchment. For example, the Job Credit scheme can be extended to sound companies that are willing to take over workers from unsound companies. The notion of saving jobs should not be restricted to jobs currently in a company.
Ultimately, this global recession is nasty business and there really isn’t a perfect solution. For now, I think the current Budget is sufficiently good. We don’t know the actual effects of the proposals until they have been executed so I prefer to wait and see. I do hope that the government will have off-Budget measures to plug any gaps if such gaps surface later.
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about 2 years ago
“It is hard to fault the logic on the government because it doesn’t quite make sense to put unsound companies on life support when the same amount of resources could be put to better use with a sound company.”
Yes, but then the question is whether these resources thus used could have been better used in other areas to help the people. Are we utilising these resources wisely?
http://siewkumhong.blogspot.com/2009/02/budget-2009-speech-on-budget-statement.html
about 2 years ago
Aaron on your point
####—I sympathise with Low because I think he was unfairly attacked. However, Low seemed to have set himself up for attack by being so skeptical of the Job Credit scheme. I think he could have at least given the scheme some due credit. The scheme WILL work for some companies—####
Judging from your statement, I seem to be getting the impression that somehow when it comes to debating, you seemed to subscribe to what I call a typical “Singaporean” attitude of “giving due credit”. Which I take it to mean that “opposition for opposition” sake is a no-no. And in any debate you should heap praise whilst criticising at the same time mentality!
In my opinion, I think that is a wrong approach to any debate, and quite often it tends to drown out some underlying issues. Actually, “opposition for opposition” sake is a much more valuable approach. Ok it may not be pleasant spectacle but it is actually an effective way of overcoming a human failing call “confirmation bias”.
“Confirmation bias” is when people set out a theory and then find facts to fit the theory. Take the case of the Job credit debate, the PAP though its mainstream media already has an inbuilt confirmation bias (see high sounding adjectives like “extraordinary”, etc). If Low were to give “credit where it is due” to the schema albeit as a precursor to a criticism or, for that matter, an alternative scheme, it would have fed the PAP’s “confirmation bias” (i.e. see even Low agree that our scheme, so it must be a good one!). Under such atmosphere it would have made any alternative scheme that Low might have proposed lost the attention. So actually, I feel, Low criticism without giving due credit may actually be doing a service.
In any case, this is politics. One aspects of politics is to, let me used a correct phrase, to be challenged on views held. It is inevitable Low will be attack whether he gave credit or not. The question is how should Low react to such an attack.
And even if Low proposed an alternative scheme, he is in no position to implement it. It will be the PAP. So it would be a political suicide had the PAP took up the offer of an alternative scheme after they expended so much effort to sell the idea. If the PAP did decide to take up offer of an alternative solution, it will not be without making a political spin. Ganging up on Low and then stealing his idea and repackaging it could be one approach.
Ok, you might then argue that the PAP should be objective and do what is good for the country and look at all possible solutions. Hey, the PAP is composed of human beings and it is natural for them to want to protect their arse and pander to their “confirmation bias” or another human failing “superiority bias” — i.e. thinking one is better than others. No more different from you and I.
about 2 years ago
Really? The Singaporean jobs credit scheme in it’s current incarnation is definitely an inefficient subsidy You are subsidizing something that has to be done anyway (have people on payroll).
And the borderline companies it helps? How many of them are there? Are they worth 4.5 billion dollars you are pouring into this scheme? Simple cost-benefit analysis: maybe you are willing to spend $10,000 per job saved. For that you’d better save 450,000 jobs. Considering the fact that Singapore’s resident workforce is around 2 million, good luck.
This is unlike Obama’s version, which is much better targeted ($3000 per extra job created in the next two years).
*clap* *clap* so PAP has found a way to transfer the Singapore reserves to fatten the bottomline of GLCs. I am happy for them
about 2 years ago
Actually I’d rather the gahmen not spend money trying to save business that are going to fail.
I think we have to make a distinction between businesses that are commercially viable, but unable to continue operating due to the current crisis (problems refinancing for e.g.), and businesses that are just badly run and doomed to fail.
The question is, how do we do that? I don’t think its possible to do that and even if it were I wouldn’t want the gahmen be involved in picking “winners” and “losers”.
@RSE:
I was an early supporter of Obama but I’m not too sure if he’s on the right track. I was happy at how solid his economic team was, but the strange thing is how he doesn’t seem to be following their advice, if I were to guess what their advice would be based on their track record.
about 2 years ago
Actually, I supported Mr Low’s point base on the reason that the budget is trying to control the recession by pumping money into the factor which is impossible/very hard to control i.e. saving jobs.
The industries have indeed over produced due to the drastic drop in demand. The gloomy economy is caused by external factors. Companies from all over the world are experiencing a shrink in demand. Singapore being the hub of almost everything / export base country would obviously get the hardest hit. Job reduction is inevitable.
During this uncertain period, no one will know how much the economy or output will shrink. From the budget, what I can appreciate that the government is trying to “push” unemployment to other countries which can provide similar services by trying to cut down the operating cost of the MNC. It wouldn’t be surprising that people would in turn see it as giving money away to fund the rich.
Bearing in mind that we do not know how long the downward spiral of the economy would last. In the end the MNC may still pack and go. The budget seems to lean towards one extreme where help is given to all companies across the board. Perhaps some kind of mean testing would be good.
This may be a good time to subsidize SMCs more and allow them to grow hence reduce the dependency of MNCs. When there are more local companies, job positions would be relatively more recession proof.
I believe, during this time, the govt can consider providing more help to unemployed, conducting mean testing on all companies as well as creating more jobs by allowing SMC to grow and looking into new industry.
about 2 years ago
Sgcynic,
What constitutes using resources wisely? That is something that everyone can agree on but unfortunately, when it comes to specifics, we are all going to have differences on what is ‘wise’. While the current methods proposed by the government are not necessarily the best, but I still think they fall within reasonable thresholds.
about 2 years ago
Mike,
I think you’ve assumed quite a bit too much here. If there’s nothing good, then obviously you have to call a spade a spade. That’s not the case here, I think. And opposition for the sake of opposition has its merits, but doing that has its pitfalls too. You points are well-taken but to me, I believe the right thing to do is to acknowledge good points even if it’s politically disadvantageous to do so. I could care less about politics than what is the right thing to do. And obviously, my ideas about what is the right thing to do might be different from yours, but let’s not go there.
And, no, I don’t expect the PAP to be objective. This is why I think Low was unfairly attacked. Low has a point, although in the grand scheme of things, Low’s point might have a lesser urgency compared to what the PAP is trying to do. Aiya, I just don’t get politicians in general. What’s so hard about being truthful and honest?
about 2 years ago
RSE,
The alternative to not subsidizing is to cut CPF rates, assuming that all of us can agree that it is necessary to help businesses cut costs to survive the lean times. I don’t know if you think it’s necessary to help businesses reduce cost, but if you do think it is necessary, then what alternative is there other than this inefficient subsidy? I would like to hear some alternative ideas.
about 2 years ago
What Mr Low is questioning is the effectiveness of the program.
$4.6b is a lot of money to give away. How sure if the government + admin officers + civil servants in MOF/MTI/MOM etc. sure that it will mitigate retrenchments and how much would it costs per retrenchment prevented?
It is not Mr Low’s job to propose alternatives because he doesn’t have access to the admin officers + civil servants in MOF/MTI/MOM to come up with specific policies. But even he mentioned that the assistance could be more targeted.
Imagine, we spend $4.6 b and it saves, say 10,000 jobs. That means it effectively costs $460k per job. If it saves 100,000 jobs, it still costs $46k per job. Pretty hefty use of resources, no?
Many GLCs that are still doing well will continue to benefit. And those who already want to retrench e.g. DBS would have done so. The jobs credit scheme is more a subsidy scheme for businesses. It is pro-biz. It is not pro-worker.
Pro-worker measures would be along the lines of unemployment insurance, health insurance for unemployed etc… CPF top-ups to medisave for aged older workers who may need it for chronic disease management.
But hey, handouts or welfare payments to citizens destroys the work ethic and leads us down the slippery slope.
Paying million dollar salaries to ministers also leads them down the slippery slope of groupthink and tunnel vision thinking their policies are truly effective when they may not be.
Majuallah Singapura.
about 2 years ago
Alternate ideas to get money to help unemployed.
1) Cut mindef budget – defence budget is increasing by 6% despite recession. It is 11.4+billion. Last year was $10.6 b. If you cap defence spending, at 10.6b, you save almost 1b to fund whatever other program to help unemployed
2) Cut Ministerial salaries further – can save a couple of millions to top up $50 – $100 per CPF medisave account for unemployed aged 45 and above
I can think of this without the benefit of admin officers, civil servants etc…. How come the gahmen with all their resources at their disposal cannot or more importantly, would not?
about 2 years ago
Panzer,
Good point about the cost of the programme. However, I don’t think decisions are made based on economic costs. There is also political costs being considered when making this decision. I think the PAP doesn’t want headlines going like ’100,000 jobs shed in 6 months”. It’s not something they can stomach. I guess $4.6 billion of inefficiency beats losing at the ballot box.
about 2 years ago
Panzer,
While I agree on the need for increased security during economic recessions because of our geography, another extra billion dollars indeed seems excessive. We just increase the defense budget last year, and we’re doing it again. The thing about defense budget is that no one outside of Mindef knows how the money is spent, and we could be well pouring money down a sinkhole. I’ve heard stories about wastage in Mindef, although I don’t know how true it is but I fear for the worst.
And yeah, ministerial salaries should be cut further. Sure, pay more during good times but the pendulum should swing equally the other way during bad times. Obama’s getting it right with this one with the executive pay limits he’s imposing.
about 2 years ago
Hi PAP Youth
There is absolutely NO NEED for increased security during economic recessions because of our geography because
1. Our neighbours have even less resources. War is not cheap.
2. We are safekeeping their *generals* money
3. We already have a better army, airforce , navy
4. even if we put every single resident and FT under arms, we will not be able to secure a swift and decisive victory. See Israel and Gaza. Unless u are willing do a Genghis Khan. i.e slaughter every enemy taller than a cart-wheel. I dun think EVEN u have the stomach for that.
Btw, PAP will gain more political mileage by giving away $4.6 billions just before election ESPECIALLY if the people are UNEMPLOYED and DESPERATE. And you better check with Lim Swee Say on whose job scheme is supposed to save.
the inefficient subsidy (which is too small in any case) is worst than doing nothing. The money is better spent if Tharman drops money from a helicopter. Who knows, some1 might start a new business with the money he picked up. Or by simply spending it, he stimuates demand. And if u are concerned about “leakage” … please check out the labour\rental costs vs the cost of goods. And leakage is better than dumping the money into the black hole call CPF.
Besides, it looks like Tharman is already thinking of off-Budget measures so you may want to tone down on the “greatest ever budget” declarations and instead prepare ur posts on how “flexible and in touch” the gahmen is going to be.
about 2 years ago
Aaron,
I believe that earlier on sgcynic posted a link to NMP Siew Kum Hong’s speech criticizing the JCS – in that speech there are key criticisms to the JCS which I feel is well-put:
1) The current global crisis is caused by a worldwide collapse in demand. Because of this collapse there will be an excess of service/production staff – a rational employer will most likely trim excess manpower: 100% wage cost reduction per head as opposed to retaining excess manpower which is subsidized at 9% per head and capped at $2500 via the JCS.
There is little assurance that the JCS will have a significant impact on saving jobs, and as mentioned by panzer – even if it saves 100k jobs, a very optimistic figure, it comes at a huge price tag of 46K per job – way higher than the median income of Singaporeans. If the jobs saved were only 10k then the price tag became ridiculously high. In other words both Low TK and Siew KH are disagreeing with the JCS based on the effectiveness of the scheme vs. its cost, than disagreeing with the principle of saving jobs.
2) The budget focuses almost completely on saving jobs than helping those who loses jobs. As mentioned in point 1, when the downturn is caused by a global collapse of demand – jobs will inevitably be lost. There are very little measures in the budget to offer significant help those who do lost their jobs.
3) The JCS not only fails to help those who already lost their jobs – it also have very limited impact on contracted staff, who are at high risk when business are cutting cost. They are usually hired by agencies and dispatched to companies – these agencies have no incentive to pass the savings to company.
Our government is so terrified of aid schemes being abused by the people, and our work ethics being eroded, that direct aid with no strings attached are completely taboo. On the other hand, the JCS gives huge hand-outs of money to firms without any strings – even firms who are firmly solvent, even firms who are not on the verge of downsizing, even firms that proceed to cut manpower are given huge payouts (on the remaining staff which they would have keep anyway for operational necessity). Worse still, considering that around 50% of the SG corporate sector is foreign owned – much of the $4.5 billion will end up following out of Singapore.
about 2 years ago
“Aiya, I just don’t get politicians in general. What’s so hard about being truthful and honest?”
Is the world that ideal?
about 2 years ago
AC,
Thank you for the thoughtful and well-written reply. The cost-benefit ratio of the JCS is unknown, and only time will tell how effective the scheme is. There are lots of unknowns about the JCS and I believe the government is gambling on the JCS as a viable tool. If the JCS fails to work, then they might pay for it at the ballot box in a couple of years. I think a lot of the debate now is based on projections and assumptions because we have no concrete data yet. For all the complaints about the ineptness of our million dollar ministers, I don’t think those guys are so inept as to create their own demise at the ballot box, so let’s see the figures after the scheme has gone into effect.
Your second point was addressed by Sylvia Lim’s proposed ‘Job Seeker’s Allowance’, which was very unfortunately shot down in Parliament. That would have been a welcome relief for those who have already been laid off.
about 2 years ago
IrCTP,
The world is not ideal, and I suspect it’s a self-fulfilling prophecy.
about 2 years ago
Aaron,
No sympathies for Low here. He never go and learn his econs/finance properly and never do his research before he talk.
Asking to get whacked only.
In any case, your understanding of the JCS is off track lah. It has nothing to do with figuring out which companies to help. When the KTM is more free, he will go and write something to explain.
@RSE:
Long time no hear from you. You don’t seem quite as sharp as you used to be. Are you the same RSE the KTM used to know? Think harder and read a bit more before you comment on the JCS lah.
@Han:
Well said. The Govt is not equipped to pick the “winners” and the “losers”. It is not the Govt’s job. It’s the market’s job to do the pickings.
about 2 years ago
Aaron said:
####—-If the JCS fails to work, then they might pay for it at the ballot box in a couple of years. I think a lot of the debate now is based on projections and assumptions because we have no concrete data yet. For all the complaints about the ineptness of our million dollar ministers, I don’t think those guys are so inept as to create their own demise at the ballot box, so let’s see the figures after the scheme has gone into effect.—-####
Er how exactly will be PAP be punished at the ballot box? How will they “demise” in the ballot box?
(a) If there is no opposition to challenge them, how will they be punished. Either way, they are going to return to power unless there is a viable alternative. Are there? Are you planning to stand for election to add number to the oppositions?
(b) Ok the percentage vote for PAP may fall but so? They still come back to govern and dominate parliament. They will still keep their job. So exactly how will they demise?
about 2 years ago
Hi Aaron,
Like Michael mentioned, due to the government’s resorting to all means both fair and foul during elections – there are simply no guarantee that poor results will equate with the PAP being punished with losses in Parliament seats.
I think that the failure to offer significant assistence to workers who lost their job is a glaring omission in the JCS, and it seems as though the government has written them off together with jobless Singaporeans.
Hi KTM,
Strong words were used on Mr Low TK, and I would think that a poster of your stature would at least follow up with some substantive examples to justify your dismissive derision of Low.
Also, do you think that the questions poised to Low and Siew by the PAP MPs were all well researched, and well grounded in theories of econs/finance?
about 2 years ago
KTM,
I don’t understand the specifics fully, but I do know that theJCS is not about saving companies. However, Low is claiming that the JCS won’t work because it can’t save jobs in companies that are on the brink of collapse. And my response to Low is that the government has no intention fo helping these companies in the first place because they are not going to survive and retrenchment is inevitable. The JCS will reduce costs and help sound companies weather the storm, but for those that are already sinking, good luck.
about 2 years ago
Aaron,
I’m trying to see the other side of the argument since I’m not in favor of the JCS.
I think the gist of MP Low’s argument is whether it is EFFECTIVE. There is no question this whole thing will save some jobs. There is no question that a number of viable companies will be saved by this. But we are talking about $4.5B, that is a lot of money.
Main issues with it:
a. It is a wage subsidy that goes to ALL companies regardless of whether they need it (you can argue MOST companies need it but I would disagree).
b. Does it address the underlying reasons for retrenchments which Siew Kum Hong also mentioned. The believe is this bout of retrenchments is caused by demand collapse cost is less of an issue of cost. Lets put it this way, they are retrenching workers in China where wages are low. In the past when we were having retrenchments and jobs were lost to China, we slash cost and that help a lot.
There are a number of people who argue from a “trickle down economics” POV that the money will allow companies to expand and hire more people. However, when your demand is not rising, and the climate is bad, they will keep the money in the bank.
The govt wants to spend $4.5B on a scheme which it is unable to estimate the +ve outcome. How many jobs saved? What % of companies will modify hiring due to this?
Although much of it’s success will depend on what businesses do with the cost savings, if you have been following the debates and studies in the US. This whole thing is similar to a tax cut. In a climate such as this, businesses will just keep the money as spare rather than to spend it. This is analogus to the money the govts around the world govts have been injecting into the banks – it did not spur lending and trigger a multiplier because banks just kept the money.
I prefer that the money be kept and used to help the jobless. I believe that will be a major problem regardless of the effectiveness of the JCS. Another less preferred alternative would be for the govt to increase spending – IT, infrastructure, schools, to ahead of the good times that we hope will come back. ..that too will create jobs.
about 2 years ago
KTM:
Don’t worry. I’m still the same person
. Much happier than before, though! 
Don’t worry lah, I know that whatever money the GLC gets in their pockets isn’t really THAT substantial compared to their overall revenues, it’s just the principle of it. So it’s just a fat waste of money as far as I am concerned. It doesn’t even fatten the pockets of the GLCs.
Anyway, there are just soo many things to keep an eye on nowadays with the current crisis. JCS is the least of my worries.
OK, this is what I know about the JCS. 1) It is based on some 1970s paper 2) It was one of Obama’s proposals (one of his advisors was helped came up with the paper) but was shot down for benefitting corporations 3) A modified version of the JCS is one of the items on the budget 4) I understand that not only the criticisms from (2) applies, and in the current incarnation is too indiscriminate to even be useful. The pros is that it applies to CPF, so Singaporeans benefit more from it compared to other types of workers.
Han:
I’m not too enamoured with the original proposal myself and *gasp* I think Obama’s overrated anyway. He’s good, but he’s no messiah. I am afraid that once the shine wipes off, people would be unreasonably disappointed in him for not being as infallible as the PAP.
Aaron:
Subsidizing ailing companies is all good and well, but do you have to throw money blindly? If you wish to subsidize, go straight out and subsidize. You only have so much money: target properly. Don’t out and subsidize everyone from zombies to mega-ultra profitable.
This crisis is more of a ride. There’s very little you can do to ‘save’ jobs, at least not in the long term. The global economy is going to change after this crisis, and there is a good chance it will hurt Singapore badly.
about 2 years ago
@Aaron,
Strong words were used on Mr Low TK, and I would think that a poster of your stature would at least follow up with some substantive examples to justify your dismissive derision of Low.
Simi stature? KTM only got short and greasy stature lah.
Done. See http://kwayteowman.blogspot.com/2009/02/untruths-about-jobs-credit.html.
Also, do you think that the questions poised to Low and Siew by the PAP MPs were all well researched, and well grounded in theories of econs/finance?
Nope. PAP MPs are equally clueless, but they have been so since last year’s Budget, so no surprises here. The way the KTM sees it, all they do is contribute noise to the Budget discussions.
@RSE,
Much happier than before, though!
Sounds good. KTM is happy for you. Any reason why?
OK, this is what I know about the JCS. 1) It is based on some 1970s paper 2) It was one of Obama’s proposals (one of his advisors was helped came up with the paper) but was shot down for benefitting corporations 3) A modified version of the JCS is one of the items on the budget 4) I understand that not only the criticisms from (2) applies, and in the current incarnation is too indiscriminate to even be useful.
Your analysis is very sloppy.
The KTM actually likes Obama. He knows how to say sorry (just google “Obama says sorry”). The KTM thinks that’s really important for a politician. Instead of weakness, it belies strength of character.
about 11 months ago
Sounds good. KTM is happy for you. This crisis is more of a ride. The global economy is going to change after this crisis, and there is a good chance it will hurt Singapore badly. Thanks!