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Standard of living and per capita GDP

with 5 comments

Note: This was published earlier in a letter sent to The Temasek Review.

I recently re-read this article which Temasek Review re-posted on the UBS study and low relative purchasing power of Singaporean workers’ wages. I tried searching for PM Goh Chok Tong’s quote where he supposedly said that Singapore achieved the 1984 Swiss standard of living in 2000 but to no avail.  So I decided to search the older news archive instead. Here’s what I found. It turns out that for the ruling party, standard of living equates to GDP per capita. An August 6th, 1995 article from the Straits Times makes clear this point when then DPM Lee Hsien Loong said that Singapore had achieved that hard numbers target:

IN DECEMBER 1984, WHEN Mr Goh Chok Tong and the second generation of leaders had established themselves in Cabinet, they unveiled an agenda for Singapore that encapsulated their visions for the next 15 years.

Vision 1999 saw Singapore becoming a “city of excellence” and a “society of distinction” by the turn of the century. It set one hard-numbers target, with which it became most closely associated: to achieve the 1984 Swiss standard of living, as measured by per capita output, by 1999.

Six weeks ago, Deputy Prime Minister Lee Hsien Loong stated in an interview that Singapore had reached the goal.

There was no elaboration, but the claim is easily verifiable. It turns out that Singapore’s gross national product per person hit US$ 20,415 (S$ 31,182) last year. The 1984 Swiss GNP per capita was virtually the same, at US$ 21,307 (adjusted to 1994 dollars).

WITH Singapore’s economy growing by more than 7 per cent this year, it may have already crossed the mark.

In characteristic over-achieving style, Singapore appears to have reached a 15-year goal in 10 or 11.

If you have a government which thinks that standard of living equates to GDP per capita without any consideration of how much of that GDP ends up in the pockets of middle class Singaporean workers, it makes you wonder if Singapore would have been a lot better off if they had chosen to target median wages instead of GDP per capita. This is truly disappointing. So does this mean a Swiss standard of living simply means surpassing Switzerland in terms of GDP per capita, but losing out to them massively in terms of purchasing power of wages earned in Singapore. Is this really the Swiss standard of living Singaporeans were promised?


Written by defennder

February 18, 2011 at 11:08 PM

5 Responses

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  1. In today’s budget report on ST,I was shocked to read that 56% of our working population does not pays income tax as their income is below $20,000!

    What a shocker and it shows the wide income gap we have here…

    Gilbert Goh

    February 19, 2011 at 1:28 PM

  2. Hi Gilbert,
    I haven’t actually looked through much of the Budget yet, and won’t have the expertise to discern how much of it would really help Singapore, but yes I think you’ve pointed out something quite alarming in Singapore.

    It looks like a majority of Singaporean workers won’t get to enjoy the proposed personal income tax cuts; it’s really nothing more than a way to shift the tax burden from the rich to the middle-class and lower income groups which spend more of their income on consumption.

    EDIT: And with reference to my above post, I think it’s best if Singapore adopts a median disposable income target instead of a generic median income one.


    February 20, 2011 at 4:25 PM

  3. It would be helpful to point out to readers that GNP calculations include investment income and capital gains as well (that are under the control of GIC and Temasek holdings).

    That is, even a high GNP figure does not mean that the regular Singaporean is enjoying a Swiss standard of living, given the ginormous level of reserves the government has.


    February 21, 2011 at 10:37 AM

  4. […] a change from vague promises such as promising to achieve Swiss standards of living, and as mentioned earlier was nothing more than a veiled GDP per capita growth […]

  5. mjuse
    Hi, thanks for pointing that out. I realised I made the mistake of writing “per capita GDP” instead of “per capita GNP”.


    February 27, 2011 at 12:47 AM

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