Emulating Singapore’s success

“As Singapore’s demographics and cost structures changed, its industrial policyevolved, moving up the quality ladder to attract industries that would create jobs to match the skill levels of its increasingly educated population.”  

On 29 March, 2015, when Singapore bade farewell to >Lee Kuan Yew, its first and longest-serving Prime Minister, India participated in the event in both top-down and bottom-up ways. Prime Minister Narendra Modi attended the state funeral, the Indian flag flew at half-mast; and in Tamil Nadu, which shares a cultural affinity with Singapore’s Tamil population and sends many migrant workers there, gatherings were organised to watch the funeral. 

LKY, as he is informally known, led the Little Red Dot republic from the third world to the first in a generation, and has been hailed as one of the leading Asian statesmen of the twentieth century. Singapore recently celebrated >50 years of independence. This is an opportune moment to examine what India can take from this  island nation’s incredible half-century. 

Public sector pay 

Much of Singapore’s success is attributed to a clean and efficient government. LKY believed that competitive salaries were required to attract the society’s best people into public service and bring out their best. In 1996, he argued, “Low salaries will not attract able men who are or can be successful in their professions or business. Low salaries will draw in the hypocrites who sweet talk their way into power in the name of public services, but once in charge, will show their true colour, and ruin the country...” 

Of course, pay should never be the sole reason people aspire to join politics or the civil services. But low pay should also not deter capable and public-spirited people from government service. Singapore has a unique system of setting bureaucrats’ pay — public sector salaries are linked via a formula to comparable private sector jobs. This approach reflects the choices and trade-offs individuals face while selecting careers.

By contrast, in India, successive Central Pay Commissions have restructured the salaries of government officers just six times in the past 68 years. Adjustments often take the form of applying a multiple to existing salaries, which do not take into account changes in the market price for certain skills due to developments in the wider labour market. Carefully designed indexation can address this issue. 

For public service jobs with no obvious comparison group — like police officers or administrators — the government can aim for a person with a certain calibre to be recruited and set salaries based on what a person with these qualifications could earn in the best private sector jobs. In Singapore senior administrative service officers (and Ministers) receive few non-monetary benefits, but have their salaries indexed — with reasonable discounts applied — to salaries of private sector executives.

Singapore was one of the fastest-growing economies in the world during the post-war period largely due to interventions by an activist state. The country heavily invested in infrastructure and institutions — transportation networks, labour skilling, an attractive tax regime — to attract Foreign Direct Investment (FDI) in sectors that created low-skilled manufacturing jobs in the late 1960s. The share of manufacturing in Singapore’s Gross Domestic Product (GDP) almost doubled from below 16 per cent in 1960 to 28 per cent by 1980.

The government also invested heavily in primary education, which enabled a larger share of the population to participate in the economic growth that was to follow. And as its own demographics and cost structures changed, Singapore’s industrial policy evolved, moving up the quality ladder to attract industries that would create jobs to match the skill levels of its increasingly educated population. 

What lessons does this hold for India? India’s growth has been fuelled by services that are skill-intensive and do not readily absorb (unskilled) labour and resources from other sectors. This, as the Economic Survey 2014-15 highlighted, has hampered the potential of these sectors (especially organised manufacturing) to spread the benefits of growth across the economy.

Fortunately, the two flagship campaigns of the present government — >Make in India and Skill India — seem to recognise LKY’s prescient advice, delivered in the 2005 Nehru Memorial Lecture, that, “Since the industrial revolution, no country has become a major economy without becoming an industrial power.” 

Women’s participation 

When Singapore became independent in 1965, few women worked — only about a third were in the labour force — and the labour force participation (LFP) of Indian women in Singapore was particularly low. The government embarked on a campaign to encourage women to join the workforce by making it safer for women to travel at night and publicly discussing the benefits of a dual-income family. This campaign helped shift cultural norms, and, coupled with rising female educational attainments and greater availability of domestic help, explains the increase in participation of women in Singapore’s workforce from below 30 per cent in 1970 to above 51 per cent in 1996.  

Research by leading growth economists such as Alwyn Young suggests that improving female LFP was a key reason, along with high savings rates and investment in primary schooling, for Singapore’s rapid growth of nearly 8 per cent per annum in the post-war period. What can India learn from Singapore’s experience? Economists Stephan Klasen and Janneke Pieters document that despite fertility declines in urban India, low levels of female LFP persist, especially among women with medium education levels.

The Singapore experience demonstrates that political backing and dedicated efforts by the state to reduce costs for women to join the workforce can yield measurable change. Given the bewildering differences in size and history between India and Singapore, is not an attempt to draw specific lessons, especially for India, a futile exercise? We do not think so.

In two specific areas — public sector pay and industrial policy — the points highlighted about boosting economic efficiency and strengthening governance have little to do with size. And with regard to women’s role in the workplace, Singapore inherited many of the cultural barriers prevalent in Asian societies. The legacy of Singapore’s astonishingly successful half-century, above all, is that transformative change is possible.

( Siddharth Eapen George is a Ph.D. student at Harvard University and a former Singapore government economist. Rangeet Ghosh is an Indian civil servant)

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Printable version | Oct 23, 2021 1:28:52 PM |

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