The Economist’s Worldwide Cost of Living index does not shed light on the bills that ordinary Singaporeans pay.
By Lin Suling, Opinion Editor, The Straits Times, 13 Dec 2023
As a sign of the lengths Singapore will go to in a bid to up its wow factor and entice more travellers here, consider the dramatic four-storey waterfall display unveiled at the recently refurbished Changi Airport Terminal 2 in November.
Just about everyone I know has already visited the attraction, now the centrepiece of the T2 departure hall, and told me the four-minute musical extravaganza is not to be missed.
Now, you may be forgiven for confusing this 14m by 17m digital display with the man-made, HSBC-sponsored rain vortex at Changi Airport’s Jewel, which was opened a mere four years ago. That spectacular sight remains the world’s tallest indoor waterfall.
If two waterfalls – one digital, one physical – sound like overkill, that is probably precisely the intent. Singapore is already home to the world’s largest air-conditioned glass greenhouse, Gardens by the Bay, and hosted the first Formula One night race globally.
We must keep filling this carousel of new shiny things so we can remain vibrant and attractive to visitors, investors and corporate leaders.
Singapore thus far seems to be doing this well. Why else would expats keep coming back to Singapore despite it being billed the most expensive city nine times in the last 11 years by The Economist?
News of Singapore – along with Zurich – topping the 2023 Worldwide Cost of Living index on Nov 30, nonetheless, raised many eyebrows.
Many Singaporeans have suggested that it confirms their longstanding concerns that making ends meet in Singapore is becoming an uphill climb for the man in the street.
Online, netizens cite anecdotal experiences corroborating this jump in prices, from the doubling of the cost of a bowl of fish soup at their local coffee shop to complaints about certificates of entitlement (COEs).
Another pointed to news of thwarted attempts to smuggle 120kg of beef and pork as an unequivocal sign that more Singaporeans are turning to the black market to fill their stomachs. Never mind that meat smuggling is possibly the most creative strategy to beat inflation nobody has ever heard of.
And most discussions eventually reached the same conclusion: that the Singapore Government has slipped, in letting in foreigners who push up prices while leaving Singaporeans behind.
The most expensive city in the world for whom?
What to make of all this? Some information about how the Worldwide Cost of Living is put together offers perspective.
The full index of how cost of living stacks up across 173 countries is available only with a US$1,195 (S$1,602) fee. Its website suggests this full report is useful for human resources, corporates, financial institutions, and legal and insurance firms, as “this purpose-built Internet tool quickly calculates cost-of-living allowances and (aids in) building compensation packages for expatriates and business travellers”.
A closer look at the items used in this benchmark of relative cost of living, which is meant to be a comprehensive dataset of over 400 individual price points across 200 goods and services, throws up things such as international school tuition fees, public golf course fees and three-course dinners.
These may just be a few outliers that stick out. Even so, not only are they hardly stuff the average Singaporean spends on, they are also more accurately the make-up of what the typical expat around the world splurges on.
Here in Singapore, I would also add to this list the doubling of Additional Buyer’s Stamp Duty for purchases of homes by foreigners, and higher personal income taxes for top earners beginning from the 2024 year of assessment.
Curiously, despite these higher projected expenses, the foreigners just keep coming.
A steady interest in the new One Pass aimed at top foreign talent persists. Even those with no plans of living here think it’s a great holiday destination, with Singapore projected to welcome 12 million to 14 million visitors in total by end-2023, according to the Singapore Tourism Board.
Vibeflation
That is not to say Singaporeans do not experience cost-of-living pressures; we surely do.
Inflation has already eroded gains from wage growth. Real median income here has fallen 2.3 per cent year on year, according to the latest Labour Force Survey. Facing higher interest rates, households are feeling the heat and paring down mortgages and personal loans. And there’s little stopping the poor economic climate from casting a pall over everything.
But to suggest the Worldwide Cost of Living index is an accurate barometer reflecting the economic hardships facing ordinary Singaporeans may be projecting our feelings of inadequacy in keeping up economically onto very specific ghosts that aren’t there.
To do so also ignores the reality that cost of living means different things to different people, and not every concern has equivalence. For example, the Singapore public will understandably feel more sympathy towards worries that daily staples like public transport fees or the costs of instant noodles and eggs are ticking upwards for low-income families, compared with the First-World problems of expats.
Using lived experience as a broader gauge of national economic performance and insisting that sentiment is pervasive also runs into serious “vibeflation” problems, a term used by The New York Times’ Paul Krugman who struggled to understand why Americans remain miserable despite optimistic economic indicators.
He has highlighted how souring public vibes over inflation have distorted media coverage of the United States economy and fuelled illogical economic analyses, which could potentially influence public policy.
Financial Times columnist John Burn-Murdoch suggests: “US consumer sentiment is becoming the latest victim of expressive responding, where people give incorrect answers to questions to signal tribal political or social affiliations.”
Could this explain what’s happening too in Singapore?
An uncaring administrator?
Looking ahead, concerns over cost of living will remain front and centre. The broader worry may be whether easing inflation can come down fast enough ahead of a dampening economic outlook for 2024.
Global economic growth is expected to slow further in 2024 to 2.8 per cent, compared with an expected 3.1 per cent in 2023, according to Monetary Authority of Singapore projections, amid geopolitical, economic and climate risks.
Macroeconomic figures consistently tell us that various sectors will grow at vastly different rates. In 2023, the travel and tourism-related industries boomed as visitors returned, while the financial and manufacturing sectors cooled.
A good job with strong prospects at a firm that has its sails hooked to growing markets and the concomitant career mobility of people to move into more productive, higher-earning sectors remain the best hedge against the rising cost of living.
The creation of good jobs, the continued transformation of businesses and the relentless push for the upgrading of skills as the economy restructures have been lifelong national obsessions that may now prove critical economic strategy in a time of uncertainty and continued disruption.
An equally important element in public policy communication going forward will be in ensuring that narratives around getting a good job and constant upskilling do not come across as stinging and unempathetic. Yet the Singapore Government is hardly an unfeeling administrator.
That public coffers have set aside a $3 billion Assurance Package at the 2023 Singapore Budget to provide cash support skewed towards the low-income, the less wealthy and seniors, only to reinforce it with a $1.1 billion Cost-of-Living Support Package in September, is clear acknowledgement from officialdom that the average Singaporean has not had it easy in 2023.
They are also signs the Government is watching conditions and exercising flexibility to dole out help when needed to put a floor beneath the most vulnerable in Singapore.
Counted from 2020, more than $10 billion has been set aside to aid Singaporeans with rising costs and GST increases alone.
Critical areas of concern like COE pricing and HDB affordability have also seen fixes informed by data and driven by technocratic policy-making moderating prices, albeit at a pace that might not meet the Singapore public’s general impatience for faster solutions to stem the bleed.
Better state-society relations
The abundance of salty comments and establishment-bashing online in response to the news of The Economist’s index suggests that cost of living remains an emotionally charged and easily politicised issue that can descend into tribalism, as more people project their own opinion of social ills onto news stories.
Those who believe the system is rigged and skewed towards serving the rich and powerful will see evidence of how Singapore is increasingly becoming a playground for rich foreigners, and locals are left to fend for themselves.
Those who think the authorities should be responsible for every part of our cradle-to-grave existence – including the colour of HDB lift lobbies and the dampening of million-dollar resale HDB flats’ prices – will frame the issue of rising costs as evidence of denial and insensitivity on the part of the Government.
The facts, however, point to progress achieved in recent years as a government engages a more educated population better schooled in the nuances of public policy.
Trust in the Singapore Government has improved to a record high of 76 per cent, according to the 2023 Edelman Trust Barometer.
This journey towards better state-society relations, however, will always be a work in progress. One step that we can take is to avoid seeing things in zero-sum terms, in order to create room for nuance.
While Singaporeans can afford to be more fair-minded and discerning regarding what news on cost of living we should pay attention to, the authorities too can be more relaxed about the same news and allow a thinking society to flourish instead of rushing to provide a “correct answer”. One example being when the authorities themselves rush to vociferously defend public policy against metrics suggesting poor performance, exhibited precisely by the Ministry of Trade and Industry’s response to the 2023 Worldwide Cost of Living survey.
More largely, given that cost-of-living issues can be a flashpoint for deeper issues around the economic competitiveness of Singaporeans in an open economy, it would be useful for the Government to proactively tackle the crux of these matters and explain how access to foreign talent has been key to convincing top firms to anchor businesses here and has led to good jobs with strong prospects created for Singaporeans.
Manpower Minister Tan See Leng had previously mentioned, as an example, that the information and communications (ICT) sector accounted for one-fifth of all Employment Pass (EP) holders in 2021, up from one-sixth in 2016. Within this same timeframe, the ICT sector saw the creation of 34,400 jobs for local professionals, managers, executives and technicians (PMETs) and a rise in median local wages.
A fifth of all the 161,700 EP holders in end-2021 translates into 32,360 EP holders in the ICT sector. One-sixth of all EPs in 2016 translates into 32,050 ICT EPs.
These figures suggest each additional EP was accompanied by over 100 new local PMET jobs in the ICT sector in those five years.
More information to show whether this same high benefits-to-cost ratio extends to other sectors might be helpful to tackle concerns that the ICT sector may be the exception rather than the norm.
Likewise, some quantifying of taxes foreign talent attracted here pay might also help us all understand the benefits of staying open to this class of manpower. After all, every cent going into the $10 billion to offset GST and other rising costs of living for Singaporeans counts. This would require backend work to categorise taxpayers by nationality, something which may not be the practice now.
Yes, higher costs of living are a real issue for many, especially the lower-to-middle income groups whose real wages have regressed, and should be addressed.
At the same time, it’s useful for us in Singapore to avoid binary thinking. Investments to attract expats and business investors through improvements to infrastructure and the economy also benefit Singaporeans, and do not mean a smaller pot for Singaporeans or that we will get left behind.
Let’s remember we get to enjoy the fruits of that labour, both big and small. Like the new digital waterfall at Changi Airport T2 which has seen a large number of Singaporeans admiring this marvel.
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