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The worldwide study conducted and released by UBS lately, titled “Price and Earnings 2009? has some unflattering results for Singapore. (download the study here)
While our economy has the highest GDP (PPP) per capita in Asia at $49,288 according to a World Bank report (source: Wikipedia), our people do not enjoy a quality of life which commensurate with it.
Though we are technically a developed first world country, some economic indictators as shown by the UBS study suggested that Singaporeans are not that better off than those in Third World countries.
Singapore has a GDP (PPP) per capita higher than Switzerland, but our wages are way below the Swiss.
The UBS study found that employees in Copenhagen, Zurich, Geneva and New York have the highest gross earnings. With its extremely high gross wages and comparatively low tax rates, Switzerland is a very employee-friendly country.
The net wages used have been deducted for taxes and social security.
Zurich and Geneva have wage indices (gross) of 119.8 and 107.5 respectively. In contrast, Singapore has a wage index of only 31.3, comparable with Moscow (30.9), Tallinn (28.7) and Johannesburg (26.7).
In the Asia-Pacific region, it is exceeded by Tokyo (83.0), Sydney (74.1), Auckland (44.1), Hong Kong (42.3), Taipei (35.5) and Seoul (32.3)
Low domestic purchasing power
Where does an average income buy the most products and services? Wages alone do not determine the standard of living in a particular city or country.
A better way to measure prosperity is to divide the average annual salary by the total price of a selected basket of goods and services (as used in the UBS study). This tells us how much purchasing power local wages.
Again, Zurich (106.9), Sydney (95.9) and Luxembourg (95.4) topped the list - its citizens have the highest domestic purchasing power.
Singaporeans have a low purchasing power of only 39.9, comparable to Kuala Lumpur (39.5), Warsaw (34.0) and Bogota (33.7).
Other countries in the Asia-Pacific region which are ahead of us are Tokyo (82.2), Auckland (68.9), Taipei (58.9), Hong Kong (58.1) and Seoul (57.4).
In other words, though the cost of living is higher in Tokyo, the average Japanese has a domestic purchasing power more than twice that of an average Singaporean.
Though Malaysia is still a developing country and has a GDP (PPP) per capita of only $14,215, less than 3 times of ours, the ordinary Malaysian citizen has about the same domestic purchasing power as the Singaporean.
Low relative purchasing power of wages
This is calculated in the UBS study by using a specific, highly uniform product that is available everywhere in the same quality, and then calculate how long an employee has to work to afford it in each city.
For the purpose of this article, the iPod nano (with 8 GB of storage) is used.
An average wage earner is Zurich and New York can buy a nano from an Apple store after nine hours of work. A Singapore worker will have to work three times longer after 27.5 hours.
The figures for selected Asia-Pacific cities are as follows: Sydney (9.5hrs), Tokyo (12hrs), Auckland (16hrs), Hong Kong (19hrs), Seoul (22hrs) and Taipei (23.5hrs). Again we came in last among the 4 Asian Tigers.
Long working hours
People work an average of 1,902 hours per year in the surveyed cities, but they work much longer in Asian and Middle Eastern cities, averaging 2,119 and 2,063 per year respectively.
European cities had the lowest working hours per year. A global comparison showed the people in Lyon and Paris spend the least amount of time at work: 1,582 and 1,594 hours respectively.
Singaporeans spent on average 2,088 hours at work per year with 11 days of vacation.
This is less than Hong Kong (2,295) and Seoul (2,312), but more than Tokyo (1,997), Taipei (2,074), Sydney (1,747) and Auckland (1,884).
Singaporeans also took the least number of holidays after Hong Kongers (10 days/year).
High cost of living
Singapore was ranked the second most expensive place to live in after Tokyo, surpassing Hong Kong for the first time.
Let us compare the food prices in Singapore and other developed countries since food is a basic necessity.
In the UBS study, a basket of 39 food items is put together and weighted mainly according to Western European consumption habits. The average worldwide cost of the basket is USD385.
In Asia, Tokyo topped the list with an index of 124.7, followed by Hong Kong (96.5), Singapore (89.4), Seoul (89.0), Taipei (67.9) and Sydney (66.3)
The high cost of living coupled with low wages and domestic purchasing power condemns the average Singapore worker to an ignonimous, monotonus and stressful working life.
Singapore workers have to work harder to earn the same amount of money and save for a longer period to purchase the same product.
In 1991, then Prime Minister Goh Chok Tong promised Singaporeans that we will be able to achieve the “Swiss standard of living” within a decade. Ten years later, we have a living standard which is closer to Russia than Switzerland.
Like Singapore, the Russians has a low wage and domestic purchasing power and Russia, especially the city of Moscow, has one of the highest cost of living in the world.
In the next part of this article, we shall examine the uncanny similiarities between life in Singapore and Russia after the disintegration of the Soviet Union.
(Source of study: http://www.ubs.com/1/e/media_overview/media_global/releases?newsId=170250)