Australia/Singapore: two examples of resilience to the crisis

This paper set out to examine the factors underlying Australia and Singapore resilience to the Global Financial Crisis (GFC). Australia and Singapore have not been spared by the GFC, but both countries did relatively well in comparative terms. Australia is the only OECD country to have dodged a technical recession and is now having one of the highest growth rates among industrial nations. Singapore is expecting a record high growth of 13% to 15% in 2010. Three factors, it is argued, have contributed to such an outcome. First, both governments were having a considerable budget surplus at hand to support the economy in facing the downfall. This was notably the case for Singapore which learned from the 1997 Asian financial crisis and has since created a special 'buffer' fund (Special Risk-Sharing Initiative) to shield the country from such events. In this respect, the case of Singapore may be seen as a case-example in favour of the establishment of Financial Transaction Taxes (FTTs). In addition, both governments decided to intervene in a prompt and significant way (Singapore Job Credit Scheme - Keeping jobs, Building the Future/Australian Nation Building Economic Stimulus Plan), which later proved to secure and fasten the road to recovery. Second, both countries have fairly robust banking systems which at that time were far less exposed to toxic assets than were their American and European counterparts. Third, both economies kept boosted by the dynamism of regional economies, China in particular. It is a common view that the huge dividends provided by the resource sector and mining exports to China significantly helped Australia to dig its way through the GFC.\ud \ud In Australia, the Labour government initiative was by and large welcome by the ACTU in Congress, 2009. The GFC did temporarily impact on the labour with part-time employment increasing markedly: up in number from almost three million in July 2007 to just fewer than three and a quarter million in July 2009, or, a shift from 28.3 to 29.6 per cent of total employment. At a macro-level (it differs across industries) this shift in the casualisation of the labour market was even more significant given employers' relative ease in not initiating or not renewing the contracts of casuals. As labour costs were generally considered more easily adjustable that other business costs employers commonly sought to reduce the wages bill by decreasing hours, minimising overtime, cutting casual staff per shift and by adjusting the workforce profile. In some industries however, particularly those where maintaining the quality of produce or service was an important consideration when making adjustment to labour costs, businesses reported that reducing permanent staff was often a last resort.\ud \ud In Singapore, the government and social partners (unions and employers' association) issued a 'Tripartite Guidelines on Managing Excess Manpower' in November 2008. The guidelines strongly recommended that employers only retrench as a last resort and offer up a range of alternatives to retrenchment to reduce business costs. These alternatives include implementing shorter working weeks, requiring workers to take either paid or unpaid leave, reducing hours of work and other forms of temporal flexibility. The objective was to encourage businesses to 'cut costs to save jobs, not cut jobs to save costs'. To complement these temporal flexibility alternatives, the Singapore Government introduced the SPUR program (Skills Programme for Upgrading and Resiliance) at a cost of $600 million over two years. SPUR is a labour market program administered by the Singapore Workforce Development Agency and provides up to 1000 different courses designed to upgrade a wide variety of worker's skills.\ud The GFC was meant to represent a turning point away from economic rationalism. Former Prime Minister Kevin Rudd even published a major essay decrying the failures of neo-liberalism. Yet the government resisted calls for more forceful regulation of executive remuneration or the financial system, dodged around international proposals for FTTs and showed little sign of following up the Rudd critique. A couple of years into the crisis, policy makers carried on much as before, as no consensus about a coherent alternative had emerged. The ideas underlying market fundamentalism had been killed yet they were still alive – as Quiggin calls it, they were 'zombie ideas'