Deceptive Statistics

In a review article in the Straits Times last Saturday, a certain Professor Ivan Png argued that the “foreign worker buffer” was working as intended. Prime Minister Lee had also reiterated this in his speech to NTU students in his forum (see above) in NTU. Similar as the two views may seem to be, they were in fact different and I will explain why.

Many have assumed that Prof Png’s article was just another unmitigated attempt by the media to drum up support for the government’s labor policies. Actually I think that is not the case here. The professor’s article was a simplified version of a more technical consideration. Like all scholars, his view is that of an unbiased nature, stating the facts as what it is. There is no moral right or wrong in argument, instead it is simply a matter of facts and accuracy. Using foreign labor as a buffering mechanism to prop up the unemployment figures is an established method utilized by many governments to “enhance” that statistic. Singapore is not alone in doing so. The only difference is that perhaps only in Singapore, the touch-up work done to the unemployment statistic was not shamefully grossed over in the media but printed in bold as if to represent some kind of righteous justification. Let me illustrate with a simple example.

Take for example there are 7 unemployed Singaporeans for every 100 Singaporeans. That is 7% unemployment. Say we are in good times and the industries need to recruit 8 of every 100 people more. Because we only have 5 suitable local workers for this employment, we need to import 3 foreign workers. The unemployment ratio would have dropped from 7% to 1.9% (2/103). If there wasn’t foreign workers import, the unemployment rate would be 2%. Therefore in a booming economy, foreign labor help reduce the unemployment rate more quickly. Now, say the economy turned southwards and the industries are laying off 4 of every 100 people which we can reasonably assume will be 50% local Singaporeans and 50% foreigners. The unemployment ratio would have risen from 1.9% to 4% (4/100). Without foreign workers, the unemployment rate would be 6%. The foreign workers would have returned back to their country and do not contribute to the ratio’s denominator here. Therefore in a lagging economy, foreign labor help cushion the rise in unemployment rate.

This is the “buffer” effect the professor was talking about in his article. Whether such mechanism does indeed benefit the host country as a whole is debatable and personally I think it is nothing but a statistical disguise. But its efficacy of suppressing the unemployment rate cannot be denied.

Now, once we understand how this buffering mechanism is supposed to work, we must then think deeper into its exact usefulness and relevance to the country and its citizens. As seen from the simple example above, regardless of the overall unemployment figure, the number of Singaporeans employed during good times and laid off during bad times remains constant. If that is the case, the unemployment figure is but another test score on our government’s report card which it will use to pat itself on it pat for a job “well done”. The statistic means little if it doesn’t translate into actual effects for the people of Singapore.

More and more, national statistics are like playthings of the rich and powerful, used to justify the whims and fancies of the decision-makers. We have politicians that use statistical cosmetic surgery as an advertisement for the government’s labor policies instead of being red-faced and embarrassed for data manipulation. Either they do not understand what they are saying or they think we don’t. With a majority of the local population that takes every at face value and forgets to read between the lines after glancing through the headlines, such nonsensical and erroneous usage of statistics will continue to be tolerated and increasingly, accepted as the biblical truth. The people who blasted Prof Png’s article as well as the people praising the labor policies of our government are but 2 sides of the same coin, people deceived by the deceptiveness of local national statistics.