Prices are computed from a basket of 122 items, based on a Western European lifestyle. The mix can be seen in the table at right. Some may ask how representative his basket is compared to the Singapore lifestyle, but seeing how westernised Singaporeans have become, I don't think it makes much of a difference.

Singapore was ranked 24th out of 73 cities worldwide, only slightly cheaper than Amsterdam (rank 23) and London (rank 21). Tokyo was 5th out of 73 cities and Hong Kong 28th.

Three years earlier, Singapore's price-ranking was 32. We climbed 8 places in the interim period, not the "two notches" that Seah spoke about.

If one adds rent to the basket, Singapore shoots up the 2009 worldwide rankings from 24th (basket without rent) to 15th place (basket plus rent), making us MORE expensive than London and Amsterdam. Tokyo goes up to 3rd place. Hong Kong shoots up even more dramatically than Singapore to 11th.

Wages are calculated from averages from 14 common occupations ranging from unskilled (e.g. building labourer) to engineers and department heads. UBS' report explained in its introduction that:

The data we collected includes standard local incomes and working hours in addition to local consumer prices. The survey asked 112 questions on wages, payroll taxes and working hours for 14 separate occupations. The survey was conducted with a representative sample of companies, and participants profiles were defined with maximum specificity with respect to marital status, work experience and education.

In the net wages ranking, Singapore was placed 41st out of 73 cities, thus the word "middling" I used above.

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To better show where we stand in relation to our neighbours, the charts below refer to the fifteen Asia-Pacific cities included in the survey.

The first chart shows the relative price of the basket of 122 items, without rent, indexed to the price of the same basket in New York. Singapore is in second place, with Hong Kong very close.

If we look at wage levels from the 14 occupations, Singapore is nowhere near second place. We stand lower than Seoul and Taipei, and we're only twice the level of wages in Shanghai. We've been surpassed, with others catching up.

(Note: the chart is based on net wages, which means wages net of taxes, social security contributions, etc)

Purchasing power is a function of wages and prices. Since we have high prices and middling wages, the purchasing power is not a pretty sight. We rank 8th out of 15 Asia-Pacific cities. Even the average guy in Kuala Lumpur can afford a better standard of living than us.

 
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What is wrong with prices in Singapore? It's hard to say. The survey does not contain enough data for us to tease out the problem. It may also fail to account for quality. Take, for instance, this chart showing the price of public transport:

As you can see, Singapore is one of the more expensive places, but you'd have to be blind to think that the quality of public transport in Manila or Mumbai is anything comparable to Singapore's.

However, the next chart may give us a clue as to how prices are pushed up. On the left is the number of minutes the average person must work to earn enough to buy 1 kilogram of uncooked rice. On the right is the number of minutes of work needed to buy one McDonald's Big Mac. 

Most places require less than twice the working time to buy a Big Mac compared to buying 1 kg of rice. Singapore is one of the few places that requires more than twice, in common with cities like Jakarta, Kuala Lumpur, Manila and Mumbai -- not quite the set we normally imagine ourselves to belong to.

What differences are there between uncooked rice and a Big Mac? Rice has far fewer domestic inputs. We buy what has been imported, adding on a little cost for storage, transport and retail space. Thus our purchasing power over rice is really derived from the strength of the Singapore Dollar's exchange rate. 

A Big Mac includes many more domestic cost inputs. The buns are baked locally, there is the rental cost of kitchen and dining space, power and water, plenty of staff, disposal of trash, licences, etc. It appears that our purchasing power is degraded by our own domestic cost inputs.

Another look at domestic cost inputs can be found in services. The UBS survey has this to say:

Service prices reflect local labor costs 

To compare global service costs as accurately as possible, we analyzed a basket of 27 services. They ranged from classic expenses such as haircuts, phone charges, dry cleaning, movie tickets and restaurant meals to newer services of everyday consumption, including DSL Internet, training and continuing education courses and tickets for a variety of leisure activities. We have responded to the broader changes in consumption habits by increasing the weight of services in our study from 20% to 22% in our total basket of goods and services.

Here are the fifteen Asia-Pacific cities:

As you can see, Singapore is the second-most pricey of the lot. Does this mean that our wages are high? Despite what UBS wrote, not necessarily. What you pay in the price of services ultimately goes to more than wages; it also goes to corporate profit and reinvestment as well as to the government in the form of taxes and levies (including the Development Charge, which in turn pushes up rents), and used for paying a bureaucracy, the military and infrastructure investment. It can also be parked away through surpluses as reserves.

As shown in the second chart above (wages), our wages aren't the second highest in the Asia-Pacific. This suggests that the (second highest) price of services here reflect more the elements of corporate profits and government take. Our workers do not benefit commensurately form the high price charged for services. Corporate profits may be kept up through the lack of competition while the slice taken by the government stems from political decisions.

How true is this? Economists might want to study the matter.

Now, let's look at the wages computed for four occupations. The next two charts show data for a car mechanic and a cook:

The Singaporean car mechanic is paid significantly less than his counterpart in Hongkong, also less than the guy in Taipei, and not much differently from the mechanic in Seoul.

The Singaporean cook earns less than the guy in Seoul too.

The next two charts look at the higher end of the job scale: product managers and engineers.

Among product managers, the Singaporean one is paid third highest among the 15 cities; among engineers, fourth highest.

Our economy seems to be one where we have an extraordinary gap between the powerful and the powerless, even by Asian standards -- countries not known for soft-hearted socialism. Average wages for Singapore as a whole are pulled down the city rankings because our low-paid are so lowly paid. Meanwhile, one suspects that our prices seem to be kept up not so much by labour costs but by profit-taking and the government's share.

With the resulting degradation of purchasing power, one can then ask: Is the average Singaporean really having it so good? 

© Yawning Bread