Question 2

Japan and Singapore

Extract 1: Japans labour shortage hits new extreme
Labour shortages in Japan have reached a new level of severity, with more permanent jobs
open than applicants for the first time on record. The ratio of regular job openings to applicants
reached 1.01 to 1 in June, the first time it has risen above parity since records began in 2004.
Increased competition for regular workers could lead to higher wage growth. It could also spur
consumption, because workers with the security of a job are more likely to spend.
While the labour market is very tight, a shift into part-time work and rising share of workers
outside of traditional working years continues to hold down wage growth, said Bill Adams,
senior international economist at PNC Financial in Pittsburgh.
It might be difficult for firms to address the labour shortage going forward only by increasing
the number of part-time employees, He continued. There is a certain limit to a reduction in
business hours and a cutback in services, and it is not the case that labour-saving investment
can be promoted in all industries.
Adapted from: The Financial Times
Extract 2: Japan Slaps 50% Tariff on Some U.S. Beef
Japan intention to impose a temporary 50% tariff on frozen beef from the U.S. and several
other countries is a move that could inflame trade tensions, although officials described it as
a required response to a recent surge in imports.

The tariff increase to 50% from the regular 38.5% will take effect in August and hit frozen beef
imports from countries that dont have an economic partnership agreement with Japan, the
Ministry of Finance said. That includes the U.S., the second-biggest foreign supplier of beef
in Japan after Australia, as well as Canada and New Zealand.

The move doesnt affect Australia, which has a free-trade deal with Japan, and doesnt cover
refrigerated or fresh beef. The U.S. Meat Export Federation said Japans move would have
negative implications for both U.S. beef producers and Japanese restaurant chains that rely
on frozen American beef.

Under Japanese law, an additional tariff known as a safeguard is triggered when frozen-beef
imports from all countries and frozen-beef imports from countries lacking free-trade deals with
Japanor non-EPA countriesboth increase by more than 17% from the same period a
year earlier.

Frozen beef is widely used at restaurants to make hamburger patties and bowls of beef over
rice, a popular fast-food item in Japan. The safeguard duty affects around 12% of total beef
supply in Japan
In 2016, the U.S. exported $1.5 billion of beef to Japan, data from the U.S. Meat Export
Federation showed.
Source: The Wall Street Journal
Figure 1: Singapores projected economic growth and productivity

Extract 3: What challenges lie ahead for Singapores economy

Singapore needs to find a way to continue growing its economy, to improve the lives of its
people. The country's growth has been high, with its real gross domestic product soaring 40
times since independence in 1965.

But this growth is slowing. Singapore's GDP is forecast to grow by 2 per cent to 4 per cent a
year going forward. How will this growth happen? There are two ways: by growing the
workforce, and by boosting workers' productivity.

Employment growth from now until 2020 will be about 2 per cent. This is because baby
boomers are retiring, fewer young people are entering the workforce, and Singapore cannot
continue taking in foreign workers at a high rate. This means that its productivity must grow
by 2 per cent - a hard slog that requires transforming businesses and helping individuals
master workplace skills under the SkillsFuture programme.

Constant improvement is needed to stay ahead of Singapores competitors. Workers will

benefit from this because they can secure higher wages. Failure to do so will increase the risk
of redundancy.
Source: The Straits Times, 1 July, 2015

Extract 4: Singapore remains worlds second-most competitive economy

Singapore kept its position as the world's second-most competitive economy this year despite
concerns over rising business costs, tighter labour policies and slowing growth.

This is the fifth year running that Singapore has come in second behind Switzerland, which
stayed in pole position in the annual Global Competitiveness Report, compiled by the World
Economic Forum (WEF).

The WEF said Singapore was one of the most consistent performers across economies, faring
well in the 12 factors assessed in the study such as infrastructure, health and education, and
technological readiness.

The Republic did especially well in terms of goods, labour and financial market efficiency, the
WEF noted. In particular, Singapore can rely on the most flexible and the second-most
attractive labour market in the world, though female workforce participation remains relatively
low. "With the best higher education and training system in the world, Singapore is well placed
to increase technological adoption, business sophistication and innovation," the WEF said.

Source: The Straits Times, September 30, 2015

Figure 2: Singapores GDP in current prices from 2010 to 2020

Questions
(a) With reference to Figure 1, describe the trend for productivity and workforce
growth from 1994 to 2020.
[2]
(b) Explain how changes in Singapores future GDP in current prices will affect the [4]
standard of living of Singapore citizens.
(c) Discuss whether a tariff on beef works to curb the recent surge in imports in [6]
Japans economy
(d) With reference to the resources and your contextual knowledge, discuss the [8]
view that Japan and Singapore face the same macroeconomic challenges.
(e) Discuss the view that a higher female workforce participation is the only way to [10]
enhance Singapores competitiveness.

[Total: 30 marks]