Tan Kin Lian's Blog: Role of public and private sectors

Sunday, September 20, 2009

Role of public and private sectors

Many governments around the world are short sighted. They want to reduce the cost of the public sector, so they cut down on the number of people employed in the public service, such as teachers, doctors, nurses and policemen. This is ostensibly to reduce the burden on the tax-payers.

If there are insufficient people to provide the public services, relatively to the size of the population, the standard will drop, as these public employers are overworked, overstretched and overstressed. The standard of teaching, health care and public order must surely drop.

There has to be a proper balance. We need an adequate number of people to provide the public service and must be willing to pay the appropriate tax to fund these services.

If the public service is not provided adequately, the people will have to arrange for these services privately. It may be more costly and the standard may be inferior. In some countries, the residents have to engage their own security guards to look after their housing estates. They have to pay more to get private health care and education.

An adequately staffed public service also helps to create employment and put more people into useful occupations. If there is inadequate work in the productive occupations, the excess manpower may be channeled into unproductive work, such as the speculative activities in the financial sector and marketing of investment scams.

There is no need for the public sector to crowd out the private sector. They can co-exist. The public sector can provide for the needs of the lower and middle income groups. The higher income groups can pay more to get private health care, education or other services. They can get personal and better quality attention, but they pay more. The public sector will be around to offer a choice and keep a reasonable limit on the charges of the private sector.

Singapore used to have a good balance between the public and private sector. I hope that we can go back to the good old days.

Tan Kin Lian

11 comments:

Anonymous said...: I think in the education field, as we do not have enough and good teachers both quantity and quality, parents ended up sending kids for tuition.In Singapore, the tuition industry is probably the largest in the world relative to population. I am not aware that parents for international schools send their kids for tuition outside of the school. It is unheard of in Australia that I spent six years living there.; September 20, 2009 8:15 AM
hongjun said...: Public services in Singapore is overstaffed. Many are doing nothing just to get paid.; September 20, 2009 8:21 AM
Anonymous said...: Actually, it is not so much about balance of public and private sector service.

It is more about how much can be tolerated by the public on the inadequate public service or less than fair treatment of citizens vs PRs.

As long as the gahmen can win big at elections and the people are peaceful, it means everything is within tolerable limits and the standard of public service, etc can even go lower with no adverse effects on social peace and political stability. Never mind what and how bad the blogs said otherwise.

This is the case in Singapore. That's why there is room for even 6 million people, according to our wise old man. He really knows Singapore well and the tolerance limits.; September 20, 2009 9:31 AM
Tan Kin Lian said...: Hi Hon Chun(8:21 AM)

The overstaffed public sector is probably the old days. Today, the public sector is understaffed in many fields.

If we have more teachers, there is no need for parents to send their children for private tuition, which is expensive and rather inefficient.

It is better to employ more teachers in schools, so that private tuition is not necessary. Although, tax payers have to pay more, they will save on the cost of private tuition.; September 20, 2009 10:31 AM
Anonymous said...: After talking to my civil servent friends, I think the govt is driving a cost cutting exercise, hence agreed with TKL that overstaffed public sectors are over.

But idiosyncracies exist. Those with clout still call the shots, and their followers will be around. Have also seen pple asked to go, those with connection would flock to old bosses in civil service (if they still around), those who do not have connection or small fries have to fend for themselves, trying to survive in private sector from a change to the staid working life they are used to.

Looking forward, I think it is a big risk if you want to work and retire in the civil service as your skills are often specialised and you hole yourself in a comfort zone, and you find it tough to survive if there is any job tsunami.

Better work in private sector first to build network, and work in govt sector only when the economy is down and always have a plan B.; September 20, 2009 1:50 PM
Anonymous said...: Sometimes it is not a matter of just numbers. Yes they can recruit more teachers but what about the quality?

Already there are many complaints about today's teachers about their commitment and even their values and behaviour!

Nowadays there are also more professions competing for talent and income compared to the past. Why should talented individuals who have no aptitude want to go into teaching?

In the past we have some very good teachers partly because of their passion and partly due to less choices in other professions.; September 20, 2009 3:13 PM
Tan Kin Lian said...: Hi anonymous (3:13 PM)

You said "more professions competing for talent". I think that "talent" is an over-used and exaggerated word. It started when our politician coined the word "foreign talent" to justify getting them to be our citizens - on better terms (i.e. no NS) compared to our locals.

I prefer to have people who are competend and dedicated, not "talented". Some "talented" people, especially the financial sector, used their so-called "talent" to fip the system and make a lot of money, causing bubbles and the economic collapse. Is this the value of "talent".

Let us focus on people who are competent, and many people can become competent through pride in their work. Let us pay people a fair salary.; September 20, 2009 4:42 PM
Vincent Sear said...: The public transport is being blurred as to whether it's public sector or private sector. Commuters are forced to incur additional inconvenience and costs with the recent EZ-Link card "upgrade" exercise.

Everything seems to be fine and dust settled after the last changeover from farecards to EZ-cards. What're the benefits of this "upgrade" excerise, somebody tell me, please.

GIRO was free and easily activated through ticket machines. Now? We have to fill in a form and pay $1.50 first. Subsequent GIRO transactions will be charged $0.25 each, for doing exactly the same thing.

"Upgrade" is a scary and costly word nowadays.; September 20, 2009 6:14 PM
Anonymous said...: I call this cutting your nose to spite your face.

If the private sector retrenches its staff, it is really "sacking" its own customers. Just think about Ford or General Motors in USA. When they retrench their workers, are they also not retrenching their best customers for their cars.

Similarly, when the public sector retrenches (ok let's use the word cost-cut) its workers, is not the number of tax paying citizens also being reduced.

Now imagine every public and private sector organization pursuing a cost-cutting strategy.

Eventually, who is going to be left with a job and salary to buy goods and services and pay taxes?

This is called a "cost cutting death spiral." You lose sales. You retrench staff. The remaining customers suffer from the poor service. You lose more customers. Sales drops again. You embark upon a fresh round of retrenchment.

Also, do you really need "talent" to cut costs?

I just wish we had talents like Steve Job (Apple) who can create entire new market segments with existing technology. Apple's market capitalization (number of shares multiplied by share price) is US$160 billion.
Apple's annual sales revenue is US$32,000,000,000!!!; September 20, 2009 8:45 PM
Anonymous said...: yes, I agreed with Mr. Tan. A lot of FT mades lots of profit from properties for example. there is really no real value added to our society. their profit is a cost that all singaporeans have to pay higher prices in goods and services via higher rental.; September 20, 2009 8:45 PM
Anonymous said...: I agreed with Hon Chun. There are too many people in the public services that are doing nothing but still getting paid coz they don't get retrenched easily unlike private sectors.; September 22, 2009 1:56 PM