Gender Equality in Singapore's society

Close that workplace gender gap

BY Dr Theresa W. Devasahayam is Fellow and Researcher-in-charge of Gender Studies at the Institute of Southeast Asian Studies.

The world once again finds itself celebrating International Women’s Day this Friday, March 8. There are many reasons to celebrate women’s and girls’ achievements. One obvious achievement we can boast about is that the gender gap in education has reversed in many parts of the world, as now girls more than boys are more likely to enter college and graduate.

While this is clearly progress for women – since receiving an education signals empowerment as theoretically it puts women on an equal playing field with men in enabling them to seek out wage work – gender equality in education does not automatically translate into gender equality in the workplace.

In fact, women still face persistent obstacles in the workplace because this domain remains largely male-dominated.

Several reasons point to why the gender gap in the workplace should be closed. The most obvious rationale is that closing the gap in employment actually spurs GDP growth rates as well as improves economic competitiveness and corporate performance.

Moreover, women bring a different approach to social interactions in the workplace, says President of Harvard University Drew Gilpin Faust.

PERSISTENT WAGE GAP

Making the workplace inclusive for women may be achieved in several ways. Ensuring equal pay for equal work across the sexes is one attempt at engendering gender equality.

In the United States, for example, in spite of the wage gap closing from 62 per cent from 1979 to 82 per cent in 2011 for men and women (according to data from the US Department of Labor and Bureau of Labor Statistics published in October 2012), a gap still persists with older female workers not being compensated as well as their younger counterparts.

In Southeast Asia also, men continue to earn more than women. According to the World Economic Forum, several countries in the region surpassed the average score of 0.64 documented for 135 countries in 2012 (with a score of 1 denoting gender equality). The Philippines (0.79), Thailand (0.74), Malaysia (0.82) and Singapore (0.81) are examples. Others, however, such as Indonesia and Vietnam fared relatively poorly in comparison with their neighbours, scoring 0.67 and 0.68 respectively

Removing every shade of discrimination against female employees in the area of promotion is also equally important. The numbers of women in decision-making positions in corporations and businesses continue to lag behind men because of the glass ceiling.

By removing the glass ceiling, which would have the effect of not only being inclusive of women, diversity is also ensured and, in turn, we may expect that the presence of women translates into better governance.

LET HER KNOW MOTHERHOOD MATTERS

Also important is that creating an inclusive workplace for women workers means there should be measures to ensure that women are not penalised if they decide not to work for a short period, in order to have or to look after their children.

This policy would have a twofold effect. Firstly, it would signal to women that their skills in the workplace are always in demand and it is acceptable for them to be mothers and workers at the same time.

Secondly, in the face of falling fertility rates across the world, a woman who decides to start a family should be fully aware that her choice of leaving the workforce for a short spell would not be held against her. She should be made to feel that her motherhood role is important not only to herself and her immediate family, but also to wider society.

Making the workplace more inclusive to women would include the provision of affordable childcare, especially in the case of working mothers, since female employees are more likely than their male counterparts to be saddled with the task of balancing family demands and workplace commitments.

Having access to affordable childcare means that the tensions of balancing home demands and workplace commitments would be significantly minimised, if these women are able to ingeniously labour towards integrating these two worlds.

If childcare is beyond the reach of the average household, this would lead to a situation where it is most likely women will choose not to enter the labour force, since they do not see gains in going out to work. For many women, it is they who would opt instead to stay at home since generally it is expected that they shoulder the burden of caring.

RETREAT FROM THE WORKPLACE

Mothers retreating from the workplace is a universal and perennial phenomenon to which Singapore is no exception.

According to a report on labour force engagement in Singapore published in 2011, 47.3 per cent of women as compared with 1.8 per cent of men singled out “families responsibilities” (which includes housework, childcare and care-giving to families/relatives) to be the reason for their economic inactivity. In fact among the women, 25.5 per cent reported not working because of childcare compared with 1.5 per cent of men.

Since motherhood is the main reason for women to retreat from the workplace, this is more than enough reason to address this concern and make it easier for women to return to work. In the world, the Nordic countries have gained considerable success in wooing large numbers of women back to the workforce. A combination of factors has led to this scenario, according to the Global Gender Gap Report 2012.

These factors include policies enabling women to combine work and family through better work-life balance and ensuring a shared participation in childcare which involves greater involvement on the part of the State; and the prevalence of a gender ideology which encourages gender egalitarianism in the home front in terms of a more equitable distribution of labour.

At a time of slow and uncertain economic growth, there is enough justification for investing in women such that their participation in the labour force can be optimised. For countries with more robust economic forecasts, accelerating women’s participation in the labour force indicates a commitment on the part of employers as well as governments to ensure that the workplace continues to be inclusive.

As the Chinese proverb goes, women hold up half the sky; so, ensuring that women are on an equal footing with men in the workplace makes logical sense. But there should be no reason for women to feel pressured to fit in and to behave like men, should they decide to participate in the workforce. Rather as Christine Lagarde, Managing Director of the International Monetary Fund (IMF) says: “We have to dare the difference and speak about it”.

MORE SUPPORT FOR WOMEN IN THE WORKPLACE

Grace Fu
Senior Minister of State for the Ministry of Information Communications and the Arts, and the Ministry of Environment and Water Resources; Member of Parliament for Yuhua; Chairman of the PAP Women’s Wing executive committee

Surveys have shown that gender ratio equality in the workplace is maintained only at the entry level. As we move up the corporate hierarchy, the number of women is significantly fewer than men. Men are progressing faster and further than women. We are under-represented (3 to 8) in the senior leadership positions. Similarly, women only made up 7% of boardroom positions in listed companies in Singapore.

Women are expected to undertake the primary role in caring for the husband, children, and the parents. While we are fortunate to have the support of domestic helpers, women are often expected to make the career adjustments to suit the family circumstances. Many chose to take a slower pace in their career or drop out of the workforce completely.

The younger generation are postponing marriage and parenthood. With good education, women are excelling in the workplace and enjoying financial independence and satisfaction from their jobs. They are delaying the drudgery of a marriage if it means having to sacrifice many of their lifestyle choices.

Women today do not wish to see employers writing them off once a baby is on the way; neither do they wish to rely solely on the promise that their spouses will provide for them for the rest of their lives. They want a workplace where employers, recognizing the multiple roles they play, manage their career with flexibility over their life phases.

A female employee choosing to work part-time when she is caring for a young child should not be excluded from training opportunities nor future progression opportunities.

35 per cent of employers offer some form of work-life arrangement. Women, especially those with children, want to see more options such as more part-time work opportunities, flexible work hours and tele-commuting arrangements.

For those wishing to re-enter the workforce when their children are older, the government can provide training to ease their transition back into the workplace.

Companies can also offer transition arrangements where women re-entering the workforce do part-time work or take up internships, before moving into full-time positions.

Singaporeans realising their Fullest Potential

Foo Mee Har
Member of Parliament for West Coast; assistant secretary of the PAP Women’s Wing executive committee

In my meetings with business leaders, I often hear them lament that despite the availability of growth opportunities in Singapore, the key constraint to realising these opportunities is neither capital nor ideas, but the availability of talent.  This dearth of talent has led companies to curtail their expansion plans, with some even contemplating taking their business offshore.

In the past, foreign workers and professionals have augmented our local talent pool.  However, there is a limit to how many foreigners our society and infrastructure can accommodate.  The government has given the assurance that the share for foreign talent will be limited to one third of the workforce.

As we approach this limit, it is more important than ever to find ways to tap on the talents of every Singaporean.  Furthermore, Singapore has one of the fastest aging populations and one of the lowest birth rates in the world.  This highlights how critical it is for us to nurture every citizen and bring out the best in our people.

Women

First, I would like to begin with a subject that is close to my heart, and that is how we can better realise the full potential of women in Singapore. Research has shown a clear link between gender equality and a country’s economic strength.  Indeed, Nordic countries that lead the world in many indicators of gender equality rank amongst the strongest global competitors with the highest standards of living.

The opportunity with women in Singapore was recognised early on. Back in 1975,our former Prime Minister, Mr Lee Kuan Yew said and I quote:“Societies which do not educate and use half their potential because they are women, are those which will be the worse off. Those that do, and face up to problems of new social and family relationships to help working wives to bring up the next generation, are those most likely to provide better lives for their people. We cannot not educate and use the energy and ability of our women.”Unquote.

Singaporean women today have more opportunities than in the past. We have seen more and more women leading in their respective fields. However, we still have 58,000 women with university degrees not working, 3 times more than that of men.  And despite recent gains, women’s labour force participation remains low at only 57% as compared to that of men at 77%.  Amongst women who work, few make it to leadership positions.  Women occupy only 27% of ‘executive’ level positions, and only 6% of board positions in Singapore listed companies.  Singapore only ranked 56th amongst 134 countries in Global Gender Gap Index by World Economic Forum.

Sir, deploying more women in the workforce contributes far beyond having more pairs of hands, or achieving egalitarian ideals.  Women bring unique talents, skill sets, life experiences and perspectives to the workplace.  There is a body of research which suggests that companies with a strong women representation at board and top management roles are also the companies that perform best.

The challenge of juggling family and work demands is the key reason for low women representation in our workforce, as women continue to be the primary caregiver. Close to 90% of women stop work due to family responsibilities.  Over the years, I have counselled many female colleagues who struggle with the choice of staying at home or continue working, usually after having children.  They are typically at the prime of their career potential.  They feel a strong sense of guilt about not having enough family time, yet they also feel a great sense of loss in giving up the career they have built and the financial security that comes with it.  Juggling work and family can be a delicate balance.   I remember my days as a young mother, rushing home to see my sons during lunch break, was the best reward of a working day, even when this usually meant a precious 15 minutes at home, before rushing back for the next meeting.   Being away on business trips was often a miserable experience.

In modern Singapore, women who choose to work, should be supported so that they can work and take care of their families at the same time.  But in order for this to happen, they need ready access to child and elder care services, they need their husbands as joint partners in raising their families, and they also need employers and government to adopt family friendly policies.  We still have some way to go in providing these.

For example, despite the many discussions in this house around flexi work arrangements, women here continue to struggle with the painful choice between full time work or no work, as flexi and part time work arrangements, including home based work, are not readily available.  61% of women who are not working, have indicated they would work, if flexi and part time arrangements were made available.  Being one of the most highly connected and technologically advanced countries in the world, Singapore has all the natural levers to support flexi work.  Not leveraging this to enable women to stay in the workforce is truly a missed opportunity.

In addition, more can be done to help women to go back to work, especially those in the lower income group, as this will mean helping their families with extra income to lift living standards.

NTUC’s Back to Work programme, has helped 8,000 women return to the workforce, but there are still more than 235,000 economically inactive women between the prime ages of 25-54 that could be re-inducted. I  have met a number of female residents who are frustrated at not being able to even land a job interview despite pursuing numerous training programs.  The reason is simply that employers are not confident about their ability to adapt to the work environment and the pace of work, especially with older women who have stopped work for some time.  So in many cases, the employer’s concerns have less to do with the applicant’s relevant skills, and more about her fitting into the working environment.

Sir, taking inspiration from the successful Job Credit Scheme, can we not consider a special grant to encourage employers to offer re-induction to women returning to the workforce? Under this scheme, which I will call the Re-entry Scheme for the purposes of this discussion, companies can obtain grants from the government for a limited period of time, perhaps 3 to 6 months for hiring female returnees to the workplace. This is to ease the re-induction of women into the workplace, by immersing themselves in the operating rhythm and orientating themselves to the rigour of a new job.  The Re-entry Scheme will help offset the employer’s cost for on-the-job training as well as any redesign of work arrangements necessary.  Yes, this will be an investment by the government, but this is an investment that is completely targeted to developing the vocational skills of the worker for the task she is already employed to do, rather than training given in the hope that she will find a job.  I would further recommend that this scheme be extended to older workers for the same purposes.

Sir, the experience of other countries and our own suggests that meaningful changes will not occur naturally.  Instead, they are the result of determined and sustained government interventions, regulations and provisions.  We have only seen a mere increase of 5 percentage points in women labour force participation in 20 years.  In the meantime, our fertility rate has slid to a historic low of 1.16.  This contrasts starkly with countries such as Norway, where gender equality and female friendly employment policies make it easier for women to raise families whilst enjoying successful careers and financial security.  Norway’s women labour participation is at a high of 80%, whilst the fertility rate a respectable 1.96.  Our lack of progress in this field is all the more conspicuous when stacked up against our achievements and progress in many other areas such as the economy, education, environment and heath.

What does it take to keep this issue at the top of  the political and social agenda, to drive it to resolute and urgent action?  Today, the issues highlighted are spread across government agencies co-ordinated by an ‘office’ within MCYS, which itself oversees a wide portfolio of concerns from social welfare, youth, sports, community bonding to aging.  Can women and family not be represented by a dedicated Ministry, as in other countries such as Sweden, New Zealand and Malaysia.  There should be enhanced levels of resources, a strong mandate and authority to prescribe and enforce, rather than to be left to the best efforts of the occasional campaign or promotion by different agencies. The integration of work and family is a national concern, and deserves to be addressed with the right policies, and a comprehensive strategy. Society should be educated and stakeholders should be given clear targets to aspire to.

Mr Deputy Speaker, Sir, it is time for us to give this area the impetus it deserves.  Our success in doing so will mean higher household incomes, more fulfilling lives, and happier families.  And very likely, it will also mean more babies.  And we will have provided employers in Singapore an enlarged pool of talent who bring unique skills.  Sir, this is a win-win-win scenario for the country.

On gender equality - Students give their views on gender equality in Singapore's society. Wed, Apr 15, 2009 The Straits Times

Meritocracy should come first

WHILE gender equality is an important aspect of a modern, developed society, it cannot and should not be at the expense of meritocracy.

Which is why the Government should be commended on how it has slowly but surely worked women into and up the rungs, rather than indulge in popular appeal and appoint women to positions of power just to achieve a semblance of equality.

There is a very practical benefit to that.

People know that the women who eventually make it to the top have done so on their own merit, and deserve an even greater amount of respect.

This is especially so in traditionally male-dominated fields such as politics, where women are more susceptible to being marginalised or dismissed.

So while Singapore has had to wait 44 years to finally see a full-fledged woman minister in Government, be glad that she is someone to be proud of.

He Zongying, 24, is a final-year business management student at Singapore Management University.

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No sign yet of full equality

US SECRETARY of State Hillary Clinton noted on International Women's Day on March 8 that 'no nation in the world has yet achieved full equality for women'.

I agree.

While Singapore women have equal access to education and health care, they face unjust treatment in the workplace.

There are still instances where companies lay off pregnant employees. And, for women in small and medium-sized enterprises especially, they are pressured into cutting short their maternity leave because there is no one to stand in for them at work.

Some even had to take no-pay maternity leave.

Advocacy group Aware receives three to five calls each month from pregnant mothers who lose their jobs or are not given maternity benefits.

The key to correcting gender inequality is thus to mould the psyche of errant bosses though carrots (training) and sticks (punishments).

Otherwise, Mrs Lim Hwee Hua's achievement is just a sound-bite statistic.

Berton Lim, 21, is a first-year business administration student at the National University of Singapore.

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Freedom to choose one's role

WE SHOULD not read too much into the appointment of Mrs Lim Hwee Hua as Singapore's first woman minister, or think that there was no equal opportunity for women at all before this.

After all, men and women are each privileged in different ways.

'Equality' is not the same as 'equity': the roles that the two genders play in society need not be the exact same ones in order for gender equity to exist.

By all means open up opportunities and offices to both genders, but if women do not wish to participate in politics but would rather be homemakers, why not let them?

Many of my female friends, who are capable and intelligent individuals, have absolutely no interest in running the country.

Not that they couldn't if they were to try, but they simply do not want to.

That does not make their future contributions less meaningful or life less fair to them.

If that means a society with fewer women in politics, that is not necessarily a loss.

Alexander Woon, 19, is a national serviceman.

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Women's issues not only focus

AT THE risk of sounding like a wet blanket, I really don't see what the big deal is - a minister is female, so what?

Perhaps it is just my gender-blindness acting up, but I think the hullabaloo about the first woman minister seems quite unnecessary.

Mrs Lim Hwee Hua's new appointment comes with an assortment of responsibilities, and I'm not sure it is fair that she might now be seen as the champion of Singaporean women's issues.

For instance, women may look to her to champion decades-long issues such as fair remuneration and treatment of women in the workplace, as well as better motherhood benefits, in the process overlooking her other strengths.

These issues may not even be among the obligations that come with her new portfolio.

Playing up her role as Singapore's first and only woman minister will only put her under unfair scrutiny, as hefty expectations are placed upon her.

Instead, we should be objective and allow Mrs Lim to ease into her new role, and decide for herself how to use her strengths to best represent the people.

Liana Tang, 24, graduated with honours in biology from NUS.

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A source of inspiration

IT IS high time that Singapore has a woman minister. I believe now it's time for women to take centre stage and take on greater, more prominent roles in society.

Women have already broken the glass ceiling in multinational companies and government bodies. Now they seem to have done so in politics, too. Mrs Lim Hwee Hua inspires me, as a woman, to stump up the guts and plump for a career in politics.

I had aimed to be a doctor, but now, why not aim higher and bring change to Singapore through politics? My female friends and I agree that as long as we have the knowledge, talent and experience, we would be given equal opportunities in any field.

Benazir Parvin, 20, is a Pre-University 2 arts student at Millennia Institute.

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Don't just look at politics

THE starkly imbalanced gender ratio in local politics is not a good indicator of whether or not there is gender equality in Singapore.

During my junior college days, I remember seeing almost the same number of female student leaders in office as their male counterparts, if not more. Yet this does not translate to more female politicians.

It seems that my peers of the fairer sex are far more apathetic towards politics or daunted by its pressures. They perceive being a politician as having to work inordinately long hours and being in constant public scrutiny. Our political history reaffirms this. Politics has largely remained the domain of males. We should look to other professions if we want to find out if women have indeed made it.

Nicholas Lim, 20, has a place at Nanyang Technological University's Nanyang Business School.

This article was first published in The Straits Times.

China tightens ideological screws

By Ching Cheong Senior Writer  www.straitstimes.com

CHINA is once again tightening the screws of ideological control by barring universities and the media from discussing or writing about seven "dangerous" topics.

These are: universal values, press freedom, civil society, civil rights, errors of the Chinese Communist Party (CCP), crony capitalism and judicial independence.

Such "dangerous Western influences" are detrimental to the ruling status of the CCP and hence "every cadre should fight earnestly against them", according to a party document.

The May 13 document, entitled Report on the Current Situation of the Ideological Front, summarises the main conclusions of a meeting of the National Conference of Chiefs of Propaganda Departments in January.

It would have been the first national propaganda meeting since Mr Xi Jinping took over as CCP chief last November and should bear his personal imprints.

According to the document, democracy and constitutionalism as promoted by liberals are intended to overthrow the CCP and to end socialism. It also said the promotion of universal values would undermine the CCP leadership and force it to make concessions.

Similarly, the real aim of bringing about civil society is to nurture and develop new political forces outside of CCP-led grass- roots organisations so as to compete with the CCP for influence.

And Western concepts such as press freedom and media openness go against the CCP's view, which is that the media should come under the party's control and act as its mouthpiece.

Regarding historical issues, discussions on the CCP's past errors would nullify its legitimacy and undermine its ruling position.

Those who allege that the "China model" is nothing but crony capitalism are trying to diminish the achievements of the CCP's reform and open-door policies, and to support claims that without political reform China's economic reform is doomed to failure.

On economic issues, neo-liberalists who advocate greater reliance on market mechanisms are undermining the CCP's policies that place great emphasis on macroeconomic control.

To maintain ideological purity, the document urges propaganda departments across the country to mount a campaign against those whose writings are "anti-party, anti-country and anti-nation" and to resolutely remove those who refuse to change their stance.

Propaganda officials at all levels are also instructed to tighten media control to ensure proper enforcement of the seven no-nos, or "forbidden turfs".

The CCP document sent ripples through university campuses and media newsrooms alike. Most people were taken aback by President Xi's apparent leftist shift.

Well-known dissident blogger Yefu noted that even as Mr Xi was putting the hearts of party elders at ease, he was burying China's future. Mr Yao Jianfu, formerly with the Rural Policy Centre of the State Council, or China's Cabinet, said it was a big shock as many people had placed their hopes in Mr Xi to launch badly needed political reform.

Professor Hu Xingdou of the Beijing University of Science and Technology called the seven no-nos draconian in ideological "wei wen" (maintaining stability). He said it reflected the CCP's extreme lack of confidence in maintaining its grip on power. He doubted if they could be implemented at all.

Historian Zhang Lifan said that by identifying the seven no-nos, the CCP is reminding the people that these are the basic flaws of the current political system.

Mr Bao Tong, former secretary to the late CCP chief Zhao Ziyang, said that by reinstating these ideological controls, Mr Xi has taken China back to the days before the 1911 rebellion, which overthrew centuries of dynastic rule.

Leftists welcomed Mr Xi's move. All the major leftist websites carried Professor Zhang Hongliang's May 15 article, "Present-day China is like Soviet Union on the eve of its breakup".

Nicknamed the Red Tank, Prof Zhang at Minzu University of China in Beijing is well known for his extreme Maoist views. He has argued that the imminent danger of the CCP breaking up like the Soviet Union calls for tightening up ideological controls.

Troubled waters in the region

By Kor Kian Beng China Bureau Chief In Beijing

YET another spat has erupted on Asia's maritime fronts, one of many in the global headlines.

The stand-off between Taiwan and the Philippines in the South China Sea continues a trend of strife, sparking fears of conflict in the region. In the East China Sea, China and Japan are fighting over the Diaoyu/Senkaku islands.

Though territorial disputes have existed in both seas for decades, claimant states were not as assertive as they are now. Why?

Reasons for escalation

THE first sign of trouble surfaced around 1992, when countries scrambled for territories in the South China Sea, to pre-empt the UN Convention on the Law of the Sea (Unclos), which specified maritime zones and sovereignty jurisdiction to come into effect in 1994.

In 1992, China passed a domestic law on the Territorial Sea and the Contiguous Zone. Asean issued its first statement on the South China Sea in 1992 over the rising tensions between China and Vietnam over oil exploration.

Disputes heightened again in 2009 due to a deadline set by a United Nations body for coastal states wishing to make claims for extended continental shelves beyond their 200-nautical mile Exclusive Economic Zones (EEZs).

The most alarming claim was China's, which included for the first time a historical map with a "nine-dash line" covering some 80 per cent of the South China Sea.

Chinese pressure on American oil companies from 2008 to stop assisting Vietnam in offshore oil development, and China's opposition to the US policy of conducting surveillance in China's EEZ, triggered the entry of the United States into the arena.

At the July 2010 Asean Regional Forum, then US Secretary of State Hillary Clinton said Washington had a "national interest" in the South China Sea and called for a peaceful resolution to ensure freedom of navigation.

Her comments spawned a perception that the US was out to contain China's rise and influence within its own backyard.

Regional security expert Carl Thayer told The Straits Times that the impact of the 2008-2009 global financial crisis on the US reportedly emboldened some Chinese to assert that it was time to press a declining America.

But Shanghai-based foreign policy expert Yang Cheng said the US stance has also emboldened China's neighbours to take a more strident approach against Beijing over the South China Sea.

Domestic nationalism has fuelled more assertive sovereignty claims as well, say analysts.

Another reason often cited is the competition for natural resources like oil, gas and fisheries.

How bad can it get?

THE tense stand-off between the navies of China and the Philippines over the Scarborough Shoal in April last year raised real fears of a conflict at sea.

Since then, there have been countless reports of incidents involving fishermen and coast guards of claimant states.

The tensions have sparked a regional arms build-up, while China has also stepped up its naval exercises in response to a similar ramp-up by the US.

A conflict would affect shipping activity in the region and cause insurance rates to rise, and could also have a negative impact on South-east Asia's economies and its trade links with China.

But Peking University international relations expert Zha Daojiong said he does not see the disputes escalating into conflicts.

"No side wants to be the first party to go overboard, firing the first shot and preparing for an enlarged military conflict," he said.

But the strife has claimed a casualty: Asean unity, after the July 2012 meeting of foreign ministers failed to produce a joint communique for the first time, over host Cambodia's refusal to include the disputes in the document.

Analysts say the grouping's internal differences have allowed external powers to play Asean states against one another, with some adopting hedging strategies by encouraging the US to remain engaged so as to balance China.

The solutions

THE hope among many now is on getting China and Asean members to agree to a binding Code of Conduct, despite floundering efforts in recent years.

On its own, the Philippines is seeking international arbitration to declare China's moves in the oil-rich waters as "unlawful" under Unclos.

Professor Zha, however, thinks that a "solution" - such as an agreement to settle the disputes - is not within sight any time soon.

"Just about every party has put forward its hardline stance on this so frequently that it stands to 'lose' by being the first to step back," he added.

How euro zone woes affect Asia

By Jonathan Eyal Europe Correspondent In London

THE problems that currently dog the euro zone countries can be traced back to the end of the Cold War two decades ago, a period when, paradoxically, Europe seemed to be at the height of its powers.

It was then that the European Union embarked on its most audacious project: the creation of the euro as its single currency. Some experts warned that no monetary union can succeed unless national economies approach a similar level of development and spending priorities are decided centrally, rather than in each state.

But the Europeans ignored such warnings because at the time, their economies were growing, the Soviet Union was defeated and the former communist countries of Eastern Europe were rushing to copy the West's economic and political model.

The result, however, is today's disaster.

What went wrong? A currency designed for an economic powerhouse such as Germany was also adopted by Greece, whose exports are less than a tenth those of Singapore's.

According to European treaties, governments were required to watch their finances and not borrow more than they could afford. But the restrictions were simply ignored. In the past, governments of weaker and poorer European states had to pay higher interest when they borrowed. But once everyone in Europe had the euro, they could all borrow at the cheap interest rates which previously only a country like Germany enjoyed.

Debt piled up as it became easier for politicians in poorer countries to borrow money in order to offer their voters new social benefits than it was to tax their people to pay for these spending promises.

Yet the game had to stop at some point and it did, once it became clear that some countries were simply unable even to keep up with the repayments on their loans, since their total debt was higher than the value of their entire economy. By 2010, for instance, Greek debt stood at 120 per cent of the country's gross domestic product (GDP). In effect, the country was bankrupt.

Others such as Portugal, Ireland and Spain too ran into debt problems. They were ultimately bailed out, but only in return for agreeing to apply severe austerity measures. The Greek economy has fallen by an average of 5 per cent for the past four years. Unemployment in Spain stands at 23 per cent of the population.

Nor is this all, for Europe's long-term economic competitiveness is being destroyed by an over-valued currency as well. For example, since Italy adopted the euro, its effective exchange rate - based on its labour costs - rose by 26 per cent. The only way this disparity can be addressed is by either devaluing the currency, or by depressing the salaries of workers, a method which economists call "internal devaluation".

The first option is not available, since the euro is controlled by a bank beyond the influence of any government. And the second option is equally impossible, since workers will not tolerate a huge drop in their earning power.

Getting out of Europe's monetary union is not an option either. According to the most optimistic calculations, an exit from the euro could cost Italy about 10 per cent of its GDP and it will need about 25 years of uninterrupted growth to merely recover from this loss. In short, the Europeans are damned if they stay in the euro, and damned if they don't.

What lies ahead is decades of misery. Since the end of World War II, Europe's economic model had been broadly the same. Each government came to power promising to expand the provision of health care and welfare services. And each took it for granted that the economy would inevitably continue to grow. Capital was cheap, companies made fat profits and jobs were plentiful. Europe's model has been fraying for years. An ageing population has already made the generous provision of pensions unsustainable.

Europe's current crisis means that the hard choices can no longer be postponed. As debts are being repaid, welfare entitlements will be slashed. And Europeans will be forced to save rather than spend, leading to a prolonged period of zero growth.

The consequences for Asia are both direct, and potentially severe. Europe is still the world's biggest trading bloc: the overall value of EU exports and imports of goods and services and foreign direct investments is worth about €3.5 trillion (S$5.6 trillion) a year. And although by 2015 it is estimated that 90 per cent of world growth will be generated outside Europe, it still accounts for about 18 per cent of world trade, so what happens in Europe directly affects economies everywhere.

Furthermore, a prolonged recession in Europe also means that China's economy may not be able to grow as fast as anticipated, and that in turn could hurt the economies of other Asian countries which depend on exports to China for growth as well: that's why, as a rule, bad economic news in Europe tends to depress stock market valuations across the world, and particularly in Asia which relies so much on trade for its prosperity.

There is also a risk that, as the crisis in Europe continues, there will be pressure on European states to protect local jobs by restricting trade, or by deliberately pushing the currency down to make their exports cheaper. For the moment, such protectionist temptations are being avoided; indeed, the EU is negotiating a bigger free trade agreement with the United States, and with key Asian countries. But as the crisis continues to bite, the danger of protectionism will loom large.

The failure of the euro to become a truly global currency on a par with the US dollar also affects Asia, partly because it would have been good to have an investment alternative to the US dollar, but also because most Asian central banks hold a part of their reserves in euros, and could therefore suffer losses.

Still, not all the consequences of Europe's crisis are negative for Asia. The prolonged recession in Europe means that Asian countries can pick up some good investments in Europe, since these are cheap. Sovereign wealth funds from Asia have been purchasing European assets, particularly those in the high-tech industry, luxury goods and design, areas in which Europe continues to excel. Most of Europe's car manufacturing sector also has a large content of Asian capital, particularly from China.

Europe's prolonged recession also means that highly-qualified Europeans are available to be hired for jobs in Asia; their talent can help Asian economies grow even further.

And ultimately, the crisis over the euro is also a reminder of the pitfalls inherent in introducing a one-size-fits-all currency for a number of countries; Asean, which also occasionally contemplated the introduction of a single currency, now knows what to avoid.