Last week, the International Monetary Fund (IMF) in its yearly review of the Singapore economy known as the Article IV Consultations, flagged a concern over the country's further plans to slow the inflow of foreign workers.
It warned that the move, which is "part of the ongoing economic restructuring, could moderate potential growth and lower competitiveness". Meanwhile, a shortage of labour will raise wages in industries where the situation is most dire, and businesses will pass on these added costs in the form of higher prices.
Of course, the IMF was quick to reassure us that Singapore's restructuring programme could eventually "set the stage for a new era of sustainable growth". But it noted that the productivity improvements which justify wage increases and alleviate the demand for cheap foreign labour "might take some time to materialise and may not fully offset the effects of declining labour force growth".
So what the IMF was saying is that in the interim, all we may get from the restructuring is higher costs and higher prices - with little or no real growth. And Business 101 tells you that if you make your customers pay more for something but don't give them any real added value for it, then all you have really done is make yourself more uncompetitive.
Now, competitiveness is multi-faceted and includes elements that are difficult to measure, so it's hard to put a finger on the concept.
On the face of it, however, Singapore seems to be holding up well.
Last month, Singapore was named the world's second most competitive economy for the fourth year running by the World Economic Forum. It came in only behind Switzerland in the annual Global Competitiveness Report, which measures more than 100 different indicators that include everything from tax rates to mobile broadband subscriptions and the quality of maths and science education.
In another influential ranking compiled by Swiss business school IMD, Singapore fell from second in 2010 to fifth last year. But it climbed back up to third spot in this year's ranking and recaptured the title of Asia's most competitive economy from Hong Kong.
Yet, despite the on-the-record accolades, more people are raising concerns about Singapore's continued competitiveness.
One reason is the passage of time. The big 10-year economic restructuring plan launched in 2010 is now approaching its halfway mark, and the results so far have been hardly inspiring. The stated objective was to lift productivity growth by 2 per cent to 3 per cent per annum and median incomes by 30 per cent over the next 10 years.
But while income growth has been largely on track at roughly 3 per cent per annum, productivity growth has been flat in the first four years, averaging just 0.2 per cent from 2010 to last year.
While there may have been the odd story of a productivity breakthrough involving the washing of dirty construction trucks or the automating of restaurant orders, no one has the sense yet that a big change has happened on the ground.
Maybe people have unrealistic expectations of fast results, but a weariness is setting in. Everyone seems to have a story to trade about someone they know who had to turn away business or close down because they either could not find the manpower, or had to pay so much more that the numbers became unviable.
Meanwhile, the labour crunch has fed into a larger and more general narrative about the high cost of operating in Singapore. To combat inflation, the Monetary Authority of Singapore (MAS) has kept the Singapore dollar on a steadily appreciating path against the country's main trading partners.
A new report by DBS Bank this month shows that Singapore's real effective exchange rate has risen steadily against the average of eight Asian economies since 2010, and the gap is widening. A stronger local currency makes its exports more uncompetitive and raises the costs of locating expats here.
Property and rental prices have been reined in for now, but various other reports, citing how high retail rents are feeding into the high price of goods and services here, are not helping the situation.
It all adds to a composite picture many see as slightly worrying, even if not alarming yet.
At an informal lunch I attended recently, the regional chief executive of a multinational bank, who is based here, said people know that Singapore is not a low-cost location and can never be. In that sense, corporations still by and large get good value from locating here, and top talents still want to live and work here.
But the country's competitiveness is also now appearing on the horizon as a potential future problem. The foreign manpower for necessary mid-tier jobs in information technology (IT) and back- room compliance, for example, is becoming increasingly difficult to get and local equivalents are becoming expensive to hire.
At another lunch I attended, it appeared that cost has already become a deal breaker. The regional CEO of a global firm in the publishing industry said the company looked at Singapore but eventually decided to locate its Asian operations in Vietnam. This is despite the fact that its English-speaking, largely expat workforce would arguably be more comfortable in Singapore, a place where excellent telecommunication and air links would also be great for its business.
So while the facts and methodology behind the world rankings don't lie, a narrative is slowly building up about the effect of economic restructuring on Singapore's competitiveness.
Academics like Singapore Management University's Dr Augustine Tan are already drawing comparisons with the failed productivity experiment in the 1980s, where a similarly well-intentioned national drive for higher wages and incomes was also carried out against the backdrop of a strong currency. When external conditions deteriorated in the mid-80s, Singapore's vulnerable economy fell into a deep recession.
The comparison was also raised at the start of the current exercise, but people were more willing to give Singapore's economic policymakers the benefit of the doubt, especially given their excellent track record in the past.
But as exports continue to flag and the harvest of yet another year is anaemic economic growth, policymakers must do something to alter the trajectory of a narrative slowly going awry, lest it take hold and become a self-fulfilling prophecy.
This article was first published on Oct 26, 2014. Get a copy of The Straits Times or go to straitstimes.com for more stories.