In response to recent question on current state of productivity and wage gains in Singapore, Senior Minister of State for Trade and Industry Koh Poh Koon on Jun 11 said that real wages went up faster than productivity for the last few years. However, the real wage growth should track productivity growth over the long run to be sustainable.
According to a data, the real wages for Singaporean resident workers rose by 1.9 percent a year from 2011 to 2017, while productivity grew by only 1.1 percent a year over the same period of time.
Dr Koh said that if the real wage growth outstrips the productivity growth for a longer period, businesses will be at risk of losing their competitiveness. They will also potentially be forced to scale back and even close their operations. However, he noted that there were differences across sectors.
For example, in domestically oriented sectors such as construction and other service industries, the real wage increased faster than productivity between 2011 and last year. This condition was attributed to the tight labour market which had pushed up wages, as well as weak or negative productivity growth in these sectors.
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On the other hand, externally oriented sectors generally saw positive productivity growth, which then supported real wage growth. In some sectors such as manufacturing, wholesale trade and finance and insurance, real wages rose along with productivity on the back of relatively strong productivity performance.
Meanwhile, in other sectors such as transportation and storage and accommodation, real wages also grew more than productivity level, The New Paper reports.
Regarding to this, Dr Koh said, “It is crucial that we press on with our productivity drive in order to maintain our competitiveness globally, while enabling continued improvement of Singaporeans’ wages and living standards.”
He added that Singaporean government is committed to help companies boost their productivity through some scenes, which have shown ‘some early signs of success’. For example, companies that signed up to receive Enterprise Singapore’s Capability Development Grant between 2005 and 2012 experienced a 9.3 percent increase in revenue on average over time.
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