Wages slow on modest economic growth, weak productivity gains

February 2, 201510:25 am267 views
Wages slow on modest economic growth, weak productivity gains
Wages slow on modest economic growth, weak productivity gains

SINGAPORE — Despite the tight labour market, wage growth has slowed sharply compared with 2013, as economists noted the Republic’s modest economic growth and weak productivity gains last year.

Releasing its report on the employment situation, the Ministry of Manpower (MOM) yesterday said the median monthly income for Singaporeans in full-time employment — including employer Central Provident Fund (CPF) contributions — was S$3,566 as of June last year, compared with S$3,480 the year before. After adjusting for inflation, real median income grew by 1.4 per cent last year, down from 4.6 per cent in 2013 when income growth was partly boosted by the initial effect of the Wage Credit Scheme.

In 2012 and 2011, real median income went up by 1.2 per cent and 1 per cent, respectively.

For the whole of last year, about 129,000 jobs were created, down from 136,200 in 2013. The overall unemployment rate remained low at 2 per cent.

Compared with 2013, the number of layoffs — including those who were retrenched and released early from term contracts — climbed to 12,800 last year, up from 11,560. “The increase in layoffs stemmed from services and construction, which more than offset the decline in manufacturing,” the MOM said.

On the sluggish wage growth, CIMB economist Song Seng Wun said that with modest economic growth — based on advance estimates, the economy grew 2.8 per cent last year — businesses hired selectively and were reluctant to pay higher wages.

DBS senior economist Irvin Seah said weak productivity gains could also have been a factor, but productivity improvement was ultimately still dependent on economic growth. “If GDP (gross domestic product) growth is sluggish, obviously productivity also underperforms,” he said.

Mr Song said the effects of the productivity push will become more apparent in the years to come. “It’s not going to happen overnight,” he said, noting that some larger firms have made great strides, but smaller companies may be struggling to raise productivity.

For the first three-quarters of last year, productivity fell by 0.5 per cent.

In his New Year message, Prime Minister Lee Hsien Loong said that while the economy performed moderately well last year and real median incomes continued to rise, the country’s productivity performance was disappointing. “We must do better. Otherwise, our incomes cannot continue to rise and will soon stagnate,” he said.

The MOM noted that while wage growth moderated last year, Singaporeans’ median income had increased over the past five years. After accounting for inflation, real median income had grown by 11 per cent — or 2.1 per cent annually — over that period.

The MOM report said 94,900 Singaporeans secured new jobs last year, up from 82,900 and 58,700 in 2013 and 2012, respectively.

The foreign workforce, excluding foreign domestic workers (FDWs), is estimated to have grown by 26,000, compared with 48,400 in 2013. Two of three workers employed here last year — excluding FDWs — were Singaporeans, the MOM said.

Income growth for workers at the 20th percentile also kept pace with the median income growth in the past five years, boosted by continuing efforts to raise the incomes of low-wage workers, the MOM said. Income for Singaporeans in this group who worked full-time, including employer CPF contributions, rose by 26 per cent from S$1,468 in 2009 to S$1,856 last year in nominal terms. The increase after adjusting for inflation was 8.1 per cent, or 1.6 per cent annually.


news source & image credits: todayonline.com

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