An­nual wage growth out­strips pro­duc­tiv­ity in cer­tain sec­tors

The New Paper - - NEWS - CHARISSA YONG

Real wages in Sin­ga­pore rose faster than pro­duc­tiv­ity in re­cent years, even though real wage growth should track pro­duc­tiv­ity growth over the long run to be sus­tain­able.

The ob­ser­va­tion was made by Se­nior Min­is­ter of State for Trade and In­dus­try Koh Poh Koon yes­ter­day, in re­ply to a ques­tion on pro­duc­tiv­ity and wage gains from Mr Sak­tiandi Su­paat (Bis­han-Toa Payoh GRC).

From 2011 to last year, real wages for res­i­dent work­ers rose by 1.9 per cent a year, while pro­duc­tiv­ity grew by only 1.1 per cent a year over the same pe­riod.

Said Dr Koh: “If real wage growth out­strips pro­duc­tiv­ity growth for an ex­tended pe­riod, busi­nesses will be at risk of los­ing their com­pet­i­tive­ness and po­ten­tially be forced to scale back or close their op­er­a­tions.”

But there were dif­fer­ences across sec­tors, he noted.

In do­mes­ti­cally ori­ented sec­tors such as con­struc­tion and other ser­vice in­dus­tries, real wages rose faster than pro­duc­tiv­ity be­tween 2011 and last year.

This was in part due to a tight labour mar­ket which had pushed up wages, as well as weak or neg­a­tive pro­duc­tiv­ity growth in th­ese sec­tors.

In com­par­i­son, ex­ter­nally ori­ented sec­tors gen­er­ally saw pos­i­tive pro­duc­tiv­ity growth, which sup­ported real wage growth.

TAN­DEM

In sec­tors such as man­u­fac­tur­ing, whole­sale trade and fi­nance and in­sur­ance, real wages rose in tan­dem with pro­duc­tiv­ity on the back of rel­a­tively strong pro­duc­tiv­ity per­for­mance.

But in other sec­tors such as trans­porta­tion and stor­age and ac­com­mo­da­tion, real wages grew more than pro­duc­tiv­ity.

Said Dr Koh: “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.”

The Gov­ern­ment helps com­pa­nies to boost their pro­duc­tiv­ity through schemes, which have shown “some early signs of suc­cess”, he added.

For in­stance, com­pa­nies that used En­ter­prise Sin­ga­pore’s Ca­pa­bil­ity De­vel­op­ment Grant be­tween 2005 and 2012 ex­pe­ri­enced a 9.3 per cent in­crease in rev­enue on av­er­age over time.

chary­ong@sph.com.sg

PHOTO: LIANHE ZAOBAO

Se­nior Min­is­ter of State for Trade and In­dus­try Koh Poh Koon.

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