Singapore's productivity and median wage have grown by a third in the last 10 years: Tharman

Singapore

CONTRARY to the "urban myth" that Singapore has failed in its quest to raise productivity, the nation's productivity and median wage have grown by about a third over the last decade, Senior Minister Tharman Shanmugaratnam has said.

It grew by 2.4 per cent annually for each worker, or by 2.8 per cent per work hour - which is the best measure of productivity - over the last 10 years, translating to a one-third gain, he said.

This meets the country's target of 2-3 per cent of productivity growth per year on average for the last decade.

In turn, median income rose about 32 per cent, after adjusting for inflation, from S$2,900 to S$4,600 in the last decade, added Mr Tharman, who is a candidate for Jurong GRC.

"That is a story that is not seen elsewhere in the advanced world, and we have to find ways of sustaining that moving escalator that comes from continuous improvement in technology, skills and movement towards better jobs," he said in a 45-minute speech streamed on Facebook on Tuesday afternoon.

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There are areas of weakness, he acknowledged, such as in the construction sector, which lags behind other advanced countries by a large margin. However, a major effort is being made to re-gear the construction sector in the coming years and to create good jobs for Singaporeans in the sector, he added.

Overall though, this has been a success story, with productivity having increased significantly, placing the Republic in the upper tier of advanced countries in terms of productivity and median incomes, he said.

Mr Tharman also highlighted that the progressive wage model is working, allowing the bottom 20th percentile of the income ladder to see their wages increase by nearly 40 per cent in real terms over the past decade - from S$1,500 a month to S$2,500 a month - and this does not include the Workfare and special employment credits which the government gives to older low-wage workers.

The progressive wage model has already been rolled out to certain sectors, such as those employing cleaners and security guards. The model will eventually be extended to all sectors.

"It is better than a minimum wage, which is only the first step. It is a ladder of skills and wages that helps our lower-income workers move up," Mr Tharman said.

As those doing lower-paid jobs move up the ladder and get higher salaries, it will eventually mean that some costs will go up. "All of us as Singaporeans will have to pay slightly higher costs, but that is a small cost to pay for building a fairer and more equitable society," he emphasised.

An immediate key challenge facing Singapore in the current crisis is keeping the unemployment rate - now at above 3 per cent - from spiralling upwards.

To tackle this, the government has rolled out the Jobs Support Scheme. There is trust in the system and employers trust the government to do the right thing to preserve jobs, he added.

Singaporeans have also been playing their part by skilling themselves over the years, he went on to say.

In his speech, Mr Tharman also highlighted that the ruling People's Action Party (PAP) has stepped up strategies over the last decade to build a more inclusive society. "We've significantly stepped up our strategies for inclusivity, a fairer society and for lesser inequalities at different stages of life in the last 10 years ... but there is much more to do in future."

He went on to point out that the global Covid-19 pandemic has amplified the importance of inclusivity, given its tendency to fracture society and slow down growth, which could lead to greater tensions between people.

He went on to outline the PAP's strategies for creating a more inclusive society for children, working adults and seniors.

Over the next few years, the government is doubling its expenditure on the pre-school sector as well as raising the quality of the pre-school sector as a whole. In five years, 80 per cent of the pre-school sector will be government supported. The pre-school profession, teaching profession and care profession are also being upgraded.

Such efforts are also being extended throughout the school system. "We need deeper interventions to help those who are falling behind, just like we do in the pre-school sector," he said, highlighting that Singapore has the smallest class sizes and the highest expenditure for students who are further behind in their studies.

Mr Tharman added: "We're hiring more teachers, more teacher counsellors, more professionals of every type to be in our schools to strengthen the whole school team to help every student in need."

For those entering working life, "we've got to make sure every Singaporean is on a moving escalator", he said, adding that today's generation of young people entering the workforce must not become a lost generation due to the impact of the pandemic.

"We have to make sure that middle-aged Singaporeans and mature workers do not find that the escalator has suddenly stopped midway through their career."

Mr Tharman said fair treatment of these groups of workers in the job market is taken very seriously.

Aside from the rules in place, the government is enabling this by investing in the skills of every Singaporean.

In his speech, Mr Tharman also touched on how the government provides seniors in Singapore with a sense of security.

Opposition parties typically wheel out "nice-sounding promises" to seniors during elections, such as allowing payouts from the Central Provident Fund (CPF) earlier and having the government bear healthcare costs, he noted.

But doing away with a social security system where the government takes responsibility to ensure people have enough savings for retirement will result in a divided, unequal society, he explained.

"The basic rationale of the CPF system, of MediShield Life and a lot of our other schemes, is that we've got to take collective responsibility for each other," he said, adding that people cannot be left to fend for themselves.

Going the route of a system where the government pays for everyone will lead to greater inequality as the better off get the same benefits as the poor, he pointed out. In addition, there will be higher taxes on the middle income.

Instead, Singapore should stick to a system in which taxes remain as low as possible for the middle class, and government revenues are used to help those who need it most - the poor, the lower-middle-income group and, to some extent, the middle-income group.

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