Robust wage growth may not be sustainable, says MTI

It’s terribly outpacing productivity gains, they said.

The strong run shown by Singapore’s wage growth last year may be more detrimental than beneficial, according to Singapore’s ministry of trade and industry.

According to the MTI, for the past five years, real average wage growth of workers in Singapore, at 1.1% per year, had exceeded labour productivity gains of 0.4% per year.

“Recent statistics from the Ministry of Manpower also showed that the real median wages for full-time resident workers continued to grow strongly in 2015, at 5.3 per cent,” the MTI said.

Meanwhile, strong wage growth may not be sustainable for two reasons, one of which is the challenging near-term outlook for Singapore’s economy, with labour demand expected to be more subdued this year.

“Second, as highlighted in the feature article, it may not be sustainable for real wage growth to continue to outpace productivity gains, given the potential negative impact on our economic competitiveness,” the MTI said.

According to the MTI, in order for our economy to remain competitive and wage growth to be sustainable, wages should grow parallel to productivity over the longer term.

“As such, it is vital that we press on with our productivity drive so as to ensure that Singaporeans’ wages and living standards continue to improve,” the MTI added.