GE2020: PAP’s Tharman debunks ‘urban myth’ of productivity decline, spells out ruling party’s approach for inclusive growth

• Singapore’s productivity and median wage has grown by about one-third over the past decade
• The past few years have also shown that the progressive wage model is working, said Mr Tharman
• He stressed that S’pore had not been pursuing “growth at all cost” but “growth to provide quality jobs for every Singaporean”

SINGAPORE — Debunking the “urban myth” that the country has failed in its push for productivity growth, Mr Tharman Shanmugaratnam pointed out on Tuesday (July 7) that Singapore’s productivity has increased by a third over the past decade.

Correspondingly, the productivity gains have pushed up Singaporeans’ incomes.

“Very few countries at the same level of development of Singapore... have seen that continuous increase in incomes,” he said.

With three more days to go before voters head to the ballot box, the People’s Action Party (PAP) stalwart spoke about the ruling party’s strategies for an inclusive society in a speech that was live-streamed on the party’s Facebook page from its headquarters.

Amid the hustings for the General Election, some opposition parties have criticised the PAP’s management of the economy, with Singapore Democratic Party chief Chee Soon Juan, for example, saying that the fourth-generation PAP leaders “have not been delivering what they promised” even before the Covid-19 pandemic hit Singapore.

“We are seeing productivity go down, economic growth go down, unemployment go up and our youth are facing greater and greater difficulty in finding meaningful employment. People are just scrounging around and simply getting by,” Dr Chee had said on June 30.

In his speech on Tuesday, Mr Tharman spelled out the achievements the country — under the ruling party — has made in productivity and income growth, including for lower income workers.

Over the last 10 years, Singapore’s productivity grew by 2.4 per cent per year for each worker, or 2.8 per cent per work hour. That translates to a one-third increase in productivity for the past decade, said Mr Tharman, who was Senior Minister and Coordinating Minister for Social Policies before Parliament was dissolved.

This is in line with the growth in median wage over the past decade, which has similarly risen by 32 per cent — or about one-third —  in real terms after accounting for inflation, he added.

The productivity gains met Singapore’s earlier target of 2 to 3 per cent growth per year, on average, from 2010 to 2020.

In the decade prior, which Mr Tharman described as a “tough decade”, Singapore had “barely” 1 per cent of productivity growth per year.

“We decided to shift gears on many different fronts: Foreign worker policies, incentives for firms to upgrade including our SMEs (small and medium enterprises), upskilling and SkillsFuture,” he said. “And we've achieved results.”

Mr Tharman noted, however, that Singapore still has areas of weakness in terms of productivity.

The construction sector in particular “lags advanced countries by a large margin”, he said, adding that the Government is making a major effort to address the issue in the coming years.

More “good jobs” will be created for Singaporeans in the sector such as logistics planners, safety officers, machine operators and engineers, he added.

ADDRESSING CALLS FOR MINIMUM WAGE

In terms of the median wage, Mr Tharman noted that this has also increased by about 32 per cent in the last decade after adjusting for inflation, from S$2,900 to S$4,600 in nominal terms.

“This has been a success story,” he said. “We have moved into the upper tier of advanced countries in productivity and incomes.”

Mr Tharman reiterated that the past few years have also shown that the progressive wage model is working.

Lower wage workers have been able to climb the income ladder, he added, with the bottom 20 percentile seeing a 40 per cent increase in real wages over the past decade — from about S$1,500 to S$2,500 per month.

This is before accounting for Workfare and Special Employment Credit.

The progessive wage model will be implemented over the coming years for all sectors in Singapore, he said.

Contrary to what some detractors are saying, Mr Tharman stressed that Singapore had not been pursuing “growth at all cost”. Rather, it has been going for “growth to provide quality jobs for every Singaporean”.

“It's better than the minimum wage, which is only the first step. It is a ladder of skills and wages that helps our lower income workers move up,” he said.

Mr Tharman said Singapore’s approach is to achieve a balance of low unemployment, along with productivity increase and income growth.

This can be done by not just providing jobs for everyone but giving everyone better jobs over time, which also provides workers with a greater sense of contribution, he added.

Such an approach is in contrast to what is happening in some other countries — they either provide work for everyone without improving the quality of the jobs, or by major restructuring through technology that causes workers to lose jobs.

On the Singapore way, Mr Tharman said: “It’s a steady approach that gives people confidence that they are improving in their jobs.

“And it gives employers confidence that the Government is going to work with them to help them to upgrade productivity, particularly in our SME sector, so they don’t have to shed workers but they can improve jobs and see their profits stay afloat.”

But he cautioned that over time, all Singaporeans will have to pay higher costs as jobs improve and wages grow.

“That is a small cost to pay for building a fairer and more equitable society,” he said.

Turning his attention on the immediate term, Mr Tharman said the challenge is to avoid a surge in unemployment in Singapore.

The country will need to ensure that young people entering the workforce do not become a “Covid generation” of unemployed fresh graduates, and middle aged workers do not find themselves stuck in their careers.

To help workers keep their jobs, the Government is investing heavily in skills upgrading on a larger scale than any other country, he said.

Mr Tharman added: “We take very seriously the need for fair treatment of our middle aged and mature Singaporeans in the job market. Employers will not be able to give easy excuses for not hiring middle aged or mature Singaporeans.”