Pay rise without higher productivity 'dangerous'
PM Lee sounds warning amid slower job growth, slight rise in joblessness
By Leslie Koh, The Straits Times, 1 May 2012
AMID continuing calls for Singaporean workers to be paid more, another warning of the risks of raising wages without an accompanying rise in productivity has come, this time from the very top.
In a May Day message that tackled the issue head-on, Prime Minister Lee Hsien Loong warned against merely relying on tightening the supply of foreign workers to achieve better salaries.
Business costs would go up, affecting Singapore's competitiveness, and inflation could rise, he said yesterday.
Instead, PM Lee urged workers and employers to work together to raise productivity, which he said was a more sustainable way to raise wages and real living standards.
Instead, PM Lee urged workers and employers to work together to raise productivity, which he said was a more sustainable way to raise wages and real living standards.
'It would be dangerous to assume complacently that wages can continue to rise indefinitely, just by our squeezing on foreign workers,' he said.
The warning is the latest from the country's leaders following suggestions for wages to be pushed up substantially to address what critics say is a growing gap between the rich and poor here.
The warning is the latest from the country's leaders following suggestions for wages to be pushed up substantially to address what critics say is a growing gap between the rich and poor here.
It also came on the same day that the latest manpower data showed a slight rise in unemployment and a slowdown in the creation of jobs.
According to the quarterly employment figures from the Manpower Ministry, unemployment rose slightly from 2 per cent last December to 2.1 per cent in March. Total employment grew by an estimated 27,400 in the first quarter, less than the 37,600 of the previous quarter and the 28,300 of the first quarter of last year.
The new jobs came from the services and construction sectors, while employment in the manufacturing sector shrank.
The latest data was generally viewed as optimistic. But some observers pointed to indications that unemployment could continue to creep up, as economic restructuring in Singapore and uncertainty in the global economy, especially in the US and Europe, threaten to make themselves felt.
Wage rises and foreign workers have been at the centre of heated public debate in the past months. Many workers have been calling on the Government to reduce the supply of foreign workers, whom they blame for higher competition for jobs while depressing wages all round.
The latest data was generally viewed as optimistic. But some observers pointed to indications that unemployment could continue to creep up, as economic restructuring in Singapore and uncertainty in the global economy, especially in the US and Europe, threaten to make themselves felt.
Wage rises and foreign workers have been at the centre of heated public debate in the past months. Many workers have been calling on the Government to reduce the supply of foreign workers, whom they blame for higher competition for jobs while depressing wages all round.
Yesterday, Mr Lee noted that the economy was facing slower growth because of the external environment and domestic constraints, of land and manpower limits.
And the Government is moderating the flow of foreign workers, though Mr Lee noted that this would pose challenges. 'This will hold back many companies that are eager to expand, but cannot find enough workers. Some may even relocate their operations out of Singapore,' he said.
Last month, eminent economist Lim Chong Yah stirred the debate further when he floated a bold proposal to raise wages of the lowest-income workers by 50 per cent over three years.
The idea won support from some quarters, but elicited warnings from government leaders, employers and economists. Many, like union chief Lim Swee Say, stressed that productivity gains support wage rises better.
Yesterday, PM Lee reiterated this stand. While the current tight labour market would push wages up in the short term, he said, productivity ultimately needs to rise to sustain better wages. 'Raising productivity is more important than ever in our mature economy, because it is the only way to upgrade ourselves and our lives,' he said.
He added: 'Raising our productivity will benefit workers, firms, and our economy as a whole. Workers can earn more in higher-quality jobs. Firms can prosper and expand their businesses here. Our economy can continue to thrive despite more intense global competition.'
Mr Lee also addressed employers and employees separately in his call for them to back the national productivity push.
He urged workers to 'make the effort' to upgrade themselves, and adapt and be willing to go into new growing industries.
And the Government is moderating the flow of foreign workers, though Mr Lee noted that this would pose challenges. 'This will hold back many companies that are eager to expand, but cannot find enough workers. Some may even relocate their operations out of Singapore,' he said.
Last month, eminent economist Lim Chong Yah stirred the debate further when he floated a bold proposal to raise wages of the lowest-income workers by 50 per cent over three years.
The idea won support from some quarters, but elicited warnings from government leaders, employers and economists. Many, like union chief Lim Swee Say, stressed that productivity gains support wage rises better.
Yesterday, PM Lee reiterated this stand. While the current tight labour market would push wages up in the short term, he said, productivity ultimately needs to rise to sustain better wages. 'Raising productivity is more important than ever in our mature economy, because it is the only way to upgrade ourselves and our lives,' he said.
He added: 'Raising our productivity will benefit workers, firms, and our economy as a whole. Workers can earn more in higher-quality jobs. Firms can prosper and expand their businesses here. Our economy can continue to thrive despite more intense global competition.'
Mr Lee also addressed employers and employees separately in his call for them to back the national productivity push.
He urged workers to 'make the effort' to upgrade themselves, and adapt and be willing to go into new growing industries.
Companies, meanwhile, should 'look beyond short-term profits', treat their workers as partners and invest in them.
Such themes are likely to figure prominently today, when PM Lee addresses workers in person at the May Day rally.
May Day Message 2012 by Prime Minister Lee Hsien Loong
30 April 2012
30 April 2012
The Singapore economy did well last year. Growth was 4.9%, quite creditable considering the external uncertainties. Workers benefitted from this robust performance. Many good jobs were created, and our unemployment rate of 2% was the lowest in 14 years.
We expect slower growth this year, between 1-3%. The US and Europe are not out of trouble yet, even though they are doing better than we had feared earlier. There are other significant external risks, such as tensions over Iran, an oil price shock or sovereign debt default, which might happen.
Another reason for slower growth is our domestic constraints. Our economy is maturing. We are running up against land and manpower limits. We are moderating the inflow of foreign workers. This will hold back many companies that are eager to expand, but cannot find enough workers. Some may even relocate their operations out of Singapore. Our labour market is currently still very tight. Singaporeans can readily find jobs, at all levels. In the short-term, this will push wages up.
But it would be dangerous to assume complacently that wages can continue to rise indefinitely, just by our squeezing on foreign workers. Higher wages push up business costs, affect our competitiveness, and may cause higher inflation. To sustain better wages and higher real living standards, we must raise our productivity. Indeed, raising productivity is more important than ever in our mature economy, because it is the only way to upgrade ourselves and our lives.
This calls for every worker to make the effort, whether the rank-and-file or Professionals, Managers, Executives and Technicians (PMETs). We must all continue to upgrade ourselves and master new skills. Let us take advantage of the substantial investments in Continuous Education and Training by the Government. Workers should also be adaptable and flexible, keen to re-skill, and willing to cross over to new, growing industries.
Companies must support this transformation. They should look beyond short-term profits to build successful businesses for the long-term, together with their employees and the broader community. They must treat employees as partners, and invest in their development and welfare to optimise the deployment of every worker, young and old, local and foreign. Companies can also contribute back to society in big ways or small, be it through corporate social responsibility or philanthropy. These efforts will strengthen our social compact, and help us avoid the mistrust and negative sentiments between businesses and citizens which we see growing in many developed countries.
Raising our productivity will benefit workers, firms, and our economy as a whole. Workers can earn more in higher-quality jobs. Firms can prosper and expand their businesses here. Our economy can continue to thrive despite more intense global competition.
Looking ahead, we must prepare for a more challenging economic environment. Globalisation has shortened economic cycles. Ups and downs happen much faster, and with less warning. Outlooks are less predictable. Every country is more exposed to global competition, and Singapore more than most.
Hence our unions must work hard to organise workers, not just the rank-and-file, but the growing number of PMETs too. Workers need help to prepare for this more uncertain environment. They need reassurance and support as they adjust to changing conditions. When layoffs and shutdowns happen, which from time to time are unavoidable, unions must help workers find new jobs and tide over the difficult times.
Workers should also be encouraged to support sound national policies that benefit them in the long run, so that we can work together as a nation to serve the best interests of Singaporeans. These goals are especially important to the new leaders in the union movement, who must strive to earn the trust of workers and foster a strong relationship with the Government and employers.
Above all, tripartism must remain our enduring competitive advantage. Each tripartite partner – Government, employers, workers – must be strong, each must share good relationships with the other two, and all three must build on the mutual trust that holds everything together. By deepening and strengthening tripartism, Singapore can continue to be a cohesive, competitive and successful society, a place where our whole is more than the sum of our parts.
Even though we expect our economy to grow less quickly in future, our shared goal is unchanged: to improve the quality of our growth. We want Singapore to be a competitive economy and an inclusive society, where the benefits of growth are distributed fairly and widely. We want this to remain a vibrant land of opportunity which continues to attract investors, and which helps Singaporeans to create a brighter future for ourselves.
I am confident that we can succeed if we put our hearts and minds into this. Let us work together to make this our best home, where every job is a good-job, where every worker is well employed and maximising his potential, and where everyone benefits from Singapore’s success.
I wish all Singaporeans a Happy May Day!
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