LABOUR-SHORT bosses are raising wages faster than at any time since 2000, but the good times for workers could dent Singapore's competitiveness.

Workers' earnings have recorded a year-on-year increase of 8.5 per cent, the largest rise since the economic boom seven years ago.

Labour experts are worried that the higher labour costs could put a dampener on the economy.

But one positive from the current boom is that, overall, workers also appear to be slightly more productive than before.

Fresh figures released yesterday by the Manpower Ministry covering the April to June period showed the 8.5 per cent increase was an improvement from the 5.5 per cent growth in the first three months of this year.

At the peak of the 2000 economic boom, wages rose 8.9 per cent.

Labour economist Cheolsung Park said this rise in wages was to be expected during the sustained strong economic growth. 'The market seems to have very little room to supply more labour because the demand has been so high and workers have had little trouble in finding jobs.'

Singapore National Employers Federation (SNEF) executive director Koh Juan Kiat reckons employers could be hiring in anticipation of better business or greater staff turnover. 'This could slow down when they have full strength,' he said.

The Manpower Ministry report illustrated just how tight the labour market has become.

The construction, marine and offshore engineering sectors helped pump a record 64,400 new jobs into the pool from April to June. This added to the increase of 49,400 in the previous quarter.

Unemployment also fell. The overall rate was 2.3 per cent in June, down from 2.9 per cent in March. Fewer people were also laid off, and of those who were, more had found jobs within six months.

Also up: the number of job vacancies, at 37,400 in June this year. This is a 16 per cent rise from the previous quarter.

The increase in wages was matched with labour productivity rising by 0.4 per cent in the second quarter of this year, from the same period in the preceding year. The construction sector powered ahead with a 6.4 per cent increase, a reflection of the growth in building activity.

The improvements in productivity across the board helped moderate the rise in the overall unit labour cost - a measure of wages, levies and other labour costs against output - to 5.7 per cent in the second quarter.

Professor Park noted that rising labour costs may slow down the economy in the long run. But he expects more foreign workers to be hired, and immigration policies used to 'stem excessive increase in labour costs'.

SNEF's Mr Koh believes employers should rely not only on wage increases to attract and retain talent, but also on offers of good career paths, flexible work arrangements and training and development opportunities.

Added National Trades Union Congress assistant secretary-general Halimah Yacob: 'They should also make better use of the available pool of older workers and the women, particularly housewives who are seeking to re-enter the labour market.'

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