Inclusive growth

THE reactions are mixed.

Yes, says Assoc Prof Hui, as this will ensure better returns to workers.

'But given our resource limitations and the need to maintain cost competitiveness, we should aim for a moderate increase in wage share but not to the level of those such as the US,' he notes.

Not quite, says Prof Hoon.

'It does not appear to me to be helpful to think of attaining a given wage share of GDP to be the right target to focus on.

'What should be a matter of focus is to generate an environment for productivity to grow because both wage gains and boost to business profits can occur even if the wage share of GDP is constant.'

But all agree that attention ought to be paid to increasing the wages of low-income workers through skills training, the creation of better-quality jobs, and the transferring of income to the poor through employment subsidy schemes like the Workfare Income Supplement (WIS).

Indeed, the Government has promised to pay special attention to low-wage workers as it aims for inclusive growth, by enhancing WIS payments and adding training to the scheme.

It has also made increasing productivity a key priority over the next few years - a new growth model for Singapore, which used to rely more on importing foreign workers to expand the economy.

As a result, it has raised the foreign worker levy and pledged to slow the inflow of foreign workers into Singapore.

Will all these work to ensure Singapore's wage levels measure up to its First World economy status?

It would go some way towards increasing workers' wages, but whether pay packages will be commensurate with growth figures depends on how Singapore innovates and transforms its economy.

Mr Bhaskaran concludes: 'Whether we are a First World economy depends not just on our wage levels but on a whole array of other factors.

'Do we really have the inherent capacity to create, innovate, produce and drive our economic destiny that smaller, developed countries such as Sweden, Finland or the Netherlands have? When we have that inherent capacity, then we can say we are First World.'

This article was first published in The Straits Times.

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