Incomes of middle- and lower-income households in Singapore have risen much faster than cost of living since the global financial crisis, unlike in many other countries where these groups have seen their real incomes stagnate or even decline, said Deputy Prime Minister Tharman Shanmugaratnam yesterday.
Mr Tharman noted that any debate about creating a more inclusive society should take into consideration Singapore's unusual success in lifting incomes amid the "new reality of a highly uncertain world". The median household income in Singapore has grown 18 per cent over the last five years after adjusting for inflation and the cost of living, said Mr Tharman, who is also Finance Minister and a candidate for Jurong GRC.
"To realise how unusual this is, we must understand that we operate in a world where very few countries have seen real wage growth in the middle-, let alone for the low-income group," he said during media interviews at Taman Jurong Market and Food Centre yesterday.
In advanced countries like the United States, Europe and Japan, and even among Singapore's regional peers Hong Kong and Taiwan, real-income growth has been stagnant or negative since the global financial crisis despite generally low inflation and, in some cases, deflation.
"We should start off any discussion by being factual and objective about where we stand relative to other countries in the same world as us," said Mr Tharman.
He noted that Singapore has done unusually well in an increasingly volatile and fragile world, where uncertainties are mounting over the outlook for key regional economies like China, Indonesia and Malaysia, and the recovery in advanced countries like the US remains tepid.
"I say this not to spread fear but to underline the confidence that investors and businesses still have in Singapore in this very uncertain environment," he said.
In order for this unusual outperformance to continue, Singapore must find the right balance in its economic strategies and continue creating opportunities for people at all stages of life, said Mr Tharman. "We can't go for a strategy of wiping out businesses by suddenly over-tightening labour policy, but neither can we stick with the status quo (where a large segment of small and medium-sized enterprises are stuck in low-productivity activities, struggling to survive)."
Restructuring the economy will be a lengthy process and involves working with businesses, unions and workers to incentivise greater efficiency and promote innovation. "That means not being simplistic about things and going for a strategy that just wipes out a large segment of businesses in the hope that somehow or other productivity is summoned up," Mr Tharman said.
The restructuring effort is already starting to yield results - productivity growth measured by value-added per actual hours worked was about 3 per cent per year between 2009 and 2014, he noted.
"We're making progress but we've got to see this through. We will not be able to sustain the very unusual income growth we've seen if we don't persist in restructuring our economy."
