PM Lee: Get used to more gradual pay rises as economic growth slows

Prime Minister Lee Hsien Loong said Singaporeans have to get used to a more gradual wage increase as the country's economic growth moderates to the lower level typical of developed countries. -- PHOTO: ST FILE
Prime Minister Lee Hsien Loong said Singaporeans have to get used to a more gradual wage increase as the country's economic growth moderates to the lower level typical of developed countries. -- PHOTO: ST FILE

SINGAPORE - The heady days of big pay rises across the board are over.

Prime Minister Lee Hsien Loong said Singaporeans have to get used to a more gradual wage increase as the country's economic growth moderates to the lower level typical of developed countries.

Growth of 5 to 6 per cent a year, as Singapore had enjoyed in the past, is no longer possible, he said in an interview with Singapore media on Wednesday.

"If we can make 2 to 3 per cent per year for the next five years, I think we're doing well," he added.

"Domestically, we have to get used to what that means.

"Three per cent (growth) per year means your wages will go up correspondingly, gradually, year to year - maybe not every year but over four, five years you will see improvements if we are successful in our policies.''

Mr Lee pledged that in the face of these slower wage increaes, the Government will do more to help lower-income groups and keep costs down for the middle-income, so that they have greater spending power.

"We are succeeding in keeping the tax burden down on middle-income Singaporeans considerably," he said, adding that Singapore's taxes on the middle class compare favorably against those of Hong Kong and Australia.

Low taxes are important "so that what you earn, you keep, rather than (the Government spends) on your behalf", he added.

Mr Lee also reiterated the importance of keeping the economy growing to create a better future for Singaporeans, a point he made in his recent New Year message.

"If we can maintain that, then we can improve our lives progressively. If we cannot maintain that, (if) we go to zero growth, I think we have a problem."

Singapore expects its economy to grow in the range of 2.5 to 3.5 per cent this year, amid a volatile global economic outlook.

This requires it to be nimble in responding to the shifts, including grinding on with the productivity drive, Mr Lee said.

Improving productivity, however, "is not something that can happen quickly, (it) is something which we have to continue working on,'' Mr Lee said and added:

"There is no alternative to this.''