SINGAPORE - Wages may be rising in a tight labour market but they could stagnate or even fall back, if productivity does not catch up, said Prime Minister Lee Hsien Loong.
With the economy maturing and facing tight resource constraints, Singaporeans will need to get used to the idea of slow growth.
"Our economy grew by 2.9 per cent last year. This year we expect between 2 per cent and 4 per cent," said Mr Lee.
"We have to get used to slower growth than before, because our economy is more mature, and we have tightened up on foreign manpower."
While growth may be slower, Mr Lee said in his annual May Day message on Thursday that Singapore cannot afford not to pay attention to it.
"We must still be concerned with growth, because that is how we can afford to invest in healthcare, education and our people."
To overcome the limitations the economy is facing, Singapore must push ahead with productivity and innovation, he said.
On this front, Mr Lee warned that that productivity growth is moving "too slowly", partly the result of an unsettled world economy and the fact that Singapore's "previous strategy is reaching its limits".
"Wages have been rising in the tight labour market, but this is not sustainable. If productivity continues to stagnate, after a while so will wages, which may even fall back," he said.
"We need a fresh approach. This is why we are working hard to make SkillsFuture a reality."
During the annual Budget Debate this year, the Government announced the SkillsFuture Credit account scheme for all Singaporeans, with every Singaporean aged 25 and older receiving an initial $500 grant where they can use to attend training courses.
Mr Lee said that the Government is taking the lead but "for SkillsFuture to take off, everyone has to play his part".
Workers need to take charge of their development and career, he said, adding that the Government is working with education institutions and employers to create more learning opportunities and skill certification programmes.
Turning to employers, Mr Lee said: "Employers must support their workers, and where possible grant time-off to attend training.
"As workers upgrade their skills, employers should re-design and update their jobs to make good use of the new skills, and recognise and reward workers who contribute more," Mr Lee urged.
A key ingredient to making SkillsFuture a success is the strong three-way partnership between the Government, employers and unions.
"Unity is our biggest strength," said Mr Lee. "Nowhere else in the world do Government, employers and workers work closely together, give-and-take and create win-win outcomes out of difficult circumstances."
Mr Lee will speak to some 3,500 union leaders, employers and government officials on tripartism at his annual address to workers at the May Day Rally to be held at the Star Performing Arts Centre at Bouna Vista tomorrow.