The strong wage growth that workers enjoyed last year might not be sustainable, given the lacklustre economic outlook and Singapore's flagging labour productivity.
Ministry of Trade and Industry permanent secretary Ow Foong Phengsaid at a press briefing yesterday that demand for labour may be more subdued this year, given the "challenging near-term outlook for the Singapore economy".
This is likely to lead to more moderate wage growth.
Real median income for full- time employed residents, which include both Singaporeans and permanent residents, grew 5.3 per cent last year, significantly faster than the 0.7 per cent growth registered in 2014. Real median wages for Singaporeans rose 7 per cent last year.
This was due to manpower shortages in some industries as well as increases in employer Central Provident Fund contributions, which went up 1 percentage point for all workers on Jan 1 last year.
Besides the depressed growth outlook, last year's strong wage increases might not continue because productivity growth has been poor.
A study released by MTI yesterday showed that the real average wage growth of resident workers outpaced labour productivity from 2005 to last year.
Labour productivity grew at an average annual rate of 0.5 per cent from 2005 to last year, while the real average monthly earnings of resident workers increased by 1 per cent a year over the same period.
If real wage growth continues to outpace productivity gains, Singapore's competitiveness will be hit, said Mrs Ow.
"In order for our economy to remain competitive and wage growth to be sustainable, wages should grow in tandem with productivity over the longer term."
This article was first published on Feb 25, 2016.
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