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 per cent 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 increases, the Government will do more to help lower-income groups and keep costs down for the middleincome, so that they have greater spending power.
"We are succeeding in keeping the tax burden down on middleincome Singaporeans considerably," he said, adding that Singapore's taxes on the middle class compare favourably against those of Hong Kong and Australia.
Low taxes are important "so that what you earn, you keep, rather than (the Government spending) 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," he said.
Singapore expects its economy to grow in the range of 2.5 per cent 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.
"(This drive) is a very tough job because you are asking companies to change the way they are doing things," Mr Lee said.
"You may need to franchise or join together, you may need to change altogether and instead of having one waiter per table, you have self-service and the waiter just comes at the beginning and pours your coffee for you."
Singapore's target is to raise productivity by an average of 2 per cent to 3 per cent annually for the 10 years starting 2010.
But workers as a whole became less productive in 2012, 2013 and the first nine months of last year.
Productivity improvement, however, "is not something that can happen quickly, (it) is something which we have to continue working on", Mr Lee said.
He added: "There is no alternative to this."
This article was first published on Januaray 17, 2015.
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