When wages fail to grow along with economy

When wages fail to grow along with economy

If wage increases here can be likened to a speeding car, Singaporeans were driving Ferraris all the way from independence to the late 1990s.

For almost 40 years, incomes went up every year, and in large dollops.

Then, for reasons that are not yet clear, the brakes were applied and the racing car slowed down considerably.

In every decade from the 1970s to 2000, the median monthly income of Singapore workers more than doubled every 10 years.

(For those interested in the details, these are the median income numbers: 1975: $286, 1980: $398, 1990: $1,000, 2001: $2,100, 2010: $2,710)

That's an annual increase of at least 7 per cent a year and, in some decades, 9 per cent.

But from 2000 to 2010, median salaries moved much more slowly, increasing by only 2.5 per cent a year. If inflation was taken into account, the increase amounted to only 1.3 per cent a year.

What happened?

It wasn't because the economy stopped growing.

On the contrary, the gross domestic product per capita, which is the usual way of measuring the economy, grew by more than 5 per cent a year from 2001 to 2010, a highly respectable increase. This was the same growth as in the decade before, from 1991 to 2000.

So, while Singapore's economic growth has been consistently good over the last 20 years, the story on the income front is very different, and has changed dramatically over the last 10.

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