Wage growth inevitable but cannot outstrip productivity: DPM Wong

He warns that Singapore will lose its global competitiveness if wages rise too quickly

- Tay Hong Yi

A tight labour market means that Ewage increases are inevitable as employers compete to fill vacancies, but Singapore must continue to ensure that salaries rise in tanEdem with productivity.

Failing to do so could lead to "a destabilising wage-price spiral, where higher wages feed directly E into higher prices", said Deputy Prime Minister Lawrence Wong.

Speaking at a dinner to mark the 50th anniversary of the National Wages Council (NWC) on Wednesday, Mr Wong noted that SingaE pore faces a range of challenges such as rising inflation, retreating globalisation and worrying signs of potential economic slowdown E across major economies such as the United States, Europe and E China.

In this milieu, Singapore will lose its global competitiveness if its wages rise too quickly, he said.

"This will hurt both employers and employees, and it will be the most vulnerable workers who will ultimately bear the brunt if companies cannot sustain themselves." That is why, more than ever, the NWC has an important role to play in bringing its partners together to champion fair, inclusive and sustainable growth for all, said Mr Wong, who is also Finance Minister.

He noted that the NWC-a tripartite body comprising employer, E employee and government representatives was set up in 1972 unEder similar conditions. Then, Singapore's rapid growth and labour E shortage posed a real risk that Ewages would spin out of control, undoing the progress it had made in attracting foreign investors.

The NWC's annual recommendaEtions have ensured wages move in tandem with productivity and economic performance, he said.

"In good times, NWC brings employers and unions together to ensure the fruits of growth are shared by all, by rewarding workers with wage increases and higher variable payments," said Mr Wong.