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Dr. Koh Poh Koon warns Parliament about dangers of wages outstripping productivity. What about Ministers?

Speaking in Parliament on Wednesday (11 Jul), Senior Minister of State for Trade and Industry Dr. Koh Poh Koon said that the growth in wages of resident workers have outstripped productivity growth. In turn, this could have a negative effect on the economy.

The 4G leader said that this was as a result of a labour market tightness in industries such as construction and other services and may not be sustainable. From 2011 to 2017, real wages for resident workers rose by 1.9% per annum compared to productivity increases of 1.1%.

"If real wage growth outstrips productivity growth for an extended period, businesses will be at risk of losing their competitiveness and potentially be forced to scale back or close their operations".

Dr. Koh added that the government had placed emphasis on increasing. For instance, the Industry Transformation map would encourage businesses leveraging on technology so that business can make better profit margins while controlling their costs.

Concluding, he said that the government "is committed to continue to work with businesses and the unions to help businesses improve their productivity and ensure that the productivity gains are shared with workers through higher wages.”

Do the million-dollar wages of PAP ministers match their productivity?

In 1994, the late Lee Kuan Yew argued the case for higher Ministerial salaries.

“If this salary formula can draw out higher quality men into politics, whatever their motivations, I say, let us have them. I make no apologies for collecting the most talented team I could find. Without them, none of you would be enjoying life today in Singapore”.

Yet things seemed to have changed some 20 years later.

In a 2015 interview with Bloomberg, Associate Professor Michael Barr said that  “The current Cabinet [in Singapore] is really a Team B.” Last month, columnist Justin Hugo opined in an opinion piece on the News Lens that the high ministerial salaries for PAP leader cannot be justified given their mediocre performance.

Noting that the Ministerial Salary formulae states that the salaries of office holders “should also be linked to the individual performance.. and the socio-economic progress of Singapore Citizens", Hugo asked if Singapore’s socio-economic progress has been stellar thus far.

He highlighted that Singapore’s “spending on social protections among the lowest in developed countries”. This led him to ask why “the government [is] intent on lining its own pockets rather than putting that money to work, [since] as many as 35% of Singaporeans living in relative poverty?”

Hugo also noted that Singapore’s economic growth or standing is not impressive. For instance, the IMF projected Singapore’s economic growth for 2018 to be a mere 2.9% while Luxembourg’s economic growth at was projected at 4.3%.

Concurrently, the Global Power City Index of 2017 - which evaluates and ranks the world's major cities in relation to their ability to attract businesses and individuals – ranks London as the first, followed by New York and Tokyo. By comparison, Singapore was ranked fifth.

The columnist then asked: “Is it fair that Xavier Bettel is presiding over a country forecast to grow 1.5 times faster than Singapore, yet [Lee Hsien Loong] pays himself nearly six times the salary? [Why is I that Lee Hsien Loong] earns more than six to 12 times that of the London mayor, the New York City mayor and the Tokyo governor?”

By Dr. Koh's own measure, do you think that PAP Minister's performance has kept up with their wages?