SINGAPORE'S WAGE COSTS

Mr Tay Beng Chuan asked the Minister for Manpower (a) what is the ranking of Singapore's wage costs in the Asia Pacific region and in the world; (b) what benchmark is applied in Singapore to determine whether wages are high, medium or low; (c) what is the percentage that high wages occupy in Singapore's total wage costs; and (d) what is the percentage of highly-paid executives in Singapore's labour force.

Dr Lee Boon Yang: Singapore's wage costs are generally higher than other Southeast Asian economies and the NIEs, but lower than developed economies such as Japan, USA and European economies. According to the World Competitiveness Report 1998, the hourly compensation for manufacturing workers is US$6.70 in Singapore, higher than US$5.60 in Taiwan, much higher than US$0.90 in Malaysia, but lower than US$17 in Japan and US, and US$26 in Germany. The picture in the services sector is roughly similar. The annual gross salary of a bank credit clerk is US$15,500 in Singapore, higher than US$7,300 in Malaysia, comparable to US$16,400 in Hong Kong, but lower than US$33,975 in US. For top management, the salary gap between Singapore and developed economies is however smaller. The annual gross salary of a CEO is US$178,000 in Singapore, higher than US$96,000 in Malaysia, marginally higher than US$167,000 in Taiwan, and comparable to US$173,000 in US. Please see tables 1, 2 and 3.

To determine whether wages in Singapore are high, low or medium, one way is to compare wages of people in equivalent occupations with other countries. Within the domestic economy, we should also benchmark the growth in wages against output, that is, whether productivity growth has been in tandem with wage growth. In recent years, productivity growth lagged behind real earnings growth in Singapore. While real earnings increased by around 4-5% annually over the past 5 years, productivity growth lagged, at 1-2% in 1996 and 1997. In contrast, in Taiwan, productivity growth outstripped earnings growth substantially. In developed economies, although productivity growth rates were lower, real earnings growth was even more subdued. We have hence correspondingly seen Singapore's relative unit labour cost rising gradually but steadily over the years. It has worsened further since July 1997 as the depreciation in regional currencies was not fully offset by a rise in their nominal wages. (Please see table 4a, table 4b and chart 4).

On the questions regarding the proportion of high income earners, 7% of full-time workers in Singapore earn income of more than $6,000 per month, based on MOM's Labour Force Survey 1998. The income share of this group of high wage earners was 27% of total income earned by full-time workers.