Photo of Koh Poh Koon from CNA

Senior Minister for Trade and Industry Koh Poh Koon complained in Parliament yesterday (July 11) that Singaporeans’ wages are too high and unsustainable. Referencing to the productivity growth, the S$1.1 million-a-year PAP minister threatened that businesses will downsize or shut down if wages continue to rise:

“From 2001 to 2017, real wages for resident workers grew by 1.5 per cent per annum on the back of productivity growth of 2.1 per cent per annum. But from 2011 to 2017, real wages for resident workers rose by 1.9 per cent per annum, while productivity grew by only 1.1 per cent per annum over the same period. Over the long term, real wage growth should track productivity growth in order to be sustainable. This is because 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.”

The PAP Minister said he wants to focus on raising productivity by giving more state-sponsored assistance to businesses in the form of tax reliefs and grants. Minister Koh Poh Koon took credit for the increased profits of businesses, claiming that trickle-down economic policies have raised companies’ revenues:

“Firms that tapped on the Capability Development Grant (CDG) managed by Enterprise Singapore for capability improvement projects between 2005 and 2012 experienced a 9.3 per cent increase in revenue on average over time. Productivity improvement projects had the largest impact, raising firms’ revenue by 12.4 per cent, compared to 7.8 per cent for technology innovation projects and an average of 6.7 per cent for the remaining project areas. 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.”

Tying wage growth to productivity growth has been one of the key fallacies employed by the Singapore government to depress wages. The “formula” excludes profit-sharing of the enterprise, resulting in widening income gap, with the director earning more than 76 times the lowest-paid worker on average in 2017.

In Singapore, manual labour jobs like cleaners earn as little S$900 a month after CPF deduction. At about S$5 an hour, this is a quarter of the S$20 minimum wage in Australia. Foreign workers from third world countries like Bangladesh earn much lower, taking home about S$600 a month. Despite having access to cheap labour, this did not result in cheaper property prices as the profits went into the pockets of company executives and the government as taxes.