Growth in Labour Productivity and Total Factor Productivity, and Implication for Wage Growth
Ministry of ManpowerSpeakers
Summary
This question concerns labour productivity and Total Factor Productivity (TFP) growth raised by Mr Melvin Yong Yik Chye and their influence on real wage growth. Minister for Manpower Dr Tan See Leng reported that between 2020 and 2025, labour productivity grew by up to 3.0% and TFP by 2.4% annually, supported by business transformation, R&D, and AI adoption. He noted that the foreign workforce strategy balances talent attraction with reduced labour reliance, while the proportion of profitable establishments rose to 83.1%. Real median income grew by 1.6% per annum, which the Minister noted is broadly in tandem with productivity gains. This alignment indicates that wage growth remains sustainable and is underpinned by improvements in underlying economic productivity.
Transcript
105 Mr Melvin Yong Yik Chye asked the Minister for Manpower (a) how labour productivity and Total Factor Productivity have grown across the economy over the past five years; (b) what factors have contributed to recent changes to Total Factor Productivity; and (c) how productivity and profitability growth have contributed to real wage growth for workers.
Dr Tan See Leng: From 2020 to 2025, Singapore's labour productivity, measured by real value-added per actual hour worked and real value-added per worker, grew by 2.6% per annum and 3.0% per annum respectively. Over the same period, total factor productivity (TFP) grew by 2.4% per annum.
TFP growth in the past five years has been supported by continued business transformation, workforce upskilling and reskilling, and Government investments in research and development through the Research, Innovation and Enterprise Plan, alongside initiatives promoting digitalisation and artificial intelligence adoption. Our foreign workforce strategy also enables this. We continue to remain globally connected and open to talent that can complement our skilled local workforce, while reducing reliance on foreign labour where there is scope to raise productivity. These efforts have strengthened firms' productivity and competitiveness. The proportion of profitable establishments rose from 62.8% in 2020 to 83.1% in 2025.
From 2020 to 2025, real median income of full-time employed residents grew 1.6% per annum, broadly in tandem with productivity gains, suggesting wage growth has been sustainable and underpinned by improvements in underlying economic productivity.