Impact of Tight Labour Market on Wage Inflation
Ministry of Trade and IndustrySpeakers
Summary
This question concerns how the tight labour market and competition for talent drive wage inflation and impact business sustainability. Minister Gan Kim Yong explained that the job vacancy ratio rose to 2.09 in 2021, resulting in a 3.2% growth in nominal median income for full-time residents. To ensure this growth remains sustainable, the Government provides schemes like the Productivity Solutions Grant and Enterprise Development Grant to help businesses transform and raise productivity. Additionally, the SGUnited Jobs and Skills Package and Career Conversion Programmes support worker upskilling, while Tech.Pass and Tech@SG facilitate access to specialized manpower. The Government is also calibrating border reopenings and updating foreign manpower policies to help companies anchor high-value activities and secure critical talent.
Transcript
49 Ms Foo Mee Har asked the Minister for Trade and Industry (a) how is the talent war and tight labour market causing wage inflation; and (b) what is its impact on the sustainability of businesses.
Mr Gan Kim Yong: The labour market in Singapore has tightened because of the economic recovery as well as border restrictions due to COVID-19. The seasonally-adjusted ratio of job vacancies to unemployed persons rose from 0.82 in December 2019 to 2.09 in September 2021.
Correspondingly, the nominal median income of full-time employed residents grew by 3.2% in 2021, reversing the decline of 0.6% in 2020.
Wage growth benefits our workers. However, for it to be sustainable for businesses, wage growth must be supported by productivity growth. To achieve this, we support businesses and workers in the following ways.
First, we help businesses transform and restructure to raise productivity via schemes such as the Productivity Solutions Grant (PSG) and Enterprise Development Grant (EDG). In view of COVID-19, we have also increased the Government’s support levels for PSG from 70% to 80% till March 2022. Firms can use the higher support levels to transform more quickly, especially in view of the tight labour market.
Second, we continue to invest in our workers’ skills through the SGUnited Jobs and Skills Package. Agencies have rolled out initiatives such as Workforce Singapore’s (WSG’s) Career Conversion Programmes (CCPs), IMDA’s TechSkills Accelerator programme, as well as sector-specific reskilling initiatives in order to equip Singaporeans with new skills and abilities to move into emerging job roles such as Data Analysts and Advanced Biopharmaceutical Manufacturing Professionals.
Third, besides improving productivity for business sustainability, we also support our businesses with access to critical manpower. The Government regularly updates our foreign manpower policies to enable companies to access a diverse pool of manpower that help anchor high-value activities here and create good opportunities for Singaporeans. We also have specific schemes such as the Tech.Pass and Tech@SG to provide firms with access to specialised manpower in the technology sector.
Finally, we have been reopening our international borders in a calibrated manner, balancing public health considerations and the needs of our economy.
The Government will continue to monitor the labour market situation, as well as the wage growth of our workers and the productivity growth of our companies. We remain committed to supporting our businesses with the necessary manpower they need to grow and provide better outcomes for Singaporeans.