Versus 18% rise in Hong Kong.
According to a commentary by ECA International on the Budget 2013, high labour costs on their own should not be a challenge for Singapore. A highly-skilled workforce should be paid commensurately for its skills.
Companies based in high salary locations such as Western Europe, North America and Japan remain competitive globally despite relatively high labour costs because their employees are highly skilled and extremely productive.
In order for Singaporean employers to remain globally competitive, the productivity levels of their employees must match or exceed those of their peers headquartered elsewhere in the world.
By embracing tools to improve the productivity of their employees, such as training, education and more intelligent use of technology, Singaporean employers can ensure that a highly paid workforce will remain more competitive than their peers who operate in low salary locations.
In fact, Singapore by several metrics has reached the level of income of a developed economy.
Based on ECA International’s research, the incomes of Singapore’s white-collar workers are amongst the highest in Asia having grown at rates in excess of peer economies such as Hong Kong, Japan, Korea Republic and Taiwan in recent years.
For example, ECA found that the incomes of white-collar workers have risen by approximately 20 per cent in Singapore since 2007 versus 18 per cent in Hong Kong and 10 per cent in Japan.
The added impact of relatively low income tax rates and the strength of the Singapore dollar means that the purchasing power of Singaporeans is at least equivalent to the residents of locations such as Hong Kong and London.
However, while this is the case, Singapore, like other Asian economies, suffers from a wealth gap which is an issue which the budget seems to be addressing.
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