Budget 2014 - Transforming our economy to raise incomes

growth based on innovation and deeper capabilities, that will enable us to sustain rising incomes for Singaporeans. It will also allow us to avoid indefinitely expanding the foreign workforce. Second, we are building a fair and equitable society, with stronger support for those who start off with less, where everyone has a real chance to pursue their aspirations and earn their own success. We are strengthening social safety nets, and mitigating inequalities. And as our population ages, we are keeping quality healthcare affordable and strengthening community networks, to help seniors to enjoy active and fulfilling years. Among citizens, median wages have increased by about 9% in real terms in the five years to 2013. This is significantly better than in the other Asian Newly Industrialised Economies or NIEs,Hong Kong, Korea, Taiwan. Singapore is the top Comparing it with the range of developed countries as well as the Asian NIEs. Real incomes at the 20th percentile of our income ladder rose by a similar amount. We have avoided the problems in many advanced economies, where median wages have stagnated or even fallen over much longer periods, while unemployment has gone up. The tighter labour market and increase in wages that we are seeing are part of economic restructuring. However we can only sustain wage increases if we succeed in boosting productivity. Let me put this in another way. Without good productivity growth, if we try to push wages up, we will end up with either higher consumer prices or squeezed profit margins that hurt both businesses and ultimately jobs. Firms will either pass on higher wage costs to consumers through higher prices, especially in the domestic service industries, or else they will become less competitive. It is a zero-sum game between business profits and wages, that no one benefits from. That is why raising productivity is at the centre of our economic agenda. It is the only way we can raise our living standards in the years to come. To reach advanced country incomes, we must develop advanced country capabilities-- the corporate and managerial skills, the ability to translate Research and Development (R&D) into commercial opportunities, and deep skills and expertise in the workforce. However, transforming our economy is not just about technology, and productivity is not ultimately about the dollars and cents of investments or upgrading. It also means changing our social norms. We need a workplace culture where employees' views and contributions are valued, up and down the line. When employees are engaged and empowered, productivity goes up. Some of our firms, including SMEs, are good role models in this regard. Many more have to get on board. Second, we also need a culture of mastery on the job. As individuals or companies, and as a society, we have to take pride in developing expertise and flair in every vocation, seeking not just competence but excellence, throughout people's lives. Employers have to support this too -- doing the job well is what counts, not long hours on the job. Third and importantly, we have to change our habits as consumers. Quality service comes in many forms, and need not mean having service staff constantly waiting on us. We must also feel at ease with self-service technologies, such as at check-out counters in supermarkets. This photo was taken yesterday. I won't say which supermarket, but you notice the queue on the left is a traditional queue, a little harrassed. The queue on the right, with the lady pressing a few buttons is a self-service queue. Faster, easier, and in my opinion, should also be cheaper. We are well behind many other cities in these respects. These other cities were not always that way, but their social norms evolved. We too must make these shifts, in order to avoid a growing dependence on foreign workers, and to create quality jobs. There is no reason, for example, why restaurants and cafes in Singapore cannot be like those in Europe or the US, which operate with fewer service staff, each taking more responsibility and getting better pay; where customers treat staff with respect and the staff wear their uniforms with pride. We must all make the effort to change our social norms, in order to raise productivity and pay. Restructuring our economy will ultimately succeed if, at its heart, it is about these changes in our social practices.