Question
Mr Inderjit Singh: To ask the Minister for Trade and Industry (a) if he can provide data on the trend of business costs over the last five years, particularly data showing the changes in labour costs and rental costs; and (b) whether this trend creates a problem for SMEs to remain viable in the Singapore economy.
Written Answer by Mr Lim Hng Kiang, Minister for Trade and Industry
During the period 2007-2011, nominal average monthly earnings (AME), as a proxy for labour costs, increased at a compound annual growth rate (CAGR) of 3.5 per cent. Rentals of factory space increased at a CAGR of 7.3 per cent.
Although costs have increased, firms have coped through restructuring and improving productivity. Over the same period, the unit labour cost (ULC), which measures the labour cost required to produce one unit of output, for the overall economy grew at a more moderate pace of 1.5 per cent (CAGR), while the ULC for the manufacturing sector declined 2.9 per cent (CAGR).
The Government recognises that business costs have generally increased. Overall, Singapore is no longer a low cost business location. The Government has put in place broad-based and sector-specific programmes to help businesses remain competitive through upgrading their capabilities and improving their productivity, thereby moderating cost concerns. SMEs which restructure by moving up the value chain and increasing their productivity will continue to remain viable in the Singapore economy.
Annex A
Exhibit 1: Business Cost Indicators
2007 |
2008 |
2009 |
2010 |
2011 |
||
Nominal AME ($) |
3,773 |
3,977 |
3,872 |
4,089 |
4,334 |
|
URA multiple-user factory index (1998 Q4=100) |
93.1 |
112.5 |
99.4 |
102.9 |
123.2 |
|
Overall Economy Unit Labour Cost (2005=100) |
108.1 |
112.6 |
113.5 |
110.9 |
114.7 |
|
Unit Labour Cost for Manufacturing (2005=100) |
100.9 |
114.1 |
109.3 |
92.1 |
89.8 |
|
Percentage Change Over Corresponding Period Of Previous Year |
CAGR 2007-2011 | |||||
Nominal AME ($) |
6.2 |
5.4 |
-2.6 |
5.6 |
6.0 |
3.5 |
URA multiple-user factory index |
20.6 |
20.9 |
-11.6 |
3.5 |
19.7 |
7.3 |
Overall Economy Unit Labour Cost |
6.2 |
4.1 |
0.8 |
-2.2 |
3.4 |
1.5 |
Unit Labour Cost for Manufacturing |
3.8 |
13.1 |
-4.2 |
-15.8 |
-2.5 |
-2.9 |
Source: Department of Statistics and Urban Redevelopment Authority