Updated: 03/06/2014 01:53

Permanent solution to tackle business costs is to raise productivity: Tharman

Permanent solution to tackle business costs is to raise productivity: Tharman

Finance Minister Tharman Shanmugaratnam says the permanent solution to tackle rising business costs is to raise productivity. 

Speaking at the wrap up of the budget debate, he adds that this is because higher costs are here to stay, given Singapore's economic progress. 

In the past 30 years, productivity in Singapore has improved quite significantly. 

Mr Tharman said productivity here was around 40 per cent that of the US, three decades ago. 

Now, it's about 70 per cent of the US and is nearly on par with the UK. 

And he said raising productivity remains the fundamental solution for companies to thrive. 

"Because as long as we remain vibrant as an economy, our costs will basically approach that of an advanced country, little higher in some area, little lower in some areas, but we'll have advanced country costs and the only way for our businesses to survive in that environment is to have advanced country capabilities, in innovation, in the commercialisation of R&D, in managerial skills in investing in employees so that they have deep skills. " 

He also said that higher productivity should not come at the cost of higher unemployment. 

"For us to be able to raise productivity while providing jobs for all of our citizens is a much bigger challenge than raising productivity by shedding jobs. And that is in fact what has happened in many countries. If you look at united states over the last 10 years, productivity has risen but in fact employment rate has come down significantly (same thing in the United Kingdom.)" 

Mr Tharman also listed the priorities for the next phase of economic restructuring. 

"First we must transform our SMEs, second we must transform jobs and develop every talent, third, we must transform our culture and our norm, at the workplace and in some regards in our society. So in short we have to transform our economy and transform our society if we succeed in this restructuring journey and achieve a high productivity, high income society." 

He said it's important to keep a steady pace in this productivity journey.

-By Travis Teo

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