4  BIS central bankers’ speeches  •  Foreign labour, which had driven Singapore’s labour force growth since the late 1970s, was already one-third of the total workforce. •  It was neither economically efficient nor socially desirable to allow the foreign workforce to expand much faster than the local workforce. By 2020, average total labour force growth was down to 1% per annum. The central thrust of economic strategies in the 2010s and early 2020s was therefore to shift to a productivity-driven growth model. The aim was to increase productivity growth to at least 2% per annum, from the 1.4% averaged during the 2000s. •  The growth of lower-skilled foreign labour was curbed through increases in the foreign worker levy and reductions in the foreign worker dependency ratio ceilings. •  Financial incentives were given to firms to undertake capital deepening and adopt technology solutions to raise productivity. •  Programmes were put in place to help Singaporeans develop and master skills in new growth clusters. While the manufacturing sector had continually undergone restructuring and moved up the value chain in the preceding five decades, this was the first time the entire economy was undergoing such a transition. •  It proved particularly challenging for many traditional domestically-oriented services like retail, hospitality, construction, real estate, and social services, which had come to be heavily dependent on cheap labour over the decades.
These market inefficiencies also lie behind – at least in part – the changes in inequality in Spain during the crisis. Over the course of the Spanish recession, strong job destruction, concentrated among certain groups, and the precariousness of many contractual relationships that arose from this more uncertain macroeconomic setting prompted growth in inequality in per capita income, despite the fact that wage differences among workers oscillated less than in other developed economies. The current upturn and, in particular, strong employment creation are allowing some correction of per capita income inequality. However, looking ahead, additional reductions in the indicators of income inequality will depend on continuing reductions in unemployment, which requires improvements in the employability of the lesser-skilled and an increase in the hours actually worked by employees with lower wages. In any event, the causes behind the dynamics of inequality and its effects are complex, and learning about them will involve analysing in depth the various key facets (wages, household income, consumption and wealth, among others), this being an essential requisite for designing public policies conducive to socially sustainable growth. Against this background, allow me to refer to the discussions surrounding the national minimum wage. The Annual Report mentions the effect of the increases approved in 2017 and 2018, of 8% and 4%, respectively.