SINGAPORE, Feb 25 — Despite acknowledging that he was not satisfied with the progress of the productivity drive over the past four years, Deputy Prime Minister Tharman Shanmugaratnam pointed out that it is a “steep climb” to move up from being an upper-middle income country to an advanced economy.

Responding to a question on a post-Budget forum on Channel NewsAsia last night (Feb 24), where he was asked for his thoughts on the Republic’s productivity growth report card — it was 0 per cent last year and -2 per cent in 2012 — Tharman said: “I can’t say I’m happy with the progress we’ve made. If you take the four years since we started this — 2010 to 2013 — it’s averaged 2.7 per cent productivity growth but that was entirely due to this kick-up in 2010.

“It’s a very sharp cyclical recovery. And since then it’s been very weak.”

The government’s target, set in 2010, is for the Republic to achieve a 2-3 per cent annual productivity growth by 2020.

But Tharman, who is also Finance Minister, noted: “We’re past the upper-middle income stage, we’re no longer a developing country but we’re not yet an advanced country. And when we’re trying to move from upper-middle to something closer to advanced, the climb is steeper.”

Most countries that go through economic restructuring face similar difficulties, he added. “It’s not an easy catch-up, it requires something that’s more within ... it’s about capabilities, it’s about attitudes, it’s about respect for workers and it’s about creativity.”

One challenge moving forward, he pointed out, is to scale up innovation so that the “habit of doing things differently from competitors” becomes more widespread.

Another challenge he foresees is some sectors growing at the expense of others.

“Some will grow faster than others and some sectors will find that they’re pruned down over time; they have to be more efficient and those that remain will be more dynamic and more profitable and pay their workers better. But the sectors that are more dynamic have to grow at the expense of the rest,” he said.

With sectors with low productivity, such as construction and F&B, growing more slowly, higher-value industries in manufacturing and services will be growing more rapidly, he said.

Meanwhile, asked if Singapore should have a target Gini coefficient — which measures income inequality — Tharman said the focus should be on real median incomes, as well as those of the bottom quintile of society.

“I’m not so concerned about the relativities, because that would depend on our role as a (global) city, I’m very concerned about people seeing improvement in their own lives, and a sense of fairness, because you must never feel that where you start off is where you’re going to end up,” he said.

He noted that the government had extended its support to middle-income families over the past three to four years, such that they receive about 2.5 times more in government transfers today than they did a decade ago.

On the Pioneer Generation Package, Tharman stressed that it was a one-off measure for “a very unusual generation” because most people started off poor in those days.

He also noted that setting aside funds for the package from the current Budget would reassure seniors that the government will follow up on its commitment, and that future Budgets could be freed up for future challenges. — Today