It shows Singapore is not just ahead of developing countries but also developed cities such as New York and Sydney.

This "alarming'' situation worries Deputy Prime Minister Tony Tan, who brought it up yesterday to show why the Central Provident Fund (CPF) rates must be cut swiftly and substantially.

The survey issued by the Political and Economic Risk Consultancy (PERC) firm on July 2 shows that on a scale of zero to 10, with zero being the lowest labour cost country, Singapore stood at 5.5, the fourth highest among 14 countries surveyed. This puts it ahead of the US (5.07) and Australia (4.8).

"To me, this is a profoundly important statistic. It's a simple one but it gets to the nub of the problem. We have priced our labour out of the market,'' Dr Tan told reporters, elaborating on a speech he made later at a dinner to celebrate the 35th anniversary of Sembawang Shipyard and its employees' union, and National Day.

He made it plain he was not expecting workers here to match the cheap wages of China and India or those of neighbouring countries.

"But it is crucial that we do not price ourselves ahead of developed countries which are also our competitors in the global market,'' he said.

He acknowledged that obtaining a correct reading of the economic situation was difficult.