SINGAPORE: Wages in Singapore grew at a faster pace last year compared with 2023 as inflation eased, the Ministry of Manpower (MOM) said in a report on Wednesday (May 28).
Real wages rose 3.2 per cent in 2024, up from 0.4 per cent in the year before. Inflation stood at 2.4 per cent last year compared with 4.8 per cent in 2023.
The rise in real wages for 2024 is the highest since 2019, with the pace of growth largely on the decline since 2018.
Mr Ang Boon Heng, director of the manpower research and statistics department, said inflation played a very big part in the jump in real wages.
He pointed out that in 2022, nominal wages - which does not take into account inflation - increased by 6.5 per cent, but because of inflation, the real wage increase was pulled down to 0.4 per cent.
Inflation is represented by the gap between nominal and real wage growth, and that gap narrowed in 2024, although it remains bigger than in pre-COVID years.
Nominal total wages in 2024 increased 5.6 per cent, slightly higher than the 5.2 per cent recorded in 2023.
But MOM warned that downside risks from geopolitical tensions and global trade uncertainties are weighing on business sentiment.
Its forward-looking survey conducted in the first quarter of this year indicated a decline in the share of firms planning to increase wages.
“These trends point to a potential moderation in nominal wage growth in 2025 compared to 2024, especially in trade-reliant sectors such as manufacturing and wholesale trade,” MOM said.
Mr Ang said the moderation in wage growth is still expected despite some improvements in the trade tensions between the US and China. The moderation is also unlikely to be significant, he said.
"The labour market, even though we expect some softening, will still remain tight," he said. He added that there is still demand for manpower in certain sectors, such as community services and health and social services.
Nearly 80 per cent of companies gave their employees wage increases last year, up from 65.6 per cent in 2023, as most establishments were profitable.
“A majority of establishments gave the increases due to past organisational performance rather than forward-looking confidence,” MOM said.
Among companies that raised salaries in 2024, the average wage increase dipped to 6.6 per cent compared with 7.2 per cent in 2023.
For the 3.2 per cent of companies that cut wages in 2024, the size of the decrease was 3.6 per cent. In 2023, 6.5 per cent of companies cut wages by 6.2 per cent.
MOM said profitability of companies varied across industries, with real estate services, construction and wholesale trade having fewer profitable establishments, and manufacturing seeing an increase in profitable businesses.
But manufacturing and wholesale trade may have fewer profitable companies in the coming year due to global trade tensions, the ministry said.
Financial services, as well as the community, social and personal services sectors, saw an above-average increase in nominal wage growth last year.
The biggest increase was in administrative and support services at 8.7 per cent, largely due to the Progressive Wage Model.
Food and beverage services saw below-average increases in wages, as with wholesale trade and manufacturing, where wage increases are expected to moderate in the coming year due to geopolitical and trade tensions.
Across Singapore, the wages of rank-and-file and junior management employees grew 5.8 per cent and 5.6 per cent respectively, slightly higher than the 5.1 per cent reported for senior management.
MOM said this partly reflects efforts to offset cost-of-living pressures.
Government policies such as increases in the local qualifying salary and the implementation of the Progressive Wage Model helped to lift wages of lower-income employees, the ministry added.
“The increase in wages of lower-income employees did not have a significant impact on cost competitiveness, as they only form a very small component of total business costs,” MOM said.
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Real wages rose 3.2 per cent in 2024, up from 0.4 per cent in the year before. Inflation stood at 2.4 per cent last year compared with 4.8 per cent in 2023.
The rise in real wages for 2024 is the highest since 2019, with the pace of growth largely on the decline since 2018.
Mr Ang Boon Heng, director of the manpower research and statistics department, said inflation played a very big part in the jump in real wages.
He pointed out that in 2022, nominal wages - which does not take into account inflation - increased by 6.5 per cent, but because of inflation, the real wage increase was pulled down to 0.4 per cent.
Inflation is represented by the gap between nominal and real wage growth, and that gap narrowed in 2024, although it remains bigger than in pre-COVID years.
Nominal total wages in 2024 increased 5.6 per cent, slightly higher than the 5.2 per cent recorded in 2023.
But MOM warned that downside risks from geopolitical tensions and global trade uncertainties are weighing on business sentiment.
Its forward-looking survey conducted in the first quarter of this year indicated a decline in the share of firms planning to increase wages.
“These trends point to a potential moderation in nominal wage growth in 2025 compared to 2024, especially in trade-reliant sectors such as manufacturing and wholesale trade,” MOM said.
Mr Ang said the moderation in wage growth is still expected despite some improvements in the trade tensions between the US and China. The moderation is also unlikely to be significant, he said.
"The labour market, even though we expect some softening, will still remain tight," he said. He added that there is still demand for manpower in certain sectors, such as community services and health and social services.
MORE COMPANIES RAISED WAGES IN 2024
Nearly 80 per cent of companies gave their employees wage increases last year, up from 65.6 per cent in 2023, as most establishments were profitable.
“A majority of establishments gave the increases due to past organisational performance rather than forward-looking confidence,” MOM said.
Among companies that raised salaries in 2024, the average wage increase dipped to 6.6 per cent compared with 7.2 per cent in 2023.
For the 3.2 per cent of companies that cut wages in 2024, the size of the decrease was 3.6 per cent. In 2023, 6.5 per cent of companies cut wages by 6.2 per cent.
MOM said profitability of companies varied across industries, with real estate services, construction and wholesale trade having fewer profitable establishments, and manufacturing seeing an increase in profitable businesses.
But manufacturing and wholesale trade may have fewer profitable companies in the coming year due to global trade tensions, the ministry said.
SECTORS WITH THE BIGGEST WAGE INCREASES
Financial services, as well as the community, social and personal services sectors, saw an above-average increase in nominal wage growth last year.
The biggest increase was in administrative and support services at 8.7 per cent, largely due to the Progressive Wage Model.
Food and beverage services saw below-average increases in wages, as with wholesale trade and manufacturing, where wage increases are expected to moderate in the coming year due to geopolitical and trade tensions.
Across Singapore, the wages of rank-and-file and junior management employees grew 5.8 per cent and 5.6 per cent respectively, slightly higher than the 5.1 per cent reported for senior management.
MOM said this partly reflects efforts to offset cost-of-living pressures.
Government policies such as increases in the local qualifying salary and the implementation of the Progressive Wage Model helped to lift wages of lower-income employees, the ministry added.
“The increase in wages of lower-income employees did not have a significant impact on cost competitiveness, as they only form a very small component of total business costs,” MOM said.
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