Singapore’s nominal wage growth hit a ten-year high in 2022 compared to 2021 amidst economic growth. However, real wage growth slowed during the same period due to higher inflation.
According to the Manpower Ministry’s (MOM) Report on Wage Practices 2022, nominal total wages of full-time resident employees who stayed with the same employer for at least one year grew by 6.5 per cent in 2022. This was significantly higher than the 3.9 per cent in 2021, the highest in a decade.
MOM released the report on 29 May 2023.
The nominal wage increase was attributed to employers’ efforts to restore the wages of workers who experienced wage cuts during the pandemic and give higher wage increases to other workers to retain them amidst the stiff competition for talent.
On the other hand, real wage growth was dampened by higher inflation, increasing marginally by 0.4 per cent in 2022 and less than 1.6 per cent in 2021.
Wage growth is expected to moderate overall for 2023 as companies may take a more cautious approach given the global economic slowdown and a more uncertain business environment.
The MOM report also credited the decade-high wage growth to the rise of profitable businesses in Singapore.
The proportion of profitable businesses grew for the second consecutive year to 83.9 per cent in 2022. This resulted in 72.2 per cent of companies giving wage increases, up from 60 per cent in 2021 and 69.2 per cent in pre-pandemic 2019.
The remaining businesses either left wages unchanged (22.6 per cent) or cut wages (5.2 per cent).
Businesses also gave higher wage increases ― 7.9 per cent in 2022 compared to 6.3 per cent in 2021. Businesses also moderated their wage cuts from – 5.2 per cent to -4.5 per cent in the same period.
The MOM report cited higher wage growth across all industries in 2022 compared to 2021. However, the figures varied from industry to industry.
Accommodation and Retail Trade reported above-average wage increases of 9.7 and 6.7 per cent, respectively, fuelled by employers’ efforts to attract and retain workers amidst strong tourism demand.
Financial Services, Information & Communications and Professional Services also registered high wage increases of 9.0 per cent, 7.7 per cent and 7.6 per cent, respectively, amidst continued manpower demand in these industries.
Manufacturing and Wholesale Trade also saw wage growth of 5.7 per cent and 5.8 per cent, respectively. However, these were lower due to global supply chain disruptions and weakness in trade-related activities.
In a LinkedIn post, NTUC Assistant Secretary-General Patrick Tay stressed that the Labour Movement must push on to help workers amidst the uncertain economic outlook and inflationary pressures despite the positive results.
He said: “[We] must not relent in our efforts to better uplift lower-wage workers and also support the broad [middle-income workers], often referred to as the sandwiched class, especially with the rising cost of living, so they do not just enjoy gross, but real wage increases.”
The report added that more companies plan to raise workers’ wages in March 2023 compared to December 2022. This was based on MOM’s recent polls on wage expectations in the first quarter 2023.
MOM urged employers to push ahead with business and workforce transformation amidst global developments.
To do so, the ministry encouraged employers to tap into Government programmes to adapt to the changing environment and implement the Flexible Wage System (FWS) to bolster resilience and flexibility in wage structures.
Employers are encouraged to refer to the FWS guidebook on MOM’s website and approach tripartite partners and the Tripartite Alliance for Fair & Progressive Employment Practices for advice.
