SINGAPORE: On the back of the Ministry of Manpower’s (MOM) announcement this week that the actual wage growth in Singapore has been at a low level in the past few years, with an increase of only 0.4% in the past two years, a human resource (HR) expert has warned that companies may tighten employee salaries amidst geopolitical tensions.
The HR expert who spoke to 8World explained that companies are grappling with the implications of geopolitical instability, which complicates their ability to project future earnings.
The current global economic landscape, marked by uncertainties such as geopolitical conflicts and the ongoing impact of climate change, is influencing corporate decisions on wage adjustments.
As companies face increasing unpredictability in their operating environments, there is a growing inclination to limit financial outlays, including employee wages.
Adding to the wage stagnation is the trend of companies relocating their headquarters to countries with lower operational costs.
Experts indicated that this migration of corporate bases away from high-cost hubs like Singapore has hurt local wage levels. This trend, driven by cost-saving strategies, has led to a reduction in wage growth opportunities for employees in Singapore.
The HR professional who spoke to 8World emphasized that while Singapore has traditionally been seen as a strategic “Asian headquarters” for many multinational companies, the higher cost of maintaining a base in the city-state is prompting some firms to move their operations to more cost-effective locations.
This shift, he warned, could be “a bit disadvantageous to Singapore and its employees.”
The dual pressures of geopolitical tensions and the relocation of corporate headquarters pose significant challenges to the Singaporean workforce and have sparked concerns about potentially prolonged periods of stagnant income growth in the future.
The warnings on wage stagnation highlight the need for effective strategies to ensure Singapore remains an attractive location for businesses while safeguarding its workforce’s financial well-being.