Pay rises in Singapore expected to cool amid inflation and geopolitical risks

SINGAPORE: Singapore’s wage growth is expected to ease in 2026 as businesses take a more cautious stance amid growing geopolitical uncertainties and persistent inflationary pressures.

According to a report released by the Ministry of Manpower (MOM) on Thursday, Singapore’s focus remains on ensuring that wage increases are supported by productivity improvements while safeguarding jobs. The report showed that nominal wages for resident employees rose by 4.9 per cent in 2025, down from the 5.6 per cent increase recorded in 2024.

The moderation in wage growth comes as employers navigate a more challenging economic environment. Businesses are increasingly concerned about rising operating costs, particularly labour expenses, as global uncertainties continue to cloud the outlook.

A survey conducted by an industry group last month found that more than half of the companies polled were worried about labour costs amid an unpredictable global economy. At the same time, Singapore’s labour market has shown signs of softening, with the unemployment rate edging up to 2.1 per cent in the first quarter of the year, compared with 2 per cent in the previous quarter.

The latest data reflects broader concerns over the impact of geopolitical tensions and inflationary risks on business sentiment and hiring decisions.

Prime Minister Lawrence Wong has previously pledged support for workers facing increasingly rapid and unprecedented economic changes. The global environment has become more volatile due to factors such as ongoing conflict in the Middle East and the rapid advancement of artificial intelligence technologies, both of which are reshaping industries and labour markets.

These disruptions are already affecting employment worldwide. Technology giant Meta Platforms and German biotechnology company BioNTech have been among firms that have announced job cuts, highlighting the pressures faced by businesses as they adjust to changing economic conditions.

Singapore’s central bank has also warned of a softer labour market ahead. In April, the Monetary Authority of Singapore (MAS) said labour demand is likely to remain subdued this year as companies adopt a more cautious approach.

The MAS noted that if economic growth weakens for a prolonged period, employers may scale back hiring plans, while layoffs could increase. Such developments could further weigh on wage growth as businesses seek to manage costs and preserve employment in an uncertain environment.

Despite the slower pace of wage increases, Singapore’s labour policies continue to emphasise balancing wage growth with productivity improvements, with the aim of ensuring sustainable income gains for workers while maintaining the competitiveness of businesses.