Salaries increased in 2023, but few companies plan on raising wages

SINGAPORE: Earlier this week, the Ministry of Manpower (MOM) said that wages in Singapore increased by 0.4 per cent last year, with inflation taken into account. However, only 20 per cent of companies are planning on raising salaries, the Singapore Business Review reported.

MOM said on Tuesday (Jun 25) that wage growth had slowed from 6.5 per cent in 2022 to 5.2 per cent in 2023. The real growth of wages last year was similar to the year before, after accounting for inflation.

The ministry also noted that last year, all types of employees across all industries experienced wage growth. MOM noted that the economy is expected to improve this year, with a continued strong demand for PMET workers in several sectors including Information & Communications, Financial Services, Professional Services, and Health and Social Services

With the tight job market and a greater number of vacant positions than jobseekers, there could be higher wage growth in these sectors this year than in 2023.

MOM also noted, however, that companies may take a cautious stance regarding wage increases because of the current uncertain business environment. It cited surveys from the first quarter of the year that showed a smaller number of companies planning on raising salaries in the succeeding three months,

“On balance, we expect the nominal wage growth in 2024 to remain similar to 2023. With inflation expected to stay on a gradually moderating trend, we expect an improvement in real wage growth,” said MOM.

Financial services firm Nomura was quoted in SBR as saying that Singaporean workers’ increasing average earnings is “consistent with a robust economic recovery.” Although a smaller number of firms intend to increase wages, more intend to hire workers, which Nomura says suggests there is sustained wage pressure.

“Still-rising labor costs and the improving growth outlook further support our long-held view that underlying inflation pressures will likely persist and that core inflation will remain sticky in the coming months,” Nomura said.

MOM’s Report On Wage Practices 2023 showed that the administrative and support services sector saw higher wage growth than others last year. It noted that more companies were less profitable last year than the previous one and that while 72.2 per cent of companies gave salary increases to their employees in 2022, this figure had fallen to 65.6 per cent in 2023.

“For wage growth to be sustainable, it must continue to be supported by commensurate increases in productivity. As such, I urge firms to press on with business and workforce transformation, making full use of Government programs to remain competitive and resilient,” said Manpower Minister Tan See Leng. /TISG

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