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While all industries continued to see wage growth in 2023, the magnitude of wage change across industries was also generally lower than the past year — with the exception of administrative & support services which saw higher wage growth.
Singapore's labour market remained tight in 2023 — unemployment rates remained low and stable, though labour demand cooled over the course of the year.
As a result, the nominal total wages of full-time resident employees continued to grow, albeit with a slower rate of increase to 5.2% in 2023 (6.5% in 2022).
Nevertheless, wage growth was higher than the range seen in non-recessionary years. According to the Ministry of Manpower (MOM)'s Report On Wage Practices 2023, real wages grew by 0.4% in 2023, after accounting for inflation which notably eased from 2022. This figure remained unchanged from that in 2022.
Diving deeper into the insights, a majority of establishments were reported to provide wage increases to their employees. That being said, as more establishments were less profitable in 2023 than in 2022, the proportion of establishments which gave wage increases to their employees declined from 72.2% in 2022, to 65.6% in 2023.
After all, the proportion of establishments who reported that they were profitable in 2023 (82.1%) dipped compared to 2022 (83.9%), reflecting slower economic growth. More profitable establishments also reported a decline in their profits in 2023 (26.8%) compared to 2022 (22.0%).
There was also a slight increase in the proportion of establishments that cut the wages of their employees, from 5.2% in 2022 to 6.5% in 2023. On a more positive note, the group still remained the minority.
At the same, the magnitude of wage increases was smaller in 2023 (7.2%), while the magnitude of wage cuts was larger (-6.2%). For comparison, these factors were recorded as '7.9%' and '-4.5%' respectively in 2022.
Wage change recorded by type of employee
According to the report, the moderated pace of wage growth was also seen across all employee types in 2023 compared to 2022. The report also noted the following:
- The wage growth of rank-and-file (RAF) (4.8%) and junior management (6.3%) employees was higher than that of senior management (4.6%) employees.
- In addition, the moderation in wage growth for the RAF (from 5.8% in 2022 to 4.8% in 2023) and junior management (from 7.4% to 6.3%) employees was also smaller than that of senior management (from 6.7% to 4.6%) employees.
- Looking ahead on this front, the report stated, it is expected that there will be continued wage growth for lower-income employees, seeing that the Local Qualifying Salary would be increased from S$1,400 to S$1,600 for full-time residents in 2024.
As noted, while all industries continued to see wage growth in 2023, the magnitude of wage change across industries was also generally lower than the past year — with the exception of administrative & support services (2023: 7.1%, 2022: 5.2%) which saw higher wage growth.
Along with food & beverage services and retail trade, wages in these industries are expected to continue growing steadily in the years ahead, alongside the expansion of Singapore's Progressive Wage Model.
Above-average wage increases were observed in growth sectors such as financial services (7.6%) and information & communications (6.2%). On the other hand, manufacturing (4.0%) and construction (4.2%) continued to see below-average wage increases, following a slowdown in goods-producing industries, impacted by external headwinds such as global supply chain disruptions.
Commenting on the findings, Minister for Manpower Dr. Tan See Leng expressed: "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 programmes to remain competitive and resilient."
Desmond Choo, Assistant Secretary-General, NTUC, also emphasied that keeping wages ahead of inflation is key, highlighting the need to "keep working on productivity.
Moving forward, the report projects improvement in Singapore's economy for 2024.
"The job market remains tight, and vacancies continue to outnumber job seekers. These developments could lead to higher wage growth in 2024 compared to 2023", it was highlighted.
However, MOM also cautions that establishments may adopt a cautious stance with respect to wage increases amidst a more uncertain business environment. Recent polls on wage expectations conducted in the first quarter of 2024 revealed that fewer firms expressed an intention to raise wages of their employees in the next three months.
On balance, the nominal wage growth is expected to remain similar in 2024 as with 2023. With inflation expected to stay on a gradually moderating trend, an improvement in real wage growth is also expected.
Lead image / Minister of Manpower Dr. Tan See Leng's Facebook
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