In 2023, Singapore's economy witnessed a modest expansion of 1.1%, reflecting a slower pace compared to previous years. Despite this, the labour market remained tight, and wages continued to grow, albeit at a more moderate pace. This article delves into the key findings on wage growth in Singapore for 2023 and provides insights into what can be expected for 2024.

Nominal and Real Wage Growth

Nominal total wages, including employer CPF contributions, for full-time resident employees who had been with the same employer for at least one year, grew by 5.2% in 2023. Although this was a slowdown from the 6.5% growth observed in 2022, it remained above the typical range seen in non-recessionary years. After adjusting for inflation, real wages increased by 0.4%, mirroring the growth rate of 2022. This indicates that despite the moderated nominal growth, employees' purchasing power remained stable.

Profitability and Wage Adjustments

In 2023, 82.1% of establishments reported being profitable, though more establishments noted decreased profitability compared to 2022. Consequently, the proportion of establishments that provided wage increases to their employees dropped from 72.2% in 2022 to 65.6% in 2023. Only a minority of establishments (6.5%) reduced wages, while 27.9% kept wages constant.

The magnitude of wage changes varied:

• Wage Increases: Averaged at 7.2% in 2023, slightly lower than the 7.9% in 2022.
• Wage Cuts: Averaged at -6.2% in 2023, larger than the -4.5% in 2022.

Wage Growth Across Employee Types

All categories of employees experienced wage growth in 2023, though at varying rates:

• Rank-and-File (RAF) Employees: 4.8%
• Junior Management Employees: 6.3%
• Senior Management Employees: 4.6%

The moderation in wage growth was most pronounced among senior management, highlighting a broader trend towards more equitable wage adjustments across different levels of the workforce.

Industry-Specific Wage Trends

Wage growth was observed across all industries, though generally at a slower pace compared to 2022. An exception was the Administrative & Support Services sector, which saw higher wage growth (7.1% in 2023 compared to 5.2% in 2022) due to the Progressive Wage Model (PWM). This model aims to uplift wages in traditionally lower-paying sectors, and its expansion is expected to continue driving wage growth in industries like Food & Beverage Services and Retail Trade.

Flexible Wage System (FWS) Adoption

While the majority of establishments implemented some form of FWS (80.4%), the proportion that fully adopted the system (incorporating both Monthly Variable Component and Annual Variable Component) remained low at 10.3%. The FWS offers flexibility for businesses to adjust wages based on performance, which could be crucial in managing wage growth sustainably.

Looking Ahead: Wage Growth in 2024

The outlook for 2024 suggests a continued tight job market, particularly with strong demand for PMET workers in sectors such as Information & Communications, Financial Services, Professional Services, and Health & Social Services. These sectors could see higher wage growth. However, the uncertain economic environment may lead establishments to take a cautious approach to wage increases. Early polls indicate fewer firms plan to raise wages in the coming months.

On balance, nominal wage growth in 2024 is expected to be similar to 2023, with potential improvement in real wage growth as inflation continues to moderate. The National Wages Council (NWC) will provide further guidance in August 2024, focusing on sustainable wage increases linked to productivity gains.

Conclusion

The Singapore economy, while experiencing slower growth in 2023, maintained a robust labour market with moderate wage increases. As we look to 2024, the emphasis will be on balancing wage growth with economic performance and productivity improvements. The government's push for broader adoption of the Flexible Wage System and ongoing support for workforce transformation will be critical in ensuring sustainable wage practices in the years to come.

For more detailed insights, refer to the "Report on Wage Practices 2023" available on the Ministry of Manpower's website.

 

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Reference Links:

https://www.mom.gov.sg/newsroom/press-releases/2024/0625-report-on-wage-practices-2023

https://www.todayonline.com/news/real-wages-singapore-grew-04-2023-similar-2022-2447516