Wage growth soars in Singapore
A recent report from the Ministry of Manpower’s Research and Statistics Department revealed that more firms in Singapore were able to raise their employees’ wages in 2022 compared to the previous year. The report highlighted that nominal wage growth in 2022 reached its highest level in a decade.
Despite the challenges posed by higher inflation, real wages continued to grow, albeit at a slower pace compared to 2021. The data indicated a robust wage growth pattern in the face of increased manpower demand.
The report outlined that nominal total wages, which included employer CPF (pension) contributions, for full-time resident employees (Singapore Citizens and Permanent Residents) who had been with the same employer for at least one year, rose by 6.5% in 2022.
Moreover, the Ministry of Manpower’s findings demonstrated that the nominal wage increase in 2022 was significantly higher than in the previous year, recording a 3.9% increase. This upward trend reflected firms’ efforts to restore the wages of employees who experienced cuts during the pandemic years. Additionally, companies granted higher wage increases to retain staff amidst the intensifying competition for workers.
While nominal wage growth managed to keep pace with inflation, resulting in real wage growth, the rate of growth was notably dampened. Real wages experienced a marginal increase of 0.4% in 2022, falling below the 1.6% growth witnessed in 2021. The report attributed this slower growth to the considerably higher inflation rate in 2022 (6.1%) compared to the previous year (2.3%).
Notably, all industries in Singapore observed higher wage growth in 2022 compared to 2021, although the extent of the increase varied across sectors. Accommodation and Retail Trade reported above-average wage increases of 9.7% and 6.7% respectively. These industries raised wages to attract and retain workers amidst a strong recovery in tourism demand.
The Financial Services (9.0%), Information & Communications (7.7%), and Professional Services (7.6%) sectors continued to experience robust wage growth in 2022, driven by sustained manpower demand.
Meanwhile, Manufacturing (5.7%) and Wholesale Trade (5.8%) firms also increased employee wages, although to a lesser extent due to global supply chain disruptions and weakness in trade-related activities.
The report further highlighted an encouraging trend, as the proportion of profitable establishments rose for the second consecutive year, reaching 83.9% in 2022. Consequently, the percentage of establishments that offered wage increases increased from 60.0% in 2021 to 72.2% in 2022, surpassing the pre-pandemic level in 2019 (69.2%).
The number of establishments that reduced employee wages remained relatively low at 5.2%, while the remaining 22.6% maintained wages unchanged.
Among establishments that provided wage increases, the magnitude of the increase was larger in 2022 (7.9%) compared to the previous year (6.3%). Conversely, establishments that implemented wage cuts saw a smaller magnitude of reduction compared to the previous year, with the figure decreasing from -5.2% to -4.5%.