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Total wages grew at a more moderate pace in 2023

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Overview

1. In 2023, the Singapore economy expanded by 1.1%1. While labour demand cooled over the course of 20232, the labour market remained tight3. Wages continued to grow, albeit at a more moderate pace compared to 2022. This could be attributed to the proportion of profitable establishments staying high and a majority of establishments continuing to provide wage increases to their employees.

Main Findings

Nominal and real wages continued to grow in 2023

2. Nominal total wages4 (including employer CPF contributions) of full-time resident5 employees who had been with the same employer for at least one year continued to grow. However, the wage growth had slowed from 6.5% in 2022 to 5.2% in 2023, although it remained higher than the range seen in non-recessionary years. After accounting for inflation, which eased in 2023 from 2022, real wages grew by 0.4% in 2023, similar to the increase in 2022.

Most establishments were profitable in 2023, although more reported that they were less profitable than in 2022

3. The proportion of profitable establishments remained high (82.1%) in 2023.However, reflecting the slower economic growth, more establishments reported that they were less profitable than in 2022. As a result, the proportion of establishments which gave wage increases to their employees declined from 72.2% in 2022 to 65.6% in 2023. Establishments which cut the wages of their employees remained the minority at 6.5%, with the remainder (27.9%) holding wages of their employees constant.

4. The magnitude of wage increases6 was slightly smaller in 2023 (7.2%) compared to 2022 (7.9%) and the magnitude of wage cuts7 was larger in 2023 (-6.2%) than in 2022 (-4.5%).

All types of employees experienced wage growth in 2023

5. 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.

6. Wage growth moderated across all employee types in 2023 compared to 2022. However, the moderation in wage growth for the RAF (from 5.8% in 2022 to 4.8% in 2023) and Junior Management employees (from 7.4% in 2022 to 6.3% in 2023) was smaller than that of Senior Management (from 6.7% in 2022 to 4.6% in 2023) employees. Going forward, we expect continued wage growth for lower-income employees, as the Local Qualifying Salary would be increased from $1,400 to $1,600 for full-time residents in 20248.

All industries continued to see wage growth in 2023

7. In 2023, all industries continued to see wage growth. The magnitude of wage change across industries was generally lower than the past year, except in Administrative & Support Services (2023: 7.1%, 2022: 5.2%) which saw higher wage growth, reflecting the impact of the Progressive Wage Model (PWM). 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 the PWM9.

The proportion of establishments which have fully adopted the Flexible Wage System (FWS) remained low

8. A majority of establishments implemented some form of FWS in 2023 (80.4%), broadly similar to 2022 (80.6%). However, the proportion of establishments which have fully adopted FWS (i.e. implemented both a Monthly Variable Component and Annual Variable Component) remained low at 10.3%.

Conclusion

9. The Singapore economy is expected to improve in 202410. The job market remains tight, and vacancies continue to outnumber job seekers. There continues to be strong demand for PMET workers in industries such as Information & Communications, Financial Services, Professional Services and Health & Social Services11. These developments could result in higher wage growth in these sectors in 2024 compared to 2023. However, with an uncertain business environment, establishments might adopt a cautious stance with respect to wage increases. Polls conducted in the first quarter of 2024 showed that fewer firms expressed an intention to raise wages of their employees in the next three months12. 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.

10. The National Wages Council (NWC) will convene in August 2024 to deliberate on the NWC guidelines for 2024/2025 to provide guidance to employers on wage increases that reflect firms’ performance and workers’ contributions. For wage growth to be sustainable, it must continue to be supported by commensurate increases in productivity. The Government urges firms to press on with business and workforce transformation, and make full use of Government programmes to remain competitive and resilient. The Government also encourages all firms to implement the Flexible Wage System (FWS) to give them the flexibility and responsiveness to adjust wages based on their performance. Firms can refer to the FWS Guidebook which is available on MOM’s website to better understand FWS and its implementation13. Firms can also approach tripartite partners and Tripartite Alliance for Fair & Progressive Employment Practices (TAFEP) for advice.

For More Information

11. The “Report on Wage Practices 2023” is released by the Manpower Research and Statistics Department, Ministry of Manpower. The full report is available online at https://stats.mom.gov.sg/.

12. For data requests and queries pertaining to the report, please reach out to the Ministry of Manpower’s Research and Statistics Department at mom_rsd@mom.gov.sg.

FOOTNOTE

  1. Source: MTI.
  2. In 2023, employment growth slowed in each successive quarter (1Q: 33,000, 2Q: 24,300, 3Q: 23,600, 4Q: 7,500) and the number of job vacancies declined in the first three quarters of 2023 (Mar: 97,800, Jun: 87,600, Sep: 78,200). Source: Administrative Records, Labour Force Survey and Labour Market Survey, Manpower Research & Statistics Department, MOM.
  3. The job vacancy to unemployed person ratio remained high at 1.87 in 2023. Unemployment rates remained low and stable throughout 2023, staying within the range observed during non-recessionary periods (overall: 1.8%-2.3%; resident: 2.5%-3.3%; citizen: 2.7%-3.5%). Source: Labour Market Survey and Labour Force Survey, Manpower Research & Statistics Department, MOM.
  4. Total wage includes components such as the basic wage and annual variable component.
  5. Residents refer to Singapore Citizens and Permanent Residents.
  6. Among establishments which gave wage increases.
  7. Among establishments which cut wages.
  8. From 1 July 2024, the Local Qualifying Salary will be raised from $1,400 to $1,600 per month. Firms hiring foreign workers will have to pay all their full-time local workers at least the Local Qualifying Salary (or Progressive Wage Model wages where applicable).
  9. The PWM has expanded to cover local workers in the Retail industry (from 1 September 2022), Food Services industry and Administrator and Driver occupations (from 1 March 2023), and Waste Management industry (from 1 July 2023).
  10. Singapore’s economy is expected to grow between 1.0% to 3.0% in 2024. Source: MTI.
  11. The proportion of PMET vacancies continued to rise, from 56.0% in 2022 to 57.2% in 2023, particularly in firms within growth sectors such as Information & Communications (15.2%), Financial & Insurance Services (10.7%), Professional Services (10.6%) and Health & Social Services (10.4%). Source: Labour Market Survey, Manpower Research & Statistics Department, MOM.
  12. The proportion of firms with an intention to raise wages declined from 32.6% in Dec 2023 to 26.1% in Mar 2024. Source: Manpower Research & Statistics Department, MOM.
  13. FWS Guidebook is available at https://go.gov.sg/fwsguidebook.