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With inflation easing and most firms remaining profitable, real wage growth improved in 2024, but early signs point to slower increases ahead, particularly in trade-reliant sectors.
As Singapore’s economy expanded in 2024, wages continued to rise for full-time resident employees, and most firms remained in the black. According to the Ministry of Manpower (MOM), total nominal wages grew by 5.6% in 2024 on par with the 5.2% increase recorded in 2023.
Importantly, as inflation eased, real wage growth picked up to 3.2% in 2024, a notable increase from 0.4% in the previous year. Real productivity growth also continued to support real wage growth over the medium term.
Most firms profitable, though outcomes differed across industries
The proportion of establishments that were profitable remained high at 80.8%, although this marked a slight drop from 82.1% in 2023. Profitability varied by sector. Fewer firms in real estate services, construction and wholesale trade turned a profit in 2024, while manufacturing saw an improvement. However, ongoing global trade tensions could lead to reduced profitability in trade-reliant sectors such as manufacturing and wholesale trade in the year ahead.
More firms raised wages in 2024
Reflecting overall profitability, 78.3% of establishments raised the wages of their employees in 2024, an increase from 65.6% in 2023. These increases were largely driven by past organisational performance rather than forward-looking optimism.
Meanwhile, only 3.2% of firms reduced wages. This is a decrease from 6.5% the year before. The remaining 18.5% of establishments kept wages unchanged.
Among those that provided increases, the average rise in wages was 6.6% in 2024, slightly lower than the 7.2% recorded in 2023. For firms that reduced wages, the average cut was less severe at -3.6%, compared to -6.2% in 2023.
Wage growth seen across all employee levels
All employee groups saw wage growth in 2024. Rank-and-file employees recorded a 5.8% increase, slightly higher than the 5.6% seen for junior management and the 5.1% for senior management. This reflected efforts to ease cost-of-living pressures.
Policy measures such as the increase in the Local Qualifying Salary and Progressive Wage Model (PWM) initiatives also contributed to higher wages for lower-income workers. MOM noted that these wage increases had minimal impact on cost competitiveness, as lower-income employees form a small share of total business costs.
Wage increases recorded across all industries
Wage growth was recorded in all sectors, though the rate of increase varied. The highest growth was in administrative & support services (8.7%), largely driven by the PWM. Financial services (6.7%) and community, social & personal services (5.7%) also posted above-average increases due to continued demand for skilled workers.
On the other hand, food & beverage services saw below-average wage growth (4.8%) amid weaker economic performance. Wholesale trade (4.2%) and manufacturing (5.1%) also recorded lower-than-average growth. Wage growth in these sectors is expected to moderate further in 2025 due to continued geopolitical and trade-related pressures.
Flexible wage system adoption remains limited
While 76% of establishments implemented at least one component of the Flexible Wage System (FWS) in 2024, only 8.5% fully adopted both the Monthly Variable Component (MVC) and Annual Variable Component (AVC).
The share of variable wages within total wages in the private sector also remained low at 14.9%. Notably, firms that had implemented at least one FWS component were more likely to have given wage increases using variable wage structures.
MOM reiterated that wider adoption of FWS could help firms adjust more nimbly to economic changes, offering competitive wages while preserving business resilience.
Outlook: Slower wage growth expected in 2025
Forward-looking survey results from the first quarter of 2025 revealed a decline in the proportion of firms planning to raise wages. This suggests that nominal wage growth in 2025 may moderate, particularly in sectors more exposed to global trade uncertainties.
To guide employers, the National Wages Council’s 2024/2025 guidelines continue to advocate for sustainable wage increases in line with productivity and worker contributions. The Government also urges businesses to make full use of available programmes and to consider adopting more flexible wage structures to remain competitive and adaptable.
Lead image / Ministry of Manpower
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