Wage growth: People walk across Jubilee Bridge on Marina Bay in Singapore. Nearly 82% of employees received wage increases last year, compared with just under 70% in 2021 and it came as almost three in four employers gave wage increases in 2022. — AFP
SINGAPORE: Employers in Singapore hiked total wages by the most in a decade in 2022 because of the tight labour market, but high inflation slashed real pay rises to less than in the previous year.
Nominal wages, which do not account for inflation, jumped 6.5% in 2022, up from 3.9% in 2021, according to Manpower Ministry (MoM) data released on Monday.
However, high inflation meant that real total wages grew by just 0.4%, lower than the 1.6% clocked in 2021 and the lowest since 2012.
In 2022, headline inflation hit 6.1%, significantly higher than 2021’s 2.3%.
Moreover, real basic wages, excluding employer Central Provident Fund contributions, declined for the first time since 2012, falling by 1%.
MoM said total nominal wage and real wage growth are expected to moderate in 2023 as firms are likely to approach salary increments with caution against the backdrop of the global economic slowdown and a more uncertain business environment.
In 2022, nearly 82% of employees received wage increases, compared with just under 70% in 2021.
This came as almost three in four employers gave wage increases in 2022, up from six in 10 in the previous year and about seven in 10 in 2019. It followed growth in the proportion of employers – almost eight in 10 – turning a profit for the second year running.
Establishments that cut employees’ wages remained in the minority at 5.2%, with the remaining 22.6% leaving wages unchanged.
Those that raised wages gave larger increases in 2022 on average – 7.9% compared with 6.3% in 2021.
The magnitude of wage cuts was also smaller than in the previous year among those that did so, with pay reductions averaging 5.2% compared with 2021’s 4.5%.
MoM noted that all industries experienced higher wage growth in 2022 compared with 2021.
“However, the magnitude of the increase varied across industries.
“Accommodation and retail trade registered above-average wage increases (9.7% and 6.7% respectively) as firms in these industries raised wages to attract and retain workers amidst the strong recovery in tourism demand,” said the ministry.
It added that the outward-oriented sectors of financial services, information and communications, and professional services continued to register strong wage increases of between 7.6% and 9% in 2022, alongside sustained manpower demand in these industries.
Firms in manufacturing and wholesale trade also raised the wages of their employees by nearly 6%, despite being hit hard by global supply chain disruptions and weakness in trade-related activities.
Among employee types, junior executives and managers saw the highest increase in their basic wages at 5.7%, compared with around 5% for both rank-and-file workers and senior management.
Only slightly more than half of loss-making firms in Singapore raised wages, compared with between seven and eight in 10 among profitable firms, depending on whether their profit exceeded their 2021 performance.
The key factor behind the strong nominal wage growth of 2022 was a tight labour market with a low overall unemployment rate and a high ratio of job openings to unemployed people, said Chua Han Teng, an economist at DBS Group.
After moderating in 2022, Chua said, real wage growth is likely to stay muted in 2023.
This is because Singapore’s growth will be hit by an uncertain global economic environment, leading to smaller nominal wage increases amid a softer labour market, he said. — The Straits Times/ANN
