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Strong Total Wage Growth in 2021

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Overview

1. The strong recovery of Singapore’s economy and a tight labour market prompted more employers to raise their employees’ wages in 2021, following a period of wage moderation in 2020. As a result, more employees received wage increases last year, and wages also grew at a faster pace than in 2020.

Main Findings       

Total wage growth was higher than 2020 amidst a tight labour market

2. Total wage growth (including employer CPF contributions) among resident1 employees who have been with the same employer for at least one year was 3.9% in 2021, which was comparable to 2019 (3.9%). This followed a period of moderation in 2020, where total wage growth had tapered down to 1.2%. The rebound in total wage growth in 2021 reflects the broad-based economic recovery across industries, and a tight labour market due to border restrictions slowing down the inflow of non-resident labour.2

3. After the Global Financial Crisis (GFC), total wage growth rebounded the following year in 2010 (5.7%) in the period of recovery. While 2021’s total wage growth also rebounded, it was lower at 3.9%, suggesting that employers may have been more cautious in raising wages given the longer tail of the COVID-19 pandemic. As COVID-19 had a less severe impact on wages compared to the GFC3, wage growth also had less ground to recover in 2021 compared to 2010.

4. However, higher inflation in 2021 has dampened real wage growth, although wage growth has continued to exceed inflation. The real wage growth of 1.6% in 2021 was only slightly above that of 2020 (1.4%) and lower than 2019 (3.3%).

Three in four employers were profitable in 2021, and seven in 10 employees enjoyed higher wages

5. With Singapore’s economy expanding by 7.6% last year, the proportion of profitable employers increased from 63% in 2020 to 75% in 2021, enabling some employers to restore wage cuts made in 2020.

6. This led to a higher proportion of employees with wage increases in 2021 (70%) compared to 2020 (59%). The extent of their wage increases was also higher in 2021 (6.3%) than 2020 (4.5%). Correspondingly, the proportion of employees that saw wage cuts in 2021 (10%) was about half of 2020 (23%). Among employees who saw wage cuts in 2021, the wage cuts (-5.2%) were less steep than 2020 (-6.9%).

All sectors registered higher total wage growth compared to 2020

7. In 2021, all sectors experienced higher total wage growth compared to 2020. Outward-oriented sectors, in particular Information and Communications (total wage growth of 5.1%), Financial and Insurance Services (4.1%) and Manufacturing (4.0%), registered healthy expansion even in the midst of the pandemic and continued to see strong wage growth in 2021.

8. Among domestic-oriented sectors, Retail Trade registered the highest wage increase (5.5%). Sectors that were more affected by the pandemic also registered wage increases as demand for manpower rose in tandem with the reopening of the borders – Accommodation (2020: -5.3%, 2021: 1.7%), Transportation & Storage (2020: -3.0%, 2021: 2.8%), Food & Beverages Services (2020: 1.5%, 2021: 2.6%).

Conclusion

9. 2021 saw a rebound in total wage growth, in tandem with the broad-based economic recovery. Real wage growth was dampened by rising inflation but remained positive and grew slightly faster compared to 2020.

10. In 2022, we expect the tight labour market to support continued nominal wage growth, although the significant relaxation of border restrictions will allow the non-resident workforce numbers to recover and ease some of the tightness. However, downside risks in the global economy remain, such as the ongoing Russia-Ukraine conflict and protracted global supply disruptions, which could moderate demand and nominal wage growth. With recent shocks to the global supply chains, inflation is projected to stay elevated and dampen real wage growth.

For More Information

11. The report is available online on the Ministry of Manpower’s Research and Statistics Department website 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. Residents refer to Singapore Citizens and Permanent Residents
  2. In 2021, resident employment grew by 71,300, while non-resident employment fell by 30,000.
  3. Nominal wages declined in 2009 (-0.9%), while wages continued to grow, albeit more slowly, in 2020 (1.2%).