Total Wage Growth Remained Strong in 2022
Overview
1. As the Singapore economy continued to grow in 2022, there was a strong increase in the proportion of profitable firms. As a result, more firms were able to raise their employees’ wages in 2022 compared to 2021. Nominal wage growth in 2022 was at its highest in a decade. Notwithstanding higher inflation, real wages continued to grow, but at a slower pace compared to 2021.
2. Against the backdrop of the global economic slowdown and a more uncertain business environment, firms are likely to take a cautious approach regarding salary increments. Hence, total wage growth is expected to moderate in 2023.
3. The key findings from the “Report on Wage Practices, 2022” released by the Manpower Research and Statistics Department, Ministry of Manpower are summarised below.
Main Findings
Strong wage growth amidst heightened manpower demand
4. Nominal total wages (including employer CPF contributions) of full-time resident1 employees who had been with the same employer for at least one year rose by 6.5% in 2022.
5. The nominal wage increase in 2022 was significantly higher than in 2021 (3.9%), and the highest in a decade. This reflected the efforts by firms to restore wages of some employees who experienced wage cuts during the pandemic years, as well as give higher wage increases to other employees to retain staff amidst competition for workers.
6. The nominal wage growth kept pace with inflation2, allowing real wages to grow in 2022. However, the pace of growth was significantly dampened. Real wages grew marginally by 0.4% in 2022, lower than the 1.6% in 2021.
More establishments were profitable in 2022
7. The proportion of profitable establishments rose for the second consecutive year to 83.9% in 2022.As a result, the proportion of establishments which gave wage increases rose from 60.0% in 2021 to 72.2% in 2022, and was slightly higher than the pre-pandemic level in 2019 (69.2%).Establishments which cut the wages of their employees remained the minority at 5.2%, and the remainder (22.6%) left wages of their employees unchanged.
8. Among establishments that gave wage increases, the magnitude of increase was larger in 2022 (7.9%) compared to 2021 (6.3%). Among establishments which gave wage cuts, the magnitude of wage cut was also smaller than the previous year (from -5.2% to -4.5%).
All industries saw higher wage growth in 2022
9. In 2022, all industries experienced higher wage growth compared to 2021. However, the magnitude of 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.
10. Outward-oriented sectors of Financial Services (9.0%), Information & Communications (7.7%) and Professional Services (7.6%) continued to register strong wage increases in 2022, alongside sustained manpower demand in these industries.
11. Firms in Manufacturing (5.7%) and Wholesale Trade (5.8%) also raised the wages of their employees, albeit to a lesser degree as a result of global supply chain disruptions and weakness in trade-related activities.
Conclusion
12. 2022 saw higher wage growth, in tandem with broad-based economic growth and increased profitability. Real wage growth was dampened by inflationary pressures but remained positive.
13. Based on recent polls on wage expectations conducted in the first quarter of 20233, more firms expressed an intention to raise wages of their employees in March 2023, compared to December 2022. However, against the backdrop of the global economic slowdown and a more uncertain business environment, firms are likely to take a cautious approach regarding salary increments. In addition, inflation is forecasted to remain elevated.4 Hence, total nominal and real wage growth are expected to moderate in 2023.
14. To remain competitive and resilient amidst these global developments, we encourage firms and workers to press on with business and workforce transformation, and make full use of Government programmes to adapt to the changing environment. The Government also encourages all firms to implement the Flexible Wage System (FWS) as the uncertainties ahead continue to underscore the need for resilience and flexibility in wage structures. Firms can refer to the FWS Guidebook which is available on MOM’s website to better understand how the FWS works and how to implement it.5 Firms can also approach tripartite partners and Tripartite Alliance for Fair & Progressive Employment Practices for advice.
For More Information
15. The report is available online on the Ministry of Manpower’s Research and Statistics Department website at https://stats.mom.gov.sg/.
16. 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.