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Wages in Singapore likely to see slower rise
SINGAPORE: Wages of Singaporeans and permanent residents are likely to go up at a slower pace in 2023, as workers continue to enter the country and overall demand for labour softens as the economy slows.
But while wage growth is expected to ease further, it will stay above its historical average, said the Monetary Authority of Singapore (MAS).
The risk is low that wages and prices will keep pushing each other higher, added the central bank, citing its studies which indicate that wages respond less than proportionately to prices in the near term.
“Nevertheless, policy and administrative factors will put a floor on the extent to which resident wage growth in certain industries eases in the near term,” said MAS in its biannual macroeconomic review.
These include policies to uplift incomes of lower-wage workers, including enhancements to the Progressive Wage Model, and salary increases in the civil service, healthcare and education sectors, which will support overall resident wage growth.
The rise in wages will also likely be uneven across sectors. It will be higher for travel-related and domestic-oriented ones like construction, real estate, retail as well as food and beverage – compared with the external-oriented types like trade and manufacturing.
The growth in real wages – factoring in the impact of inflation – will also be greater for lower-income households compared with higher-income ones amid policies aimed at raising lower-income workers’ wages, said MAS.
It also pointed to early indicators of the tight labour market easing, in line with a slowdown in the Singapore economy.
The number of employees temporarily laid off or placed on short work weeks rose while retrenchments picked up in the fourth quarter, reaching a similar level to the pre-pandemic average.
Market indicators also suggest reduced job-hopping among workers moving to higher-wage positions.
Resident wage growth slowed to 5.4% year-on-year in the fourth quarter, down from 7.1% in the third quarter.
Compared to the previous quarter and seasonally adjusted, wage growth eased to 1% in the fourth quarter, cooling from 1.2% in the third quarter.
“On the whole, the trajectory of resident wage growth has been broadly comparable to that of past cyclical recoveries, with wage growth gradually coming off as the recovery matures,” said MAS.
These numbers come even as total employment in 2022 as a whole expanded by 250,100, bringing the workforce to 2.9% above its pre-Covid-19 level.
The resident unemployment rate declined from 2.9% in September to 2.8% in December and slipped further to 2.7% in the first two months of this year.
Meanwhile, the ratio of job vacancies to unemployed persons rose from 2.02 in September to 2.33 in December, reflecting a larger drop in the number of jobless workers compared with job openings.
MAS noted that while the resident unemployment rate has been low in recent quarters, it may not fully reflect employers’ difficulty in finding staff.
“The persistent skills mismatch between labour demand and the resident workforce might have arisen after the onset of Covid-19 as businesses accelerated their transition towards digital solutions such as eCommerce and work-from-home applications.
“The increased demand for such applications has endured, raising the need for more software developers and employees conversant with digital technologies,” it said. — The Straits Times/ANN