Why Salary Increases Alone Are No Longer Enough: What Singapore's Latest Wage Trends Mean for Employers in 2026

Singapore's wages continued to grow in 2025. That is the headline finding from the Ministry of Manpower's Report on Wage Practices 2025, released on 28 May 2026. Nominal wages rose 4.9%, real wages improved to 4.0%, and business profitability reached 83.1%, its highest level in recent years. Workers' purchasing power strengthened, and wage growth remained positive across every sector and every employee group, from rank-and-file staff to senior management.

These are genuinely positive results, and they reflect an economy that has continued to perform despite a more uncertain global backdrop. Demand for skilled talent in sectors such as Financial Services, Insurance, Semiconductors, and Professional Services has remained resilient, and Singapore's labour market fundamentals remain sound.

But read further into the MOM data, and a more nuanced picture emerges. The proportion of employers granting wage increases fell from 78.3% in 2024 to 72.4% in 2025. The share of firms keeping wages unchanged jumped from 18.5% to 24.5%. And looking ahead, MOM signals that firms will remain measured in their wage decisions amid geopolitical uncertainty and inflationary pressures.

For HR leaders and business owners in Singapore, this is not simply a story about salary figures. It is a story about what happens when wage growth continues in aggregate, but the confidence to increase individual salaries becomes more selective. The gap between what employees expect and what employers are prepared to offer is where retention risk quietly grows.

This article unpacks what the latest wage data actually means for employers, and what practical steps you can take to remain competitive in the second half of 2026.

Key Findings from MOM's Report on Wage Practices 2025

The MOM report covers full-time resident employees who had been with the same employer for at least one year. Here are the figures that matter most for workforce planning in Singapore.

Nominal wages grew 4.9% in 2025, a moderation from 5.6% in 2024, coinciding with easing inflation.

Real wages grew 4.0%, up from 3.2% in 2024, meaning employees' purchasing power genuinely improved year on year.

83.1% of firms were profitable, up from 80.8% in 2024, reflecting broadly favourable business conditions.

72.4% of firms raised wages, down from 78.3% in 2024. Among those that did, the average increment was 5.8%.

Employee retention remained the top reason cited for granting wage increases, ahead of market benchmarking or cost of living adjustments.

More firms kept wages unchanged: 24.5% in 2025, up from 18.5% in 2024, signalling growing caution in salary decisions despite strong profitability.

Why Are Employers Becoming More Cautious About Salary Increases?

The rise in profitable firms alongside the fall in firms granting wage increases might seem contradictory. It is not.

What the data reflects is a shift in business sentiment rather than financial inability. Many employers are profitable, but uncertain about what comes next. Global trade friction, the impact of US tariff policies on supply chains, and persistent cost pressures have prompted a more guarded approach to fixed salary commitments.

Reeracoen's Hiring Manager Survey 2025/2026, conducted with Rakuten Insight Global across 375 Singapore-based hiring managers, reinforces this pattern. 80.3% of employers cited salary expectations as a top hiring challenge. Not salary budgets, but salary expectations. The tension is not that companies cannot afford to hire. It is that candidate expectations have continued rising even as employer confidence has become more measured.

For Manufacturing, Semiconductor and Professional Services firms in particular, this dynamic creates a challenging operating environment. Semiconductor employers are navigating capital-intensive investment cycles while competing internationally for a limited pool of engineers, process specialists and data professionals. The sector's hiring profiles are highly specialised, and losing a key technical contributor carries a replacement cost that extends well beyond the salary differential.

Retention Is Still Driving Wage Decisions

MOM's finding that retention remains the primary motivation for salary increases is significant. It tells us that employers are not raising wages because they feel optimistic about growth. They are raising wages because they fear losing people they cannot easily replace.

This is a reactive posture, and it carries a cost. When wage increases are driven primarily by exit risk, companies find themselves responding to individual departure threats rather than building a sustainable compensation strategy.

Reeracoen's Beyond the Paycheque: Singapore Employee Sentiment Study 2026, developed in partnership with Rakuten Insight, found that 71.8% of Singapore employees were in some form of job search activity at the time of survey. This includes professionals who are casually browsing roles rather than actively applying, creating a broader and less visible retention risk that many employers underestimate.

For BFSF and Semiconductor employers, this is particularly acute. Reeracoen's Singapore BFSF Talent Outlook 2026 identifies mid-level to senior professionals at Manager to Director level as the segment most likely to exercise selective mobility. In the Semiconductor sector, where the talent pool for experienced process engineers, equipment specialists and regional operations leaders is structurally limited, passive browsing by a small number of key contributors can quickly translate into difficult-to-fill vacancies.

Why Higher Pay Alone Is No Longer Enough to Retain Talent

Here is the finding that should most directly shape employer strategy in H2 2026.

Reeracoen's employee sentiment research found that while a meaningful salary increase remains the strongest single retention lever, 69.1% of Singapore employees said they would accept a pay cut if overall employment conditions improved. Work-life balance, flexibility in work arrangements, workload sustainability, and job stability were the conditions they named most frequently.

This is not an argument against paying competitively. It is an argument that total employment value matters, and that employers who compete on salary alone are vulnerable. If a candidate can find comparable compensation with better conditions elsewhere, the salary advantage disappears quickly.

What employees are telling employers, clearly and consistently, is this:

1. Salary gets attention. Conditions determine whether people stay.
2. Flexibility is no longer a perk. It is a decision factor.
3. Career progression and learning opportunities shape whether employees see a future inside your organisation.
4. Manager quality and team culture influence daily experience in ways that a salary increment cannot offset.

Reeracoen's Salary Guide 2025/2026 notes that retention risk is particularly elevated in Manufacturing, where turnover reached 26% in 2025. For firms in this sector, and for Semiconductor employers managing lean specialist teams, non-salary retention levers are not optional extras. They are business imperatives.

How Employers Can Stay Competitive Without Leading the Market on Salary

Not every organisation can offer the highest salary in its sector. The more important question is whether you can offer the most compelling overall proposition.

Benchmark compensation accurately, not optimistically

The Reeracoen Salary Guide 2025/2026 projects average wage growth of 4.0% to 4.3% for 2026. If your increment budget sits below this range, your roles need to work harder on non-salary value. If you are above this range, make sure candidates know it clearly during the hiring process. In Semiconductor and BFSF roles where market rates for specialists are significantly above average, accurate benchmarking is the foundation of every offer conversation.

Communicate total rewards, not just salary

Many employers underinvest in articulating what employees actually receive beyond base pay. Bonuses, medical coverage, leave entitlements, flexible arrangements, learning budgets, and career development pathways all contribute to total employment value. These need to be stated clearly and consistently, not assumed.

Invest in conditions employees can feel weekly

Reeracoen's employee sentiment data identified work-life balance, flexibility and workload sustainability as the conditions employees are most willing to trade salary for. These are operational decisions, not abstract culture statements: how meetings are managed, how workloads are distributed, how much autonomy employees have, and how approachable their direct manager is. Each of these is within the control of individual teams and leaders.

Build visible career progression into roles

Reeracoen's BFSF Talent Outlook 2026 notes that senior professionals in Singapore consistently prioritise stability, leadership quality and long-term career value when evaluating opportunities. For Semiconductor employers, articulating a clear technical or leadership pathway matters enormously for experienced engineers who could pursue opportunities across multiple markets in the region.

Move early on critical roles

In a market where fewer firms are proactively raising wages, those that benchmark accurately and move decisively have a structural advantage. Prolonged internal approval cycles are retention risks in disguise. Candidates who are browsing the market will not wait indefinitely.

Workforce Planning Strategies for H2 2026

Based on MOM's wage findings and Reeracoen's market observations across Singapore, these are the priority actions for employers heading into the second half of 2026.

1. Conduct a retention risk audit. Identify the roles and individuals most vulnerable to departure, particularly in Semiconductor, BFSF and Manufacturing, and assess whether your current proposition is competitive on both salary and conditions.
2. Review salary benchmarks against current market data, not last year's approved ranges. In Financial Services and Insurance Services, where wage growth has remained above average, anchoring to outdated benchmarks creates unnecessary exposure.
3. Define and communicate flexibility policies clearly. 61.7% of Singapore employees prefer hybrid work arrangements, according to Reeracoen's employee sentiment research. Ambiguity in policy is itself a retention risk.
4. Strengthen internal mobility pathways. Employees who see a credible path forward within your organisation are less likely to look externally. Structured career development conversations are more powerful than retention bonuses in sustaining long-term loyalty.
5. Partner with specialist recruiters early. In BFSF, Semiconductor, Manufacturing and Professional Services, talent shortages are structural. Reeracoen's Hiring Manager Survey found only 23.2% of employers feel very confident securing qualified local talent. Waiting until a role is vacant significantly increases the timeline and cost of replacement.

Hiring Talent in Singapore? Let Reeracoen Help.

Whether you are planning headcount for H2 2026, benchmarking compensation for a critical hire, or managing a confidential senior search, Reeracoen's specialist consultants are ready to support you. We work across Banking and Financial Services, Semiconductors, Manufacturing, Professional Services and beyond, with deep market knowledge and access to active and passive talent across Singapore.

Submit a Hiring Enquiry to Reeracoen Singapore

Exploring New Career Opportunities in Singapore?

If you are a professional considering your next move, Reeracoen's consultants can provide market-rate salary benchmarking, connect you with relevant opportunities, and guide you through the Singapore job market in 2026.

Register with Reeracoen as a Candidate

Frequently Asked Questions

What is the average salary increment in Singapore in 2026?

Based on MOM's Report on Wage Practices 2025, nominal wages grew 4.9% in 2025. Among firms that provided increases, the average increment was 5.8%. For 2026, Reeracoen's Salary Guide projects average wage growth of 4.0% to 4.3%, reflecting a more cautious business environment while remaining positive overall.

Are Singapore salaries increasing faster than inflation?

Yes. Real wages grew 4.0% in 2025, up from 3.2% in 2024. After accounting for inflation, employees' purchasing power improved meaningfully year on year. This improvement was supported by easing inflation alongside continued productivity growth across the economy.

What is driving salary increases in Singapore?

Employee retention is the most commonly cited reason Singapore employers raised wages in 2025. This reflects a market where replacement costs and talent scarcity, particularly in BFSF, Semiconductors and Professional Services, are significant concerns. Market benchmarking and cost of living considerations also play a role, especially in sectors with above-average wage growth.

How can employers retain talent without raising salaries significantly?

According to Reeracoen's Beyond the Paycheque Singapore Employee Sentiment Study 2026, 69.1% of employees would accept a pay cut if overall conditions improved. The conditions that matter most are work-life balance, flexible work arrangements, workload sustainability, and job stability. Employers that invest in these areas, and communicate their total rewards proposition clearly, can remain competitive even when salary budgets are constrained.

Which industries are seeing the strongest wage growth in Singapore?

Based on MOM's 2025 data: Administrative and Support Services led at 7.5%, supported by the Progressive Wage Model. Insurance Services recorded 6.6% and Financial Services 5.9%, driven by sustained demand for governance, risk, compliance and regional leadership talent. Wholesale Trade and Insurance Services were the only sectors where wage growth accelerated compared to 2024.

What should Singapore employers prioritise in H2 2026?

Three priorities stand out. First, benchmark compensation against current market rates rather than last year's approved ranges. Second, strengthen the non-salary elements of your employment proposition, including flexibility, career development and manager quality. Third, move early on critical hires. In a market with structural talent shortages across Semiconductors, BFSF and Manufacturing, prolonged hiring timelines carry a direct cost.

Why are fewer Singapore employers raising salaries in 2025?

The proportion of firms granting wage increases fell from 78.3% in 2024 to 72.4% in 2025, while firms keeping wages unchanged rose from 18.5% to 24.5%. This reflects caution in business sentiment rather than widespread financial difficulty. Most firms remain profitable, but geopolitical uncertainty and inflationary pressures have led employers to take a more measured approach to fixed salary commitments.

What is the wage growth outlook for Singapore in the second half of 2026?

MOM expects real wage growth to remain positive but moderated, with firms likely to remain measured in their approach. Reeracoen's Salary Guide projects average wage growth of 4.0% to 4.3% for 2026. Sectors with structural talent shortages, particularly BFSF, Semiconductors and high-value Professional Services, may see continued above-average salary pressure for specialist and leadership roles.

Related Articles

You may also find these Reeracoen Singapore articles useful:

• Why Paying More Is No Longer Enough to Retain Talent in Singapore

A deep dive into why salary increases alone are failing to solve Singapore's retention challenge, and what employers can do to build a more durable employment proposition.

• Beyond the Pay Cheque: What Singapore Employees Really Want in 2026

Drawing on Reeracoen's employee sentiment research, this article explores the non-salary factors that are increasingly shaping whether Singapore professionals stay or leave.

• Mid-Year Workforce Planning in Singapore: How to Build a Hiring Strategy That Holds Up in H2 2026

A practical framework for Singapore employers to assess hiring gaps, benchmark compensation, and build a talent strategy that holds up through the second half of 2026.

About the Author

Valerie Ong, Regional Marketing Manager, Reeracoen Group

Valerie leads content and market insights for Reeracoen across Southeast Asia. She works closely with Reeracoen's specialist recruitment consultants to translate hiring data, salary benchmarks and labour market trends into practical guidance for Singapore's employers and professionals. Her work draws on Reeracoen's proprietary research including the annual Salary Guide, Hiring Pulse, and Hiring Manager Survey.

Language note: This article is published in English. Reeracoen Singapore also publishes selected content in Mandarin and Japanese for our bilingual and Japanese-speaking professional community.

References

Ministry of Manpower Singapore. (2026, May 28). Real Wages Continued to Grow in 2025: Report on Wage Practices 2025.

Reeracoen Singapore. (2026). Singapore Salary Guide 2025/2026.

Reeracoen Singapore x Rakuten Insight. (2026). Beyond the Paycheque: Singapore Employee Sentiment Study 2026.

Reeracoen Singapore x Rakuten Insight Global. (2026). Hiring Managers Unfiltered: Singapore Hiring Manager Survey 2025/2026.

Reeracoen Singapore. (2026). Singapore BFSF Talent Outlook 2026: Comprehensive Hiring and Talent Strategy Guide.

Reeracoen Singapore. (2026). Hiring Pulse: Q1 2026 Singapore Market Report.

 

Disclaimer

This article has been prepared by Reeracoen Singapore Pte. Ltd. based on publicly available information and Reeracoen's proprietary research, believed to be reliable at the time of publication. It is intended for general informational and educational purposes only and does not constitute professional HR, legal or financial advice. Readers should seek independent advice tailored to their specific circumstances before making employment or business decisions. Market conditions may change, and the information in this article reflects data available as at the date of publication.