Singapore’s real wages saw a notable jump of 3.2% in 2024, marking the highest growth since the pandemic. For workers, this signals relief as inflation eases. But for employers? It’s a more nuanced story. According to the latest Ministry of Manpower (MOM) Wage Practices Report, wage pressures and economic uncertainties may lead to a moderation in salary growth in 2025—especially in trade-reliant sectors. So what should Singapore businesses and jobseekers take away from this report? Let’s break it down.

What’s Driving the 2024 Wage Growth?

1. Easing inflation led to real wage gains.

• Nominal wage growth reached 5.6% in 2024, while inflation eased to 2.4%, resulting in real wage growth of 3.2%—up from a mere 0.4% in 2023.
• This suggests employees actually took home more in purchasing power terms.

2. Wages rose across all levels—but not equally.

• Rank-and-file workers and junior managers saw the highest increases (5.8% and 5.6%), versus 5.1% for senior management.
• This aligns with policy efforts like the Progressive Wage Model (PWM) and the raise in Local Qualifying Salary (LQS) to $1,600/month.

3. Most firms were still profitable.

• 80.8% of companies remained profitable in 2024 (just a slight drop from 2023), giving them room to reward past performance.

The Catch? 2025 Might Be a Different Story.

1. Fewer companies plan to raise wages.

• Firms with intentions to increase wages dropped from 32% in Dec 2024 to 22% by Mar 2025, a clear sign of caution.

2. Trade-dependent sectors are feeling the heat.

• Wage growth in wholesale trade (4.2%) and manufacturing (5.1%) lagged behind other sectors and are projected to moderate further in 2025.
• Ongoing geopolitical tensions and global tariff uncertainties are weighing on confidence.

3. Bonuses may depend on flexible wage systems.

• While 76% of firms have adopted some form of Flexible Wage System (FWS), only 8.5% fully embraced it.
• Firms with FWS were more likely to give wage increases through bonuses—suggesting it’s a lever companies can use to adjust pay sustainably.

 

What This Means for Employers

✔️ Cost management will be critical
With wage moderation on the horizon, companies—especially in manufacturing, construction, and real estate—must find smarter ways to remain competitive without triggering talent attrition.

✔️ Adopt FWS for flexibility
MOM encourages wider adoption of Monthly and Annual Variable Components. These systems allow businesses to scale rewards in boom years and conserve resources in downturns.

✔️ Rethink your EVP (Employee Value Proposition)
With real wages rising and workers regaining purchasing power, top talent may become more selective. Beyond salary, firms must focus on career growth, workplace culture, and purpose-driven leadership.

What This Means for Jobseekers

It’s a good time to negotiate—wisely
If you're in growth sectors like financial services, community services, or admin support, where wage growth hits 6.7 – 8.7%, you’re in a strong position. But tread carefully—employers are becoming more cautious in 2025.

Lower-income workers have more support
Thanks to the PWM and LQS changes, baseline wages for full-time local workers are rising. This opens up more equitable opportunities, especially in frontline and operational roles.

Upskilling is essential
The most in-demand roles include nurses, educators, financial advisors, and skilled technicians. Workers looking to thrive in 2025 must invest in certifications and training aligned with market demand.

Final Takeaway: Resilience Over Reaction

The MOM report is a tale of past resilience and future caution. Businesses need to shift from reactive pay hikes to strategic workforce planning, supported by flexible pay structures, sustainable growth, and stronger employer branding.

At Reeracoen, we help our clients and candidates navigate these shifting tides. Whether you’re hiring or job hunting, understanding these wage dynamics is your first step to staying competitive.

 

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References:

1. MOM Press Release – Report on Wage Practices 2024

2. CNA – Real wages increased as inflation eased

3. The Straits Times – Real wages up in 2024

4. Human Resources Online – Wages expected to taper in 2025

5. NTUC – Nominal and real wages grew in 2024

6. AsiaOne – More firms raise salaries in 2024

7. Business Times – Singapore’s real wages rise at 3.2%