Employees in Singapore see stronger real wage gains despite cooling nominal growth

Employees in Singapore saw real wage growth accelerate to 4% in 2025, up from 3.2% in 2024, according to the Ministry of Manpower’s (MOM) latest wage practices report. The improvement came even as nominal wage growth moderated to 4.9%, down from 5.6% the previous year – a trend MOM attributed largely to easing inflation, which fell to 0.9% from 2.4% in 2024.

“The narrower gap between nominal and real wage growth rates indicates that lower inflation has helped support employees’ living standards,” the ministry said, noting that purchasing power effectively improved for most employees.

Despite the positive real wage headline, HR leaders should note a meaningful shift in employer behaviour. The proportion of organisations granting salary increases declined to 72.4% in 2025, down from 78.3% in 2024, while the share of organisations keeping wages flat rose to 24.5% from 18.5%. MOM described these as “signs of greater prudence in terms of wages.”

Among organisations that did raise salaries, employee retention remained the most-cited reason – a signal that the talent competition remains a live concern even as wage momentum cools.

Wage reductions remained limited: only 3.1% of organisations cut pay, with an average reduction of 3.7%, generally concentrated among organisations that saw deteriorating performance.

However, wage growth varied considerably across industries. Administrative and support services led all sectors at 7.5%, bolstered by Progressive Wage Model mandates for lower-wage employees. Financial services (5.9%) and insurance (6.6%) also posted robust gains, driven by sustained demand for professionals and executives.

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At the other end, accommodation wages grew just 3.9%, easing from 5.5% in 2024 as post-pandemic hiring normalised. Construction similarly moderated to 4% from 5.5%.

On the business side, the share of profitable organisations climbed to 83.1% from 80.8%, with 64.1% reporting stable or improved margins. The gains were uneven, however, with smaller organisations in financial services and wholesale trade facing greater cost pressures compared to their larger counterparts – a dynamic MOM noted could weigh on compensation decisions in those segments.

Looking ahead, the ministry expects real wage growth to remain positive but measured, citing geopolitical uncertainty and inflationary risks as factors likely to temper employers’ compensation approaches in the near term, reported The Business Times.