NWC guidelines push for wage flexibility and business transformation alongside mandated pay increases

Lower-wage employees in Singapore earning up to S$2,700 a month should receive a pay increase between 5.5% and 7.5%, according to the National Wages Council (NWC) in its latest annual wage guidelines. Employers with strong business performance are encouraged to grant pay increases of at least S$105 to S$125, even if this surpasses the specified percentage range. For organisations experiencing weaker conditions, the NWC recommended increases at the lower end of the range, with further adjustments when business prospects improve.

The recommendations aim to narrow the wage gap between lower- and median-income employees, reflecting Singapore’s current economic outlook and historical median income growth of 4.2% per annum between 2016 and 2024. Different sectors continue to face uneven productivity recovery. Ministry of Manpower (MOM) Permanent Secretary Ng Chee Khern highlighted that domestically oriented industries, such as administrative and food and beverage services, must accelerate business transformation to remain competitive. “This will ensure wage growth for their employees,” he said.

To help organisations stay resilient, the NWC reiterated the importance of a flexible wage system that includes both annual and monthly variable components. Such flexibility allows organisations to adjust wages rather than resort to retrenchments during downturns and to reward employees appropriately during upturns. More than 70% of employers have adopted some form of flexible wage system, though this figure slipped slightly from 77.3% in 2023 to 76% in 2024.

Wage flexibility is not just good to have, but essential, said Tan Hee Teck, President of the Singapore National Employers Federation. NTUC President K. Thanaletchimi added, “Organisations have to be fair and share productivity gains. That motivates employees and boosts morale.”

READ MORE: Singaporeans see better career growth at home, but job security worries persist

Although the guidelines are not mandatory, both public and private sector employers closely follow them. NWC Chairman Peter Seah noted that most organisations pay attention to the recommendations when reviewing wages. Covering the period from 1 December 2025 to 30 November 2026, the guidelines also align with upcoming CPF changes, including an increase in the monthly salary ceiling from S$7,400 to S$8,000 and higher employer CPF contribution rates for older employees from January 2026.

The NWC further recommended updates to Occupational Progressive Wages (OPW) requirements for administrators and drivers, whose roles are evolving with digital transformation. From 1 July 2026, administrative assistants’ baseline gross wages will increase from S$1,980 to S$2,170, while drivers’ baseline gross wages will rise from S$2,190 to S$2,370, with both categories subject to further adjustments in 2027.

The council also warned of a decline in structured training participation, from 79.6% in 2023 to 66.4% in 2024. “With the proliferation of digital technology and AI, it is critical that employers and lower-wage employees stay adaptable and invest in transformation and their human capital,” said the NWC, reported The Straits Times.