Organisations in Singapore brace for slower hiring and wage growth

Organisations in Singapore are taking a cautious approach to the coming year, with a new survey revealing a pessimistic economic outlook and plans to curb hiring and wage growth.

The Singapore Business Federation’s (SBF) National Business Survey 2025 – Manpower and Wages Edition showed that organisations are lowering their revenue and profitability expectations, with many putting a hold on expansion plans.

According to the survey, more organisations (35%) expect economic conditions to worsen over the next 12 months than to improve (14%). This sentiment is reflected in the overall Business Sentiment Index (BSI), which dropped from 56.5 in Q1 2025 to 55.4 in Q2 2025.

While most sectors are feeling the pinch, the hotels, restaurants and accommodations sector has the most negative outlook, recording the lowest BSI score among all industries. The hiring outlook indicator for this sector saw a sharp decline, dropping from 67.4 in Q1 2025 to 51.6 in Q2 2025.

Conversely, organisations in health and social services and education are slightly more optimistic.

The survey also highlighted ongoing concerns about global trade, with 59% of organisations reporting they are still “negatively” exposed to the evolving US tariff situation, although this is a decrease from 81% in April 2025.

In a direct reflection of a cautious business sentiment, hiring and wage growth are set to slow. Only 36% of organisations plan to expand their full-time employee base in the next year, a decrease from 40% in 2024. This trend is consistent with a general tapering of growth, though larger organisations remain more optimistic than small- and medium-sized enterprises (SMEs).

Similarly, fewer organisations (59%) intend to raise salaries, down from 64% in 2024, and the proportion of organisations planning wage freezes has risen from 35% to 41%, driven primarily by SMEs.

An exception to this trend is lower-wage employees, with 66% of organisations planning to raise their salaries in the next 12 months, an increase from 64% in 2024. This aligns with the National Wages Council’s recommendations, but organisations continue to face challenges such as market-rate wages, weak performance, and cost pressures that limit further increases.

While rising manpower costs remain the top challenge for organisations, the proportion of organisations citing it as a concern has declined from 75% in 2024 to 65% in 2025. However, there has been a significant jump in the number of organisations concerned about talent upskilling and reskilling, which almost doubled from 25% to 47%.

Organisations face several barriers when it comes to investing in employee training, including the cost burden, a lack of available employees to cover for those in training, and difficulty in measuring the return on investment (ROI). The survey noted that informal and unstructured training is becoming the preferred method for both SMEs and large organisations.

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The SBF also found that the adoption of skills-first hiring practices remains low, with only 18% of organisations having fully implemented them. Barriers to this approach include a lack of confidence in whether candidates with adjacent skills can perform the required tasks and the perceived need for more training compared to experienced hires.

In other findings, about one-third of organisations have implemented structured career planning for their employees. These organisations reported benefits such as improved employee morale (77%), more effective workforce planning (62%), and higher retention rates (58%).

Additionally, 30% of organisations have implemented job redesign, with a focus on productivity (63%), digitalisation (40%), and sustainability (34%).

Mr Kok Ping Soon, CEO of the SBF, said, “The survey findings reflect a more cautious business outlook, reinforcing the need for organisations to adapt quickly to cost pressures and shifting market dynamics. Singapore businesses should leverage the strong public-private support and available schemes to alleviate challenges and remain competitive.”