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Singapore salaries: Majority of companies to increase pay next 12 months, says survey

This is despite more businesses expecting weaker economic conditions in the next 12 months, according to an SBF survey.

Aerial view of the skyline of Singapore, illustrating a story on salaries.
Majority of Singapore companies expect to increase salaries in the next 12 months, according to an SBF survey. (PHOTO: Getty) (Travel Wild via Getty Images)

SINGAPORE — A "significant" majority of companies and small-medium enterprises (SMEs) said they have increased salaries in the past 12 months and will continue to do so in the next 12 months, according to findings from the Singapore Business Federation's (SBF) latest survey on manpower and wages that was released on Tuesday (12 September).

The survey, which was carried out from 20 July to 31 July 2023, was conducted to provide insights on the business community's current and forward sentiments, as well as concerns on issues related to manpower and wage cost. It drew responses from 282 companies across major industries in Singapore. Of the 282 companies surveyed, 79 per cent were small and medium enterprises (SMEs), and 21 per cent were large companies.

Based on the survey, 88 per cent of large companies increased salaries in the last 12 months, and 86 per cent of them expect to increase salaries in the next 12 months, whereas 73 per cent of SMEs did so in the last 12 months and 62 per cent of SMEs expect to do the same in the next 12 months.

Employment outlook

Additionally, the survey found that 51 per cent of companies had no change to their full-time employees in the last 12 months, and 53 per cent do not expect a headcount change in the next 12 months. In fact, more companies (36 per cent) expect to increase headcount in the next 12 months, compared to the last 12 months at 29 per cent.

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Correspondingly, while 19 per cent of companies reported a decrease in manpower in the last 12 months, the percentage of companies expecting a decline in manpower in the next 12 months declined to 10 per cent.

Moreover, 20 per cent of companies experienced an increase in headcount in the last 12 months and expect to further increase in the next 12 months. This category included companies in the "Banking, Finance, Insurance & Accounting" (38 per cent) sector, the "Retail, Hotels & Food and Beverages" (30 per cent) sector and the "Health & Education" (20 per cent) sector.

On the other hand, only six per cent of companies experienced a decrease in headcount in the last 12 months and expect to further decrease in the next 12 months. Within this category, the top three sectors are "Construction & Civil Engineering" (10 per cent), "Logistics & Transportation" (9 per cent) and "Retail, Hotels & Food and Beverages" (9 per cent).

Business outlook

The positive outlook on employment comes amid a backdrop of weak economic sentiments that businesses are expecting in the next 12 months. The survey found that more companies (35 per cent) expect business conditions to worsen in the next 12 months than improve (28 per cent).

Furthermore, 61 per cent of surveyed companies indicated that inflationary pressure leading to increased business costs is the top factor impacting their businesses. The top three sectors in this category are "Real Estate" (100 per cent), "Health & Education" (80 per cent) and "Information and Communications & Professional Services" (72 per cent).

Findings from the survey also showed that more companies (45 per cent) are expecting business revenue to decline in the next 12 months than improve (33 per cent). More companies in the "Wholesale Trade" (58 per cent) and "Construction & Civil Engineering" (49 per cent) sectors expect declining revenue while more companies in the "Banking, Finance, Insurance & Accounting" (62 per cent) and "Information and Communications & Professional Services" (44 per cent) expect improving revenue.

Overall, a significant majority of companies (85 per cent) expect business costs to increase in the next 12 months. More large companies (45 per cent) expect cost increases of up to 10 per cent, while more SMEs (42 per cent) expect an increase between 10 and 25 per cent.

Wage increase in moderation

The overall results of the survey showed that the employment outlook remained positive despite businesses expecting a weakened economic outlook. Based on this, the survey concluded the need for "a moderation in the wage increases for the next 12 months".

"There are sectors that expect to do well just as there are sectors that will continue to face headwinds. Hence, differentiated and sustainable wage growth that keeps with the underlying productivity growth of the sectors is important," said SBF chief executive officer Kok Ping Soon.

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