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Singapore's real wage growth up 1.6% in 2021, MOM says
SINGAPORE — The real wage growth of workers in Singapore was up 1.6 per cent last year, slightly higher than the 1.4 per cent in 2020.
Still, the real wage growth, which takes into account the inflation rate, is lower than the 3.3 per cent in 2019, said the Ministry of Manpower (MOM) in a report on wage practices for 2021 released Monday (30 May). The survey considered responses from 5,199 private establishments employing 1,077,400 employees.
“Despite rising prices, nominal wage growth still more than kept pace with inflation, allowing real wages to grow, but at a considerably slower pace of 1.6 per cent,” the MOM said.
Singapore’s core inflation for the whole of 2021 came in at 0.9 per cent, up from minus 0.2 percent in 2020, with overall inflation rising to 2.3 per cent.
Disruptions and uncertainty
Wages are expected to continue to grow this year as the labour market “is expected to remain tight, and firms compete for workers.”
However, supply chain disruptions and uncertainty arising from the prolonged Russia-Ukraine conflict could affect business confidence and slow the rate of growth. Inflation caused by recent disruptions to the global supply chains is expected to stay elevated and dampen real wage growth, according to the ministry.
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The MOM’s Annual Wage Change survey also found that nominal wages of resident employees rose by 3.9 per cent in 2021.
The increase is more than double the decade low of 1.2 per cent in 2020, and within the range of the pre-COVID years of 2018 and 2019.
However the MOM found that the wage growth last year was 5.7 per cent, lower than the 2010 post-global financial crisis recovery.
“This is reflective of the uneven recovery across sectors. In addition, some establishments may have been more cautious in raising wages given the greater uncertainty brought about by the pandemic,” the ministry said.
As the COVID-19 pandemic had a “less severe impact on wages” compared to the global financial crisis, wage growth had less ground to recover in 2021 compared to 2010.
More firms gave wage increases in 2021 — 60 per cent — as compared to 52 per cent in 2020. But the proportion is lower than the 69 per cent in 2019, suggesting that some firms were still slower in recovering from the effects of the pandemic.
Analysing wage change by sector, the MOM found that while all sectors experienced higher total wage growth 2021 compared to 2020, the scale was varied across sectors.
The information and Communications, financial and insurance services and manufacturing sectors all saw strong wage increases in 2021, at 5.1 per cent, 4.1 per cent and 4 per cent respectively. These sectors were less affected by the pandemic and have been seeing sustained GDP growth since late 2020.
The sectors severely affected by the pandemic also registered wage increases.
Accommodation, transportation and storage, food and Beverages services saw increases of 1.7 per cent, 2.8 per cent, and 2.6 per cent. However the increases were generally lower than pre-pandemic growth rates. The rates are expected to pick up with the easing of COVID-19 safe management measures and border restrictions.
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