Singapore’s real total wage growth expands in 2015; jobless rate likely to be around 2% in near-term

Singapore’s real total wages in 2015 grew 5.4% from 2014’s 3.9% growth. Nominal total wage in the private sector grew 4% last year, as compared with the growth of 4.9% recorded in 2014. Challenging business conditions remain for domestic firms in the country, amidst the restructuring of economy that is underway. About 64% of private establishments increased the total wages in 2015 as compared with 72% in 2014. Meanwhile, 25% of establishments kept wages unchanged, as compared with 20% last year, whereas a smaller proportion of firms (11%) cut wages in 2015.

Moreover, just 46% of private firms with employees earning up to $1,100 in a monthly basic salary in 2015 increased wages of those employees. The 54% of companies that did not increase wages cited reasons of high business/wage costs, poor business and that they were paying the market rate already.

Within the industry level, employees in administrative and support services received the highest increase in wage. The next highest wage growth was seen in the financial and insurance sector, followed by community, social and personal services. Meanwhile, infocomms, manufacturing and construction sector saw the smallest wage growth last year.

The real wage growth is expected to further moderate in 2016, likely in the range of 2%-3%. This is because of the cautious business sentiments, slow macro-environment and the likelihood of headline inflation remaining negative at 0.4% y/y amidst easing domestic asset prices, said OCBC Economist in a research report. The disparities in wage rise will be driven by the market demand-supply dynamics at the industry level. However, the total jobless rate is expected to hover around 2% in the near-term, added OCBC Economist.