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Consistent with easing inflation, the average nominal wage increment among companies that raised wages moderated from 6.6% in 2024 to 5.8% in 2025, with only a small percentage of firms reducing its wages (3.1%).
The proportion of establishments that provided wage increases in 2025 stood at 72.4% (2024: 78.3%), with more keeping wages steady (from 18.5% to 24.5%), said Singapore's Ministry of Manpower in its latest report on Wage Practices.
According to the report, wage cuts remained stable, at around 3.2% to 3.1%. Among establishments that raised wages, most cited employee retention as the main reason.
Wage growth also moderated amid easing inflation. Nominal wage growth for full-time resident employees slowed from 5.6% in 2024 to 4.9% in 2025, which may have reduced pressure on firms to raise wages as much as before.
However, because inflation was lower, real wage growth rose from 3.2% to 4%, meaning workers’ purchasing power improved. The narrower gap between nominal and real wage growth suggests that easing inflation helped support workers’ living standards.
Establishments that raised wages also gave smaller increments on average. The average nominal wage increase among these establishments declined from 6.6% in 2024 to 5.8% in 2025.
Wage cuts remained uncommon, with only 3.1% of firms reducing wages in 2025, of an average cut of 3.7%. These firms generally reported weaker business performance than in the previous year, which led some to reduce wages.
Total wage changes have now become similar across all employee groups
The report also revealed that wage growth remained positive across all employee groups in 2025, although it slowed from the previous year. Rank-and-file employees saw wage growth of 4.8%, while junior management recorded 5.1% and senior management 4.9%.
Notably, wage growth has become more similar across the three employee groups.
Total wage change by industry
Overall, wage growth remained positive across all sectors in 2025, but the pace was generally slower than in 2024. This suggests that while employers continued to raise wages, they did so more cautiously amid a softer business environment.
The strongest wage growth was seen in sectors where demand for workers remained resilient. Financial services and insurance services recorded wage growth of 5.9% and 6.6%, respectively, partly reflecting continued demand for skilled talent. Business services-related sectors also posted strong increases, led by administrative & support services at 7.5%, followed by real estate services at 5.3% and professional services at 5.1%.
For the administrative & support services, wage growth was supported by wage ladders under the Progressive Wage Model and Local Qualifying Salary requirements. However, the increases appear to have become more gradual and sustainable, helping to maintain wage growth while supporting long-term business viability. Similar patterns were seen in other Progressive Wage Model sectors, including retail trade and food & beverage services.
At the other end, wage growth was more modest in sectors such as accommodation and food & beverage services, both at 3.9%, as well as construction at 4.0% and manufacturing at 4.1%. For accommodation, the slower pace marks a return to more typical wage growth after the sharp hiring rebound in 2022 and 2023, when the recovery in tourism boosted labour demand.
Overall, the picture points to a labour market where wages are still rising, but with employers taking a more measured approach to pay increases.
Over 80% of establishments reported being profitable
The report also highlighted other key findings, including that in 2025, 83.1% of establishments reported being profitable, which is an increase from the year before (80.8%), reflecting favourable business conditions amid Singapore's continued economic growth.
Most firms continued to report stable or improved profitability, with 64.1% of firms reporting their profitability was stable or had improved in 2025, which was slightly higher than 62.7% in 2024.
When broken down by sector and firm size, profitability trends were more uneven. In particular, the profitability gap between smaller and larger firms was more pronounced in financial & insurance services and wholesale trade. In these sectors, smaller firms saw a decline in the proportion of profitable firms, while larger firms registered an increase.
This suggests that although these sectors were key drivers of economic growth, smaller firms likely faced greater cost pressures that eroded their profit margins, while larger firms were better positioned to sustain stronger financial performance.
Overall adoption rate of Flexible Wage System continued to decline over the years
The Flexible Wage System (FWS) helps employers adjust wage costs during difficult business conditions, instead of turning to job cuts. It includes two components: the Monthly Variable Component (MVC) and the Annual Variable Component (AVC).
In 2025, most establishments (74.2%) had adopted at least one FWS component. However, adoption has continued to decline over the years.
The Annual Variable Component was much more common than the Monthly Variable Component. AVC adoption stood at 73.2%, slightly lower than 74.7% in 2024. In contrast, MVC adoption remained low at 8.1%, mainly because it is not common practice in many industries.
Variable wages made up only 13.0% of total private-sector wages, broadly unchanged from 13.2% in the previous year. Notably, establishments with at least one FWS component recorded higher wage increases, at 5.4%, compared with 3.6% among non-adopters.
All in all, Singapore's labour market showed positive wage growth in 2025 amid favourable business conditions and easing inflation. Despite moderation from the stronger pace seen in 2024, real wages improved, and workers' purchasing power increased.
According to MOM, wage growth is "expected to remain positive but moderated amid a more uncertain global environment and inflation risks. Firms are likely to be measured in wage increases."
"Over the longer term, sustaining real wage growth will continue to depend on the economic outlook, productivity improvements, workforce upgrading, and wage-setting practices."
Infographics / MOM
Lead image / MOM Facebook
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