Fewer firms increase salaries last year, though the proportion of profitable establishments grows
[SINGAPORE] Real wages rose in the Republic at a faster pace of 4 per cent in 2025, compared with 3.2 per cent in the year before, amid favourable business conditions and easing inflation, data from the Ministry of Manpower (MOM) showed on Thursday (May 28).
This was even as nominal wage growth eased to 4.9 per cent for full-time resident employees who have been with the same employer for at least a year. This is from 5.6 per cent in 2024, stated the ministry’s latest wage practices report.
Nominal total wages include employer Central Provident Fund (CPF) contributions.
MOM noted that the moderation in nominal wage growth coincided with easing inflation, which may have reduced upward pressure on firms to raise nominal wages. Headline inflation slowed to 0.9 per cent in 2025, from 2.4 per cent in 2024.
“The narrower gap between nominal and real wage growth rates indicates that lower inflation has helped support workers’ living standards,” said the ministry.
Meanwhile, the proportion of firms that gave wage increases to their staff declined in 2025, even as the proportion of profitable businesses rose.
MOM noted that overall, Singapore’s labour market continued to experience positive wage growth in 2025 “amid favourable business conditions and easing inflation”.
“Although nominal wage growth moderated from the stronger pace seen in 2024, real wages improved, supporting workers’ purchasing power.”
Looking ahead, the ministry expects real wage growth to remain “positive but moderated” amid geopolitical and inflation uncertainties, with firms likely to be measured in their wage increases.
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Sectoral wages
In 2025, all industries continued to experience wage growth, though most sectors saw moderated growth compared with that in 2024. This signals that “wage momentum had eased amid a more cautious business environment”, added MOM.
The financial services (5.9 per cent) and insurance services (6.6 per cent) sectors registered “relatively strong” wage growth, amid continued demand for professionals, managers and executives, said the ministry.
The administrative and support services sector had the highest wage growth of 7.5 per cent, with lower-wage workers supported by the Progressive Wage Model and Local Qualifying Salary requirements.
On the other hand, the accommodation sector saw the largest moderation in wage growth, easing to 3.9 per cent in 2025 from 5.5 per cent in 2024. This was due to the stabilisation of labour demand following the post-pandemic hiring surge during 2022 and 2023.
Construction also recorded notable moderation in wage growth, slowing to 4 per cent in 2025 from 5.5 per cent in the previous year.
Fewer firms give salary bumps
In 2025, the proportion of firms that raised their staff’s salaries declined to 72.4 per cent, from 78.3 per cent in the year prior. More firms also kept wages unchanged, with 24.5 per cent doing so compared with 18.5 per cent in 2024.
These trends indicate “signs of greater prudence in terms of wages”, said MOM. Still, it noted that a majority of establishments continued to provide wage increases, with employee retention cited as the most common reason for these firms to do so.
Rank-and-file employees (4.8 per cent), junior management (5.1 per cent) and senior management (4.9 per cent) experienced “positive but moderated” wage growth, added MOM.
It pointed out that differences in wage growth across employee groups narrowed in 2025, suggesting more broad-based wage gains.
A “small” percentage of firms (3.1 per cent) reduced wages in 2025, with an average wage reduction of 3.7 per cent, said MOM.
“These firms generally experienced weaker business performance than in the previous year, leading some to implement wage cuts.”
Increase in proportion of profitable firms
Meanwhile, the proportion of businesses that reported they were profitable rose to 83.1 per cent, from 80.8 per cent in 2024. This reflects “relatively favourable business conditions amid Singapore’s continued economic growth”, noted MOM.
In addition, the proportion of firms that reported stable or improved profitability rose to 64.1 per cent, from 62.7 per cent previously, “suggesting a growing share of financially stable firms”, it added.
At the same time, the proportion of firms with declining profitability rose slightly to 19 per cent, from 18.2 per cent previously; those that incurred losses fell to 16.9 per cent, from 19.2 per cent.
Profitability was more mixed across industries and firm sizes. The profitability gap by firm size was more pronounced in the financial and insurance services and wholesale trade sectors, where fewer smaller firms were profitable, while more larger ones had profitable businesses.
Said MOM: “This suggests that even though these sectors were primary drivers of economic growth, smaller firms likely faced greater cost pressures that eroded their profit margins, whilst larger firms were better positioned to drive financial performance.”
While 74.2 per cent of establishments implemented at least one flexible wage system component in 2025, the overall adoption rate continued its gradual decline, said MOM.
Variable wages comprised 13 per cent of total wages in the private sector, remaining consistent with 13.2 per cent in the previous year.
The MOM survey, conducted between Nov 17, 2025 and Mar 30, 2026, looked at private-sector entities with at least 10 employees. The findings, which took into account some 6,236 firms, reflect the wages of more than one million employees.
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