Labour productivity growth expected to ensure real wage gains in Singapore
Singapore will likely see stronger real wage gains in the coming year amid anticipated labour productivity growth, according to the Monetary Authority of Singapore (MAS).
MAS said in its latest Macroeconomic Review that Singapore's labour productivity growth is expected to "temper the impact" of continuing wage cost increases and help ensure real wage gains.
The forecast comes as MAS predicts labour productivity growth to recover "discernibly" in 2024 and pick up further next year.
"The improvement in productivity will be led by cyclical improvements in the trade-related cluster. An improvement in capacity utilisation as well as rising fixed capital formation could also provide a boost to output per worker in the services sectors," MAS said in the review.
"Overall, improved productivity growth alongside easing nominal wage growth should help bring down overall unit labour cost (ULC) growth, while helping to secure sustainable real wage gains for workers."
Singapore's real wages grew by 0.4% in 2023, similar to the increase in 2022, according to the Ministry of Manpower.
Nominal wages forecast for Singapore
Nominal total wages, on the other hand, grew by 5.2% in 2023, down from 6.5% in 2022.
MAS said it expects the growth in nominal average monthly earnings to continue moderating in the quarters ahead, reflecting in part the high base effects from large bonuses paid in the first quarter of this year.
"Easing inflation expectations are also expected to dampen wage gains, even as labour demand recovers modestly," MAS said.
Nominal wage growth is expected to remain slightly higher than pre-COVID levels amid sectoral demand-supply mismatches as well as policy factors.
"For instance, wage growth could be firmer in sectors with high job vacancies such as health and social services, as well as PWM sectors such as F&B, retail trade, and administrative and support services," MAS said.
Source: Monetary Authority of Singapore
