Real Wage Growth in Singapore Surges in 2025

Photo Credit: One IBC

Singapore workers experienced a meaningful boost to their purchasing power in 2025, as real wage growth accelerated to 4 per cent, marking a significant improvement from the previous year. This positive trend comes as inflation eased considerably, allowing nominal wage increases to translate into genuine gains for employees across the island nation.

Strong Real Wage Performance in 2025

The Ministry of Manpower’s Report on Wage Practices 2025 revealed that real wages in Singapore grew by 4 per cent in 2025, outpacing the 3.2 per cent growth recorded in 2024. This acceleration occurred despite a slowdown in nominal wage growth, which rose by 4.9 per cent in 2025 compared to 5.6 per cent in 2024.

The key driver behind this improvement was easing inflation. When inflation falls, the same nominal wage increase translates into greater real purchasing power for workers. Headline inflation in Singapore slowed to 2.4 per cent in 2024 and continued declining, reaching a low of 0.5 per cent in August 2025 before picking up slightly in subsequent months.

For resident workers at the median wage level, real incomes rose by 4.3 per cent in 2025. The median nominal monthly income reached S$5,775 in 2025, representing a 5 per cent increase from S$5,500 in 2024.

Benefits for Lower-Wage Workers

One of the most encouraging aspects of real wage growth in Singapore was the strong performance for lower-income workers. Those at the 20th percentile—the bottom 20 per cent of earners—saw real wage growth of 3.8 per cent in 2025. This figure exceeds the average annual rate of 2.9 per cent over both the past five years and the past decade.

At the 20th percentile, nominal monthly income grew by 4.6 per cent to S$3,164, up from S$3,026 in 2024. When including Workfare Income Supplement and related payments, the nominal income growth rate for this group reached 6.1 per cent.

Prime Minister Lawrence Wong highlighted this trend, noting that wage growth has been strongest for lower-income workers, faster than for those in the middle or at the top. After accounting for household size, the median monthly household income per household member rose by 7.5 per cent in real terms, from S$3,837 in 2024 to S$4,160 in 2025.

Sector-Specific Wage Patterns

Not all sectors experienced the same wage growth trajectory in 2025. Sectors closely aligned with Singapore’s strengths as a strategic regional hub—including logistics and shipping, aerospace, high-tech manufacturing, and consumer goods—outperformed expectations, delivering base salary increases of 4.9 per cent to 5.5 per cent.

The high-tech sector, however, recorded more muted growth at 3 per cent against a budgeted 3.8 per cent. This slowdown was attributed to continued automation, offshoring, and the commoditisation of certain IT functions.

Overall, despite some sectors outperforming, real wage growth settled at 2.9 per cent in some measurements, highlighting the impact of sector-specific challenges and broader economic uncertainty.

Outlook for 2026

Looking ahead to 2026, Real wage growth in Singapore is expected to remain positive but moderate. The Ministry of Manpower projects that wage growth will stay positive in 2026, though firms are expected to be cautious given ongoing geopolitical tensions and uncertainty around inflation.

The Monetary Authority of Singapore forecasts inflation to rise to between 1.5 and 2.5 per cent in 2026. This inflation outlook will significantly influence how nominal wage increases translate into real wage gains.

Mercer’s Total Remuneration Survey indicates that employees in Singapore are expected to see an average salary increase of 4 per cent in 2026, closely aligned with the 4.1 per cent growth recorded in 2025. The study, which analyses pay trends across nearly 6,000 roles in more than 1,100 organisations, found that 97.6 per cent of organisations plan to implement salary increases in 2026.

Most industries expect more moderate salary growth of between 3.2 per cent and 4.5 per cent in 2026. Wage premiums are anticipated to remain concentrated in sectors that strengthen Singapore’s position as a strategic regional hub, particularly roles that support resilience, transformation, and sustainable business growth.

Long-Term Perspective

Over the longer term, sustaining real wage growth in Singapore will continue to depend on several key factors. The Ministry of Manpower emphasises that economic outlook, productivity improvements, workforce upgrading, and wage-setting practices will all play crucial roles.

Real wage growth of 4 per cent in 2025 is higher than the average annual rate of 1.6 per cent in the past five years and 2.1 per cent in the last decade. This represents a meaningful improvement in workers’ living standards after years of modest gains.

Prime Minister Wong noted that real wages across all income levels rose over the past 10 years, meaning that for many Singaporean workers and households, wage growth has outpaced inflation.

Factors Influencing Future Wage Growth

Several factors will shape real wage growth in Singapore moving forward. Global economic unpredictability and continuing geopolitical shocks create an uncertain environment for businesses. These external pressures may make firms more cautious in their wage-setting practices.

Productivity improvements remain critical for sustaining wage growth. As workers become more productive through skills upgrading and technological adoption, businesses can afford to pay higher wages while maintaining competitiveness.

The Progressive Wage Model (PWM) continues to play an important role in ensuring structured wage progression for workers in specific sectors. Workers covered under the PWM and those in sectors with strong labour demand are likely to continue seeing more structured wage progression.

The Permanent Jobs Story

The labour market also showed strength in employment quality. The proportion of the workforce in permanent jobs hit a new high of over 90 per cent in 2025. This shift toward more secure employment complements the positive wage trends, providing workers with greater income stability alongside higher pay.

Broader Income Trends

The median monthly household market income increased from S$11,558 in 2024 to S$12,446 in 2025 for resident households, representing a 6.8 per cent increase. Singapore’s definition of household income now includes income from non-work sources, including rental and investment income, providing a more comprehensive picture of household financial wellbeing.

Key Takeaways for Workers and Businesses

For Singapore workers, the 2025 data offers encouraging news about real wage growth in Singapore. The combination of solid wage increases and moderating inflation has delivered genuine improvements in purchasing power. Lower-wage workers have benefited particularly well from this trend, helping to narrow income inequalities.

For businesses, the outlook suggests continuing to invest in productivity and workforce development. As the economy navigates global uncertainties, maintaining competitive wages while managing costs will require careful balance. Sectors with strong labour demand and those aligned with Singapore’s strategic priorities continue to offer better wage prospects.

The trajectory for 2026 points toward continued but more moderate real wage growth in Singapore. With inflation expected to remain modest and salary increases projected around 4 per cent, workers should anticipate continued gains in purchasing power, though perhaps at a slower pace than the strong 2025 performance.

The success of Singapore’s wage growth story ultimately depends on sustained productivity improvements, effective workforce upgrading programmes, and prudent wage-setting practices across all sectors of the economy.