Experts Believe Wage Growth in Singapore Will Continue, But With A Catch
Experts are optimistic that wage growth will continue in Singapore. However, it will have to catch up on inflation.
Supported by Global Economic Recovery
The news of the continuing wage growth is good indeed. Experts believe that continuing wage increases will be supported by global economic recovery and a generally positive outlook. They did, however, add that wages would have to catch up to inflation, which has been on the rise.
According to a report released by the Department of Statistics (SingStat), the median household income increased last year after falling for the first time in a decade in 2020. Household incomes are likely to have risen above pre-pandemic levels as a result of the strong economic recovery and generous wage subsidies.
A Tighter Labour Market Post Pandemic
A tighter labour market may have contributed in a way to the increased resident wages and household income, resulting in overall wage growth. This is because many foreigners have had to leave Singapore in the last two years thanks to the Covid-19 pandemic and unprecedented global lockdown.
However, with sustained consumer demand and business viability, the fundamentals have remained strong. The increase in household income and wage growth is also based on the effectiveness of pandemic support measures. Support particularly in those related to job and business relief have had a strong role to play.
Economists are predicting that income growth will continue in the coming year. Rising household income momentum will remain moderate, in line with broader economic growth projections. The global economic recovery will play a significant role in determining this increase.
Outlook Remains Positive for This Year
The outlook for this year remains positive, as economic reopening and border-control relaxation will support growth and employment. Economic reopening should revitalise the consumer-facing and hospitality sectors. This, in turn, will result in more jobs and higher wages for lower and middle-income households.
As a result of progressive wage and labour policies, household income inequality should continue to decline. The implementation of the Local Qualifying Salary and the expansion of the progressive wage scheme to the retail sector in September of this year will also contribute to wage growth for lower-income households and contribute to the reduction of inequality.
Playing Catch-Up With Inflation
Wages may have to catch up with inflation. In December, headline inflation rose to 4%, exceeding economists’ expectations. This then prompted the authorities to revise their 2022 projections.
2021 was a record-breaking year for growth too, with the labour market continuing to improve and risk appetite improving, resulting in asset markets mostly rising. 2022 may be more difficult due to central banks catching up on monetary policy tightening to combat high inflation.
As a result, we can probably expect bouts of risk on and off as the market grapples with inflationary policies, potential new virus variants, and geopolitical uncertainties. High inflation and the dismantling of the Jobs Support Scheme, on the other hand, are wild cards that could erode the benefits of an improving economy and labour market, particularly for lower-income households.
Singapore Is The Place to Be
With the good news of wage growth, a robust economy, and a vibrant community, Singapore is the place to be. Find out more about the available Singapore Government schemes to improve work-life balance.
