Real wages may grow faster in 2025 as labour productivity growth picks up

But nominal pay rises could be smaller after already slowing down in first half of 2024

- Tay Hong Yi

Singapore workers could see better real wage growth in 2025 amid an expected uptick in labour productivity growth and easing inflation, said the Monetary Authority of Singapore (MAS) on Oct 28.

But nominal pay rises, which, unlike real wages, do not take inflation into account, could be smaller after already slowing down in the first half of 2024.

While hiring is expected to remain robust, MAS cautioned in its twice-yearly macroeconomic review that some groups of workers may be having greater difficulty securing employment that matches their skills.

It highlighted retrenched professionals, managers, executives and technicians (PMETs), as well as older workers, as having lower rates of re-entry into employment than the pre-Covid-19 average.

Just 53.2 per cent of PMETs were back in work in the second quarter of 2024 within six months of being retrenched, down from the average re-entry rate of 62.6 per cent between 2015 and 2019. For workers aged 50 and above, the rate was 41.6 per cent in the second quarter of 2024, down from the 55 per cent average over the same period.

The mismatch between available jobs and skill levels or expectations of workers may also lead to the risk of workers being underemployed, MAS said.

This is happening against the backdrop of a less tight labour market with less churn, with employers more willing to retain workers while workers are more cautious about leaving.

Nonetheless, the central bank added that employers' financial conditions appear to have strengthened in recent quarters, which could lead to a pickup in job creation.

Employers' gross operating surplus growth turned around in the first half of 2024 after four consecutive quarters of negative growth in 2023, it said.