Tight labour market and inflation contribute to declining wages, with hopes for recovery in 2024.
SINGAPORE – Real median income for Singaporean and Permanent Resident (PR) workers declined by 2.3% year-on-year in 2023, according to preliminary labour force data released by the Ministry of Manpower (MOM) on Thursday (Nov 30). Workers at the 20th-percentile wage level experienced an even sharper fall of 3% year-on-year.
The MOM attributed the decline to the tight labour market in 2023 and easing labour demand. Singapore’s employment rate for residents aged 15 and above dropped from a record 67.5% in 2022 to 66.2% in 2023. The number of job vacancies has been falling for five consecutive quarters, with the ratio of job vacancies to unemployed persons dipping significantly to 1.94 in June 2023.
Global Context and Outlook
Despite the downturn, Mr. Ang Boon Heng, director of MOM’s manpower research and statistics department, emphasized that Singapore still maintains one of the highest employment rates worldwide.
While MOM acknowledged the challenges of negative real income growth in 2023, it expressed optimism for 2024, citing expectations for easing inflation. “Over a longer time horizon from 2013 to 2023, real income growth remained positive, and wage dispersion narrowed between the 20th-percentile worker and the median worker,” the ministry noted.
Parliamentary Insights
Senior Minister of State for Manpower Zaqy Mohamad highlighted in Parliament on Nov 7 that real median income fell by 4.5% in the first half of 2023 compared to the same period in 2022. The decline was attributed to high inflation amid a weak economic outlook. However, Mr. Zaqy shared that with inflation projected to moderate, the situation could stabilize.
The latest data underscores the dual impact of a cooling labour market and inflationary pressures on household incomes, with policymakers hopeful for recovery in the year ahead.
