Employers in Singapore should lean toward raising pay and pass productivity gains on to their staff, the National Wages Council (NWC) said on Monday (Oct 19), pointing to the country's robust economic showing.

In its recommendations covering December 2026 to November 2027, the council said companies with strong results ought to reward their employees through built-in wage rises and variable payments.

Firms that have fared poorly may hold back on wage increases, the council said in a press release, with management expected to set the example.

Because productivity and business growth differ across sectors, the council said employers should be free to tailor wage increases to their own results and outlook, weighing rewards for staff against staying competitive.

To keep wages fair and competitive, employers should regularly check market wage benchmarks and adjust their wage ranges where they can, the council said.

The NWC urged every employer to adopt the flexible wage system in full, including both its annual and monthly variable parts. Such a system allows firms to trim costs instead of cutting jobs during downturns, and to move wages quickly during recoveries so they can hold on to talent, it said.

Support for lower-wage workers

The NWC said the national push to lift lower-wage workers must carry on so that every worker shares in Singapore's growth. To close the gap with the median-wage worker over this decade, their pay must rise consistently faster than the median, it said.

Employers that have done well have more room to share their gains, the council said, recommending a higher percentage band of increases and higher minimum dollar amounts.

For workers earning a gross monthly wage of up to S$2,800, employers that have performed well and have positive business prospects should grant a built-in increase at the upper end of 6 to 8 per cent of gross monthly wage, or at least S$135 to S$170, whichever is greater.

Employers that have done well but face uncertain prospects should grant an increase around the middle of that band, or at least S$135 to S$170, whichever is greater.

Employers that have not done well but remain profitable should grant an increase at the lower end of the band, or at least S$120, whichever is greater.

For the first time, the guidelines also take in firms that have not done well and are unprofitable. These should grant a built-in increase of at least S$120, the council said.

Should business prospects later improve, employers should review wages and consider further increases for their lower-wage workers, it added.

The government has accepted the council's recommendations.

The NWC's proposals for lower-wage workers deliver meaningful wage uplift for them while leaving employers flexibility based on economic and business conditions, the Ministry of Manpower (MOM) said in a press release.

Speaking at a press conference on Monday, the ministry's permanent secretary Stanley Loh said adoption of last year's guidelines was a little over 25 per cent as companies adjusted to broader coverage and higher recommendations. The adoption rate had surpassed 70 per cent at its peak, he said.

NWC chairman Hsieh Fu Hua stressed that the figure did not mean the remaining 75 per cent of employers did nothing for lower-wage workers. They did not provide wage increments in line with the recommendation, he said, which is why the new category was introduced in the hope of lifting adoption.

AI adoption and training

The NWC called on employers and workers to build up capabilities so they can thrive in an economy driven by artificial intelligence, which can lift productivity, create new sources of value and strengthen Singapore's competitiveness.

It said workers should build AI-related skills to reach new opportunities, and develop their AI literacy alongside human skills and judgment.

Employers should get their staff ready for changing job functions and back their training, while redesigning jobs and investing in their workforce using available support. They should also set aside a sufficient budget for continuous education and training at every career stage, and strengthen their human resource capabilities to support workplace transformation, the council added.

The share of employers offering structured training to staff fell from 66.4 per cent in 2024 to 64 per cent last year, while the share of employees receiving structured training also dropped, from 52.6 per cent to 48.1 per cent over the same period.

The NWC also recognises that some workers face greater employment barriers and challenges, which may in turn affect their career progression and corresponding wage growth, it said, stressing the need for inclusive employment practices.

Employers and employees should also hold structured career conversations to align career aspirations with business needs and spot reskilling or upskilling opportunities.

National Trades Union Congress president K Thanaletchimi said the labour movement backed the recommendations, but urged employers to provide protected training time so that workers can pursue training without having to choose between learning and their work duties.

Inflation concerns

At the press conference, Mr Loh said the council weighed factors including economic growth, sector growth and inflation when drafting the guidelines.

He said inflation is a bit higher but manageable, and added that extra measures such as one-off annual payments are not needed. The government has also rolled out other support to help citizens with the cost of living, he added.

Mr Hsieh said that since economic and business performance is uneven, workers are bound to be compensated unevenly.

But over the longer term, the longer goal is of course for all to be lifted, which is why the council will observe and try to address every part of the economy, he said.

He said the council will also address senior employment, though not this year.

Singapore National Employers Federation chief executive Hao Shuo said real gross monthly income rose in the first half of this year.

Over 10 years, you are seeing real wage growth. So although there are concerns over inflation, I think the outcome speaks for itself, he said.