In the preliminary findings from the Ministry of Manpower (MOM) released on November 30, 2023, Singapore’s real median income fell by 2.3% this year, primarily due to high inflation diminishing nominal wage growth. The report indicates that real wages for workers at the 20th percentile decreased by 3% year-on-year when adjusted for inflation, although this decline lessened to 2.1% after considering government transfers like the Workfare Income Supplement.

Despite this setback, real income growth for the decade from 2013 to 2023 remains positive, with an average annual increase of 2% for real median incomes and 2.6% for those at the 20th percentile.

The MOM report, which encompasses data collected in June and pertains to Singaporeans and permanent residents, suggests that real income growth is expected to remain negative for the remainder of the year. However, a potential improvement is anticipated in 2024 as inflation levels ease, contingent upon various factors such as the tightness of the labor market and overall economic performance.

Some sectors may experience “above-average” nominal wage growth, particularly in industries with higher productivity and wages, such as financial and professional services. Ang Boon Heng, MOM’s director for manpower research and statistics, emphasized the correlation between job vacancy data and wage growth in these sectors.

Looking ahead, economists project that real income growth will likely turn positive in 2024, albeit modestly, ranging between 0% to 1%. While inflation is expected to moderate, it will still remain elevated compared to historical norms. For workers at the 20th percentile, targeted government transfers are predicted to enhance real income growth closer to 2% to 3% next year.

The labor market in Singapore remains tight, yet the weaker economic outlook has tempered improvements in the short term. The employment rate for residents aged 15 and above decreased to 66.2%, down from last year’s historical high of 67.5%. Ang noted that it is unrealistic to expect the employment rate to keep climbing towards 100%.

Structural challenges, particularly an aging population, continue to exert downward pressure on employment rates. Consequently, MOM’s strategy focuses on the quality of employment, ensuring that individuals can secure better-paying jobs and addressing the needs of specific demographics, such as women aged 45 to 49 who have exited the workforce for caregiving responsibilities.

Unemployment rates remain low, with non-professional workers experiencing a decline in the unemployment rate from 4.4% to 3.6%, while PMET (Professionals, Managers, Executives, and Technicians) workers saw a decrease from 2.6% to 2.4%. Long-term unemployment rates also fell for both groups, indicating ongoing stability in the labor market.

Additionally, the incidence of discouraged workers—those who refrain from job hunting due to perceived futility—remained low and stable at 0.4%. The resident time-related underemployment rate hit a decade-low of 2.3%, reflecting increased availability of desired work hours for part-time workers compared to the previous year. The proportion of workers in permanent positions rose to 90.5%, matching levels last observed in 2016.