New guidelines target fairer wage growth, stronger job security, and long-term economic sustainability.
The National Wages Council (NWC) has proposed a significant pay increase for Singapore’s lower-wage workers, urging employers to raise salaries by between 5.5 and 7.5 per cent from December 2025 to November 2026. The move aims to narrow the wage gap and strengthen income growth amid global economic uncertainty.
NWC Pushes for Faster Wage Growth
The NWC announced on November 11 that employers of lower-wage workers (LWWs) should raise salaries within a 5.5 to 7.5 per cent range. Those earning up to S$2,700 (about IDR 33.75 million) monthly—representing roughly the 20th percentile of full-time employed residents—fall under this category.
Companies performing well are encouraged to grant at least S$105 to S$125 in built-in wage increases, even if that surpasses the percentage range. Meanwhile, firms facing tougher conditions may opt for the lower end of the increase range but should review salaries once business prospects recover.
NWC chairman Peter Seah highlighted that this year’s recommendations were based on “extensive tripartite discussions,” considering both local productivity challenges and global market uncertainty.
Government Co-Funding and CPF Adjustments
To support these wage increases, the Singapore Government will co-fund pay raises of at least S$100 for resident low-wage workers—covering 40 per cent in 2025 and 20 per cent in 2026—under the Progressive Wage Credit Scheme.
In addition, the Central Provident Fund (CPF) monthly salary ceiling will rise from S$7,400 to S$8,000 in January 2026, aligning with rising incomes. Employer CPF contribution rates for older workers aged 55 to 65 will also increase by 0.5 percentage point, shelping to strengthen retirement savings for this group.
Encouraging Flexible Wage Systems
The NWC urged employers to adopt the Flexible Wage System (FWS) to help maintain business resilience during downturns. The system allows companies to adjust wages quickly in response to market conditions—cutting costs rather than jobs during slow periods, while rewarding staff during recoveries.
Tan Hee Teck, president of the Singapore National Employers Federation, emphasized that wage flexibility is “not just good to have, but essential.” The council noted that over 76 per cent of employers have adopted either the annual or monthly variable components of this system, though the figure has dipped slightly from 2023.
Sectoral Transformation and Productivity Gaps
According to the Ministry of Manpower (MOM) Permanent Secretary Ng Chee Khern, domestically oriented sectors—such as food and beverage services and administrative support—continue to lag in productivity. He stressed that these industries “must press on with business transformation” to remain competitive and ensure sustainable wage growth.
NTUC president K. Thanaletchimi added that firms should fairly reward employees according to performance and productivity, noting that “sharing productivity gains motivates workers and boosts morale.”
Updated Progressive Wage Requirements
The NWC also proposed updates to the Occupational Progressive Wage (OPW) requirements for administrators and drivers, effective July 2026.
- Administrative assistants will see baseline gross wages increase from S$1,980 to S$2,170 in 2026, and to S$2,360 by 2027.
- Drivers will have new classifications with baseline wages rising from S$2,190 to S$2,370 in 2026, and to S$2,550 by 2027.
These revisions aim to align job roles with digital transformation and expand career progression opportunities for lower-wage sectors.
Training and Human Capital Investment
Despite the push for upskilling, the NWC warned of a decline in structured training participation—from 79.6 per cent in 2023 to 66.4 per cent in 2024. The council urged employers and workers to invest in digital transformation and human capital to stay competitive amid the rise of artificial intelligence and automation.
Singapore’s new wage guidelines reflect a broader commitment to equitable and sustainable income growth. For both Singaporean and Indonesian observers, the policy underscores how strategic wage adjustments, skill development, and government co-funding can build a resilient workforce—one prepared to navigate the evolving global economy.
Sources: AsiaOne (2025) , Straits Times (2025)
Keywords: Wage Growth, Lower Income Workers, Singapore Guidelines, Progressive Wage, Economic Policy, Salary Adjustment
