After a pandemic-induced hiccup in 2020, salaries in Singapore have rebounded in 2021 and the trend is expected to continue next year as well.
By official statistics, the median monthly wage including CPF contributions increased by 3.2 per cent to S$4,680 in 2021 (data is reported for the middle of the year, that’s why we already have figures for 2021).
While the government itself does not publish future projections, the latest independent report 2021 Salary Increase and Turnover Study by insurance giant AON projects that salaries should increase by another 3.8 per cent in 2022. This would take the median monthly wage north of S$4,850 next year and, if the trend continues, beyond S$5,000 in 2023.
This is up from little over S$4,500 last year, S$4,000 in 2016 and just S$3,000 in 2010.
Basic wages outpace total wages
While incomes performed well over the previous decade, there are some noticeable — even if minor — shifts in how Singaporeans are being paid.
The period between 2015 and 2020 has shown a stronger pace than the preceding five years (when post-crisis inflation ate away the gains in 2011 and 2012, pushing real wage growth into negative territory) and we can expect an inverse situation in the coming years — i.e. post-Covid inflation is likely to eat away some of the gains.
That said, there’s also a shift between basic and total wages, which include bonuses.
As you can see in the chart below, the annual bonus quantum went down from a high of 2.32 months of basic wages to just 1.79 during the pandemic year of 2020, when companies were cutting their costs. But even before Covid-19, they dropped below two months, to 1.94 in 2019.
And while the overall growth for the period was comparable — 3.1 vs. 3.2 per cent (marked in green above) — basic wages have grown slightly faster, suggesting that more employers prefer predictability that a fixed salary gives in controlling costs for the year (particularly in volatile times).
It also offers stability to employees — though a nice, big bonus at the end of the year is always nice.
S$6,000 by 2027 and S$7,000 by 2030?
You may be wondering what the trajectory may be for the future, given the currently unpredictable times and the pandemic dragging us behind.
Well, in a high inflation scenario, nominal salary growth may be impacted, pushing them up at a faster rate — like it happened after the financial crisis a decade ago, when monthly wages increased on an annualised rate of five per cent.
This would push the median salary beyond S$6,000 by 2027 and S$7,000 by 2030 — though, of course, prices of goods would increase more quickly as well.
A more realistic, medium average inflation scenario — like the one we’ve experienced over the past 10 years — would reduce this to about S$6,500 by the end of the decade, with an average price increase comparable to what you’ve witnessed since 2010.
Thus, comparing how well off you and your family were in 2010 versus today could be the best, moderate benchmark for what to expect by 2030.
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Featured Image Credit: Singapore Guide
