As employees adjust to our back-to-office routines, employers are also adapting to the changing labour market. The recent spate of layoffs from various major tech companies including Shopee and Carousell may have also cast a gloom over our employment outlook. However, according to the advance release of the Labour Force In Singapore 2022, most of our labour force indicators have returned to or are performing better than pre-COVID levels. Notably, despite the rising inflation, real median income increased by 2.1% in 2022.
Here’s what employers need to know about the current labour market conditions and how Singapore’s resident labour market is recovering from the pandemic.
Read Also: Singapore’s Unemployment Falls To A 6-Year Low But Is The Labour Market As Rosy As It Seems?
Real Median Income Has Increased By 2.1% Even As Inflation Rises
One good news for employees is the fact that their wage increases are not eroded by the rapidly increasing inflation in 2022.
For full-time employed residents (Singapore Citizens and Permanent Residents), the nominal median income increased by 8.3% from $4,680 in 2021 to $5,070 in 2022. This is a faster rate of increase compared last year’s 3.2%. Even after accounting for inflation, the median income increase of 2.1% is higher than 0.9% in 2021.
While income growth has managed to keep pace (and stay slightly ahead of inflation, this 2.1% real median income increase is still lower than the pre-pandemic years. During this period when inflation was lower, the real median income growth was 3.8% p.a. between 2014 to 2019. Thus, the most important employment indicator to employees isn’t fully out of the woods yet. For employers, the effect of inflation may make the heftier wage increases less impactful for your employees.
Lower Wage Workers Have The Highest Wage Increase
Encouragingly, the gap between lower wage workers (indicated by the 20th percentile of income) and median incomes has narrowed.
In 2022, real income at the 20th percent (lower wage workers) increased at 4.8% compared to 2.1% for real median income. This increase is higher than the 4.4% in 2021 and the 4.4% p.a. increase during the pre-pandemic years of 2014 to 2019.
This is likely due to the Progressive Wage Model (PWM) measures that supported the uplifting of lower-wage workers. In 2022, workers in the lift and escalator maintenance sector and retail sector were covered under the PWM while the PWM was extended for the cleaning, security and landscape sectors.
As the PWM is extended to the food services sector, waste management sector and occupations (administrative assistants and drivers) in 2023, we can expect that real wage increases will continue to be sustained for lower wage workers.
Read Also: Progressive Wage Model: How Much Will Singapore Employers Have To Pay Their Workers
As for lower wage workers not covered by the PWM, the National Wage Council recommends that:
- Employers that have done well and have good business prospects should provide their lower wage workers with a built-in wage increase at the upper bound of 5.5 to 7.5% of gross monthly wage, or a wage increase of at least $80 to $100, whichever is higher.
- Employers that have done well but face uncertain prospects should provide their lower wage workers with a built-in wage increase at the lower to middle bound of 5.5 to 7.5% of gross monthly wage, or a wage increase of at least $80 to $100, whichever is higher.
Employers can also tap on the progressive wage credit scheme for government co-funding assistance in funding these wage increases for lower wage workers.
Read Also: Progressive Wage Credit Scheme (PWCS): What Businesses Need To Know
Labour Market Remains Tight As Employment Rate Increases In 2022
The employment rate for residents in Singapore in 2022 is 67.5%. This high employment rate is the third highest amongst OECD countries.
For workers in the key working ages of 25 to 64 years old, the employment rate is 82.7%. Labour force participation rate also remains high at 70% and is still higher than pre-pandemic times.
Most workers are also in permanent employment. Resident employees on fixed-term contracts and in casual or on-call work has also declined back to pre-pandemic levels, at 7.4% and 3.1% respectively.
Unemployment has also fallen to pre-pandemic levels. The resident unemployment rate has fallen to 4.4% for non-PMETs and 2.6% for PMETs. The long-term unemployment rate has also declined to 0.7% for non-PMETs and 0.5% for PMETs.
For employers looking to hire, this may mean thinking about more ways to attract workers (from their existing jobs) with better benefits and compensation.
Part-Timers Are Also In Demand While There Are Fewer Potential Job Entrants
As for part-timers, time-related underemployment rate has declined to 3.% in 2022 and is back to pre-pandemic levels. This means that most part-timers who are willing and available to work additional hours are able to work those additional hours.
For employers, this also means that it may be harder to find part-timers to take on additional manpower roles or who are willing to work longer hours.
Read Also: Part-Time Employment Regulations: 10 Things To Know When Hiring A Part-Timer
Employers may also seek to expand their hiring pool by hiring people outside the labour force. In 2022, there are 1.05 million residents outside of the labour force, higher than the 1.00 million in 2021 but still lower than 1.09 million in the pre-pandemic years of 2019 and 2018. Of these numbers, there are potential job entrants as they are either actively looking for work or want to and are available to work.
The number of people who are actively looking for work but are not currently available for work has also declined from 14,500 (1.4% of residents outside of labour force) in 2021 to 12,300 (1.2%) in 2022. The number of people who are not actively looking for work but desire and are available to work has also declined from 23,900 (2.4%) in 2021 to 22,900 (2.2%) in 2022.
Overall, employers may find it challenging to hire in 2022 as the labour market makes a sustained recovery to pre-pandemic levels. Instead of focusing on compensation (which is being worn away by inflation), it may be worth looking into other benefits to make employment more attractive
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