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Singapore Firms Freeze Wages Amid Weakening Economic Outlook
Singapore’s economic outlook is facing headwinds, leading to cautious business sentiment and impacting wage and hiring plans across various sectors. Singaporeans may need to adjust their financial expectations and strategies in response to these developments.
Wage Freezes on the Rise
A recent survey by the Singapore Business Federation (SBF) reveals that an increasing number of Singaporean companies are planning to freeze wages in the coming year [3, 7, 9]. Approximately 41% of businesses anticipate holding wages steady, a rise from 35% in the previous year [2, 3, 7, 9]. This decision reflects growing economic uncertainty and weakening business confidence [2, 3, 7, 9].
The trend is more pronounced among Small and Medium Enterprises (SMEs), with 43% planning wage freezes, compared to 28% of larger companies [3, 7]. Conversely, only 59% of companies intend to increase salaries, a decrease from 64% in 2024 [3, 7, 9]. However, about two in three firms are still planning to increase pay for lower-wage workers [2, 9].
Weakening Business Confidence
Business satisfaction with the current economic climate has declined to 33%, down from 35% the previous year [3, 7]. More companies now expect conditions to worsen over the next 12 months [3, 7]. The overall Business Sentiment Index (BSI) has also dipped, falling 1.1 points from 56.5 in Q1 2025 to 55.4 in Q2 2025 [2, 9]. At least 35% of companies anticipate worsening conditions in the year ahead, while only 14% foresee improvement [2, 9]. This pessimism is translating into more cautious wage policies [3].
Hiring Intentions Soften
Hiring intentions among Singaporean businesses have also weakened. Only 36% of businesses expect to expand their full-time workforce over the next 12 months, down from 40% in 2024 [2, 3, 14]. The downturn is most evident in the hospitality sector, where the hiring outlook has dropped sharply from 67.4 in Q1 to 51.6 in Q2 [2, 9].
Sector-Specific Outlook
Sentiment varies across different sectors [7]. Hospitality, administrative support, and IT firms are the most pessimistic, while health, social services, and education sectors show greater optimism [7, 9]. Banking, insurance, and manufacturing firms are leading the way in salary adjustments, while real estate, construction, and civil engineering businesses are more likely to maintain wage freezes [3, 7].
Key Concerns for Businesses
Rising manpower costs remain a primary concern for Singaporean businesses [2, 7, 14]. However, the share of businesses citing it has eased to 65%, down from 75% in 2024 [7, 14]. The challenge of upskilling and reskilling staff has surged, with 47% of businesses flagging it, a sharp increase from 25% previously [2, 7, 9].
Despite easing concerns over U.S. tariffs, 59% of firms still view them negatively amid trade uncertainty and margin pressures [2, 9]. Many firms welcome the removal of the maximum employment period for work permit holders but remain concerned about rising S Pass qualifying salaries, prompting them to hire locals, raise wages, or outsource [9].
Economic Context and Forecasts
Singapore’s economy experienced a growth of 4.4% in 2024 [4, 10, 16, 22, 24]. However, the near-term economic outlook points to moderate GDP growth in 2025, projected at around 2% [4, 10]. This slowdown is attributed to global trade disruptions and uncertainties [4, 12].
Global economic growth is expected to moderate from 3.3% in 2024 to around 2.8% in 2025 [4]. The U.S. economic growth momentum is also expected to moderate from 2.8% in 2024 to around 1.8% in 2025 [4].
Impact on Singaporeans
The anticipated wage freezes and slower hiring may affect Singaporeans in several ways:
- Reduced disposable income: Wage freezes can limit the ability of Singaporeans to maintain their current living standards, especially with inflation and rising costs of living.
- Career progression: Slower hiring may reduce opportunities for career advancement and job mobility.
- Increased financial anxiety: Economic uncertainty can lead to increased stress about job security and financial stability.
Strategies for Navigating Economic Uncertainty
In light of these economic conditions, Singaporeans may want to consider the following strategies:
- Budgeting and expense tracking: Monitor expenses closely and identify areas where spending can be reduced.
- Retirement planning: Continue to contribute consistently to your retirement accounts.
- Upskilling and reskilling: Invest in courses and training programs to enhance skills and stay competitive in the job market [2, 7, 9, 24].
- Emergency fund: Build an emergency fund to cover unexpected expenses or periods of unemployment.
- Long term investment: Consider diversifying your investment portfolio.
Singapore’s Strengths and Opportunities
Despite the challenges, Singapore maintains several strengths as an investment destination [5, 6, 11, 13]:
- An open and trade-dependent economy [5, 6, 13].
- Strong government support and business-friendly policies [5, 6, 13].
- A robust free market economy [5, 6, 13].
- A stable political environment and transparent legal system [5, 6, 11].
- A well-developed infrastructure [5, 6, 11].
- Its strategic location in Southeast Asia [11].
These factors contribute to a favorable investment climate, particularly in sectors like digital innovation, pharmaceutical manufacturing, sustainable development, and cybersecurity [5, 6].
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