Employers urged to share gains with workers as Singapore's economy outperforms: National Wage Council

The National Wages Council, or NWC, provides national guidance on wage increases. Its recommendations help employers decide how to reward workers while considering company performance, business prospects, productivity, and competitiveness. The government accepted the latest recommendations for December 2026 to November 2027.

The council recommends different approaches for different firms. Companies that performed well should provide built-in wage increases and variable payments. Firms that did not perform well may exercise wage restraint, with management leading by example. For lower-wage workers, the NWC sets clearer percentage and minimum-dollar recommendations.

The guidelines allow flexibility because productivity and business growth differ across sectors. The NWC also urges employers to review market wage benchmarks and fully implement annual and monthly variable wages. This keeps pay responsive to changing business conditions while supporting workers during stronger economic periods.

The recommended increase for lower-wage workers is substantial but flexible. Employees earning a gross monthly wage of up to S$2,800 should generally receive a built-in increase between 6 and 8 per cent. Employers should also compare that percentage with a minimum dollar amount, giving whichever is higher.

For successful firms with positive prospects, the increase should be at the higher end: 6 to 8 per cent, or at least S$135 to S$170, whichever is higher. Firms doing well but facing uncertainty should aim around the middle. Profitable firms that have not done well should use the lower end, or at least S$120.

For the first time, unprofitable firms that did not do well are included. They should provide at least S$120. If their prospects improve, they should review pay and consider further increases.

Employers are being urged to share gains because Singapore’s economy has performed strongly, while workers contribute to productivity and business growth. The NWC says a positive-leaning approach would make sure employees benefit when companies have greater capacity to pay. It also supports fair and competitive wages.

A company that performed well and has positive prospects could provide a built-in wage increase and variable payments. This approach links rewards to business results rather than applying one identical increase to every firm. The NWC also says employers should regularly review market wage benchmarks and adjust wage ranges where possible.

The recommendation recognises that sectors have not grown evenly. Successful firms have more scope to reward workers, while weaker firms may need restraint. Sharing gains can strengthen retention, but employers must still balance employee rewards against competitiveness and future prospects.

Singapore’s flexible wage system is designed to help businesses adjust pay as conditions change. In an economic downturn, firms can reduce wage costs rather than immediately cutting jobs. This can help preserve employment while companies face weaker demand or financial pressure.

The system includes annual and monthly variable wage components. When conditions improve, employers can adjust wages more quickly and use stronger pay to retain workers. This gives firms a way to respond to a recovery without relying only on permanent salary changes. The NWC calls on all employers to implement the system fully.

The system therefore links part of compensation to business conditions. Its effectiveness depends on broad adoption and responsible use. The article reports that adoption of last year’s guidelines was slightly above 25 per cent, although it had exceeded 70 per cent at its peak.

The policy aims to narrow the wage gap between lower-wage workers and the median-wage worker over this decade. The NWC says lower-wage workers’ pay must consistently grow faster than median wages to close that gap. This makes wage growth a tool for sharing Singapore’s economic progress more broadly.

For example, the latest guidelines recommend 6 to 8 per cent increases for workers earning up to S$2,800 monthly, depending on their employer’s performance. They also set minimum dollar amounts, including at least S$120 for firms that have not done well but remain profitable, and for unprofitable firms under the new category.

The broader effort is intended to ensure every worker benefits from growth. Adoption has been uneven, so the NWC introduced coverage for unprofitable firms in hopes of raising compliance. Employers should review wages again if business prospects improve.

The NWC says artificial intelligence could raise productivity, create new sources of value, and strengthen Singapore’s competitiveness. These gains may change what workers do rather than simply remove existing tasks. Employees will need AI literacy alongside human skills and judgment to access new opportunities.

For example, an employer may need to prepare staff for changing job functions, redesign roles, and invest in training. The council asks firms to set aside enough money for continuous education across all career stages. It also wants employers to strengthen human-resource capabilities so workplace transformation is properly supported.

The current training trend is concerning. The share of employers providing structured training fell from 66.4 per cent in 2024 to 64 per cent last year. Employees receiving structured training fell from 52.6 per cent to 48.1 per cent. More training will be important as AI-driven change continues.

Higher wages can give workers more money to spend and help pay keep pace with living costs. They also increase employers’ labour costs. If productivity and business growth support the increase, firms may absorb the cost more easily. If not, companies may face pressure on prices, profits, or competitiveness. The article does not directly discuss inflation.

The NWC’s mechanism is flexibility. Strong-performing firms should share gains through built-in increases and variable payments. Weaker firms may exercise wage restraint, while the flexible wage system can help them cut costs rather than jobs. This links part of pay to business conditions and productivity.

The guidelines seek a balance rather than one universal increase. Employers should review market wage benchmarks and adjust wage ranges where possible. They must reward workers fairly while protecting competitiveness. The recommended increases therefore depend on performance, prospects, and profitability, not just economic growth alone.