After the worst recession on record in 2020, Singapore’s economy rebounded strongly in 2021, growing by 7.6%. Despite the need to manage COVID-19 safe management measures and supply chain disruptions, businesses and employees benefited in 2021.
To learn more about how employees were paid in 2021, we reviewed MOM’s recently released report on 2021 pay practices. Here are 5 things we learned.
#1 Over 75% of businesses were profitable in 2021
More than 75% of companies said they were profitable during the year. This is a welcome improvement from 2020, when around 63% of businesses in Singapore were profitable.
In fact, the number of profitable companies in 2021 was also higher than in 2019 and 2018 – when no COVID-19 held them back.
However, if we look at the statistics from 2010 until just before COVID-19 hit, we can see a general downward trend for companies reporting profits.
Also read: Singapore employers are hiring. But where exactly are these job opportunities?
#2 Employee nominal wages increased by 3.9%
Thanks to more companies reporting profits in 2021, employees were rewarded with nominal wage growth of 3.9% over the year. That was far better than the 1.2% nominal wage growth employees achieved in 2020.
Nominal wage growth in 2021 was also close to pre-pandemic wage growth figures – 3.9% in 2019, 4.6% in 2018 and 3.8% in 2017.
6 out of 10 companies granted salary increases in 2021, which is still far from the pre-pandemic figures. Nonetheless, this is encouraging, especially when combined with the fact that fewer companies imposed pay cuts in 2021, even compared to 2019.
#3 The real wage increased by 1.6% more modestly
Despite much better growth in nominal wages for employees, real wages rose only 1.6% in 2021. That’s not far off the 1.4% rise in 2020. According to the MOM report , this can be attributed to rising prices.
Real wage growth after COVID-19 paints a different story than before COVID-19. Real wages increased between 5.4% and 3.3% in the five years to 2020 – from 2015 to 2019.
The report does not talk about 2022. However, given the inflationary pressures we face, there is a very real possibility that real wages will be further suppressed in 2022.
Also Read: 5 takeaways from Prime Minister Lee Hsien Loong’s May Day 2022 speech: Preparing for challenges in a post-pandemic world
#4 All sectors paid higher wages in 2021
Those who have followed the news will notice that some sectors have handled COVID-19 and the general downturn better than others. These include the information and communications and financial services sectors. Other sectors, such as retail, accommodation, transport and food services, have generally been the worst off.
Despite this, all sectors were able to pay higher wages in 2021.
#5 Larger companies paid higher salaries in 2021
What was also interesting about the report is that larger companies were more likely to pay higher salaries in 2021. Companies with 10 to 24 employees saw their total salary growth increase by 2.9%, while firms with more employees generally experienced higher total wage growth.
Also read: 4 things we learned about employees in Singapore from the 2021 Labor Market Report
Total salaries increased in 2021, but will Singapore employees continue to benefit in 2022?
In general, employees saw their wages increase in 2021. This shouldn’t be the most surprising thing as the economy rebounded strongly in 2021, and other possible reasons include possible reinstatement of salary cuts or increases. salary after a salary freeze in 2020.
Singapore is also experiencing a shortage of employees. With a record number of job vacancies reported in 2021. This actually meant that there were more than 2 jobs available for every unemployed person in Singapore. The tight labor market certainly played a role in the increase in wages in 2021.
However, as we have already seen in one of the points above, real wages may not be growing as rapidly. In 2021, real wages only increased by 1.6%. Real wages could be compressed further in 2022 due to inflation spikes in various sectors.
Inflation in 2022 will not only impact employee wages, but could also decrease business profitability. Additionally, rising geopolitical tensions and rising interest rates may also have an impact on slowing earnings.
All of this would impact the ability of companies to continue paying a higher wage. On the employee side, a spike in inflation will also reduce wages.
Also Read: Chicken Prices Will Rise: 4 Types of Businesses Hit by Export Restrictions
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