Real wages grew 3.2% in 2024 compared with 0.4% in 2023 as inflation eased: MOM
SINGAPORE: Wages in Singapore grew at a faster pace last year compared with 2023 as inflation eased, the Ministry of Manpower (MOM) said in a report on Wednesday (May 28).
Real wages rose 3.2 per cent in 2024, up from 0.4 per cent in the year before. Inflation stood at 2.4 per cent last year compared with 4.8 per cent in 2023.
The rise in real wages for 2024 is the highest since 2019, with the pace of growth largely on the decline since 2018.
Nominal total wages, which does not take inflation into account, increased 5.6 per cent, slightly higher than the 5.2 per cent recorded in 2023.
But MOM warned that downside risks from geopolitical tensions and global trade uncertainties are weighing on business sentiment.
Its forward-looking survey conducted in the first quarter of this year indicated a decline in the share of firms planning to increase wages.
'These trends point to a potential moderation in nominal wage growth in 2025 compared to 2024, especially in trade-reliant sectors such as manufacturing and wholesale trade,' MOM said.
MORE COMPANIES RAISED WAGES IN 2024
Nearly 80 per cent of companies gave their employees wage increases last year, up from 65.6 per cent in 2023, as most establishments were profitable.
'A majority of establishments gave the increases due to past organisational performance rather than forward-looking confidence,' MOM said.
Among companies that raised salaries in 2024, the average wage increase dipped to 6.6 per cent compared with 7.2 per cent in 2023.
For the 3.2 per cent of companies that cut wages in 2024, the size of the decrease was 3.6 per cent. In 2023, 6.5 per cent of companies cut wages by 6.2 per cent.
MOM said profitability of companies varied across industries, with real estate services, construction and wholesale trade having fewer profitable establishments, and manufacturing seeing an increase in profitable businesses.
But manufacturing and wholesale trade may have fewer profitable companies in the coming year due to global trade tensions, the ministry said.
SECTORS WITH THE BIGGEST WAGE INCREASES
Financial services, as well as the community, social and personal services sectors, saw an above-average increase in nominal wage growth last year.
The biggest increase was in administrative and support services at 8.7 per cent, largely due to the Progressive Wage Model.
Food and beverage services saw below-average increases in wages, as with wholesale trade and manufacturing, where wage increases are expected to moderate in the coming year due to geopolitical and trade tensions.
Across Singapore, the wages of rank-and-file and junior management employees grew 5.8 per cent and 5.6 per cent respectively, slightly higher than the 5.1 per cent reported for senior management.
MOM said this partly reflects efforts to offset cost-of-living pressures.
Government policies such as increases in the local qualifying salary and the implementation of the Progressive Wage Model helped to lift wages of lower-income employees, the ministry added.
'The increase in wages of lower-income employees did not have a significant impact on cost competitiveness, as they only form a very small component of total business costs,' MOM said.
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CNA
an hour ago
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Retailers in Singapore seek lower costs and bigger market in Johor Bahru, but face challenges
JOHOR BAHRU: Tucked in the corner of a suburban mall 15km from the Johor-Singapore Causeway, Japanese hair salon company QB House's first outlet in Johor Bahru easily attracts quizzical looks from most passers-by. The small salon on the first floor of Aeon Tebrau Mall, with its fluted wooden panelling at the entrance and neat booths with bright overhead lighting, exudes a clean and minimalist design. One of QB House's first customers when the store opened on May 13 was Singaporean Jerry Ng, who decided to have an unplanned haircut after walking past the store. 'I usually go to the Malay barber near where I stay (in Singapore), but I decided to try something new,' said Ng. When met at the store recently, Osamu Matsumuto, chief operating officer and director of the chain's parent company QB Net Holdings, told CNA that the outlet is the company's first foray into Johor Bahru and it is eyeing around 10 branches in the city in the short term. He added that QB House faces market saturation in Singapore, where it already has 30 outlets, and is looking to expand across the Causeway to tap Johor's lower costs. 'Singapore is a bit small and there's too much competition,' said Matsumoto. 'I have strong confidence (in our expansion plans into Johor) because we have been planning for this for many years, and we believe that now (is the right time) because the living standards are higher and the expectations of quality service is there,' he added. QB House is one of an increasing number of Singapore retailers who are eyeing expanding or moving their outlets into Johor Bahru, where the cost of operations is lower and the appetite for higher quality retail standards is increasing. However, many of these companies are facing roadblocks in their plans. Challenges include finding skilled labour, facing bureaucratic red tape as well as the fear that their outlets are located in malls that ultimately fail due to low footfall. President of the Singapore Retail Association Ernie Koh told CNA: 'There is an (outflow) of retail away from Singapore because of the higher costs of operating and the stronger Singapore dollar vis-a-vis many regional currencies, so many are opening front-end stores in Malaysia, Thailand and Japan. 'More are setting up operations in Johor Bahru and yes, this can be challenging for different reasons. But overall, it (makes sense) because the reliability of brands from Singapore command a premium in Malaysia,' he added. Many retailers CNA spoke to are also buoyed by how the Johor-Singapore Special Economic Zone (SEZ) could potentially increase the demand for high-end products and services. Yet, they noted that many of the corporate incentives for the SEZ are targeted at the manufacturing and pharmaceutical industries, and that more can be done to also boost retail. WHY MOVE TO JB? Koh said that while there are currently no statistics on the number of Singapore-based retailers moving into Johor Bahru, SRA is working with a third-party firm to study the trends closely. However, he stressed that the significant interest can be seen anecdotally from the 27 retail company representatives and three trade industry leaders retailers who joined the association for a business exploration trip in May to learn first-hand procedures and challenges in moving their business across the Causeway. Moreover, Koh noted that there have been numerous queries from its members to move both its front-end retail stores as well as back-end logistics facilities to Johor Bahru. Koh said that this is inevitable given the push factors in Singapore, such as high costs of rental and labour, and the pull factors in Johor Bahru - including the upcoming Johor-Singapore Rapid Transit System (RTS) Link which is set to increase the city's accessibility to shoppers from Singapore. He added that this is especially so for the service-oriented retailers like hair salons, nail salons, dentists and optometrists. 'With the RTS Link coming in 2026, I always like to say 'Empty hands go, empty hands come back' meaning Singaporeans will increasingly travel across to JB for services relating to their hair, eyes, face, teeth, so they can travel over and take the train back without carrying too many things,' said Koh. Joshua Koh, president of the Singapore Furniture Industries Council (SFIC), told CNA that Singapore retailers are losing business to competitors from China and Johor due to costs. For instance, because of high rental costs, Singapore retailers have to actively manage their offerings to maximise the rental yield. This is different in Johor where lower rentals mean retailers have much larger showrooms and a wider variety of products 'at significantly lower prices'. 'We are concerned that the opening of the RTS will further add on to this trend of consumers going overseas for their furniture purchases as travel in and out of Johor will be much more convenient,' he added. 'Unless there are more cost effective measures to bring costs down, the only way to level the playing field is for Singapore retailers to set up shop in Johor.' Bedding company Epitex told CNA that it plans to expand its market into Johor Bahru because it is targeting Singaporean visitors or Malaysians who work in Singapore but live in Johor Bahru. Epitex's retail and operations manager Tan Shea Hao told CNA that the chain has 24 outlets in Singapore and that the competition is 'quite packed already' so it plans to open outlets in Johor Bahru. Tan noted that its outlet in Woodlands, near Johor, is its best performing one. So the company is looking to open stores across the Causeway and price the goods at slightly levels lower than in Singapore. 'We have two outlets in Malaysia (in the Klang Valley) but we are spending more to open more shops in the different states, especially in Johor,' said Tan. Meanwhile, QB House's Matsumoto said that the main target customer base for its upcoming Johor stores are locals. But he acknowledged that Singaporeans may also patronise these outlets given that the prices are slightly lower than in Singapore. A haircut for men at QB House's Aeon Tebrau Outlet costs RM32 (S$9.72) while in Singapore, the same service is priced at S$14. 'Our focus is on servicing local Johoreans but of course, we welcome Singaporeans as well, especially since many of them are familiar with our products,' said Matsumoto. 'From our estimates, 30 per cent of the shoppers in Johor Bahru malls are Singaporeans,' he added. SALARIES MUST BE COMPETITIVE While there is impetus and interest from Singapore retailers to set up shop in Johor Bahru, they face a variety of obstacles. QB House cited how it has faced challenges hiring qualified hairstylists given that many of the skilled workers from Johor Bahru prefer to ply their trade in Singapore for higher salary. 'It has been quite challenging because the talented stylists prefer to go to Singapore, we've been trying to recruit for two months already,' said Matsumoto. 'We have a few candidates but hopefully with this first store, more people here will recognise us and apply,' he added. A hiring ad outside the store stated that it is ready to offer stylists a salary of between RM3,000 and RM5,000, but Matsumoto acknowledged that the firm may have to increase this to be competitive in the Johor market. 'Maybe we'll have to pay more than that, the figure is still negotiable,' he said. Epitex's Tan told CNA that finding skilled manpower to front its retail stores in Singapore and Malaysia has been the company's 'main problem' given that the industry has a high 'turnover rate'. He anticipates that it will be the same for their Johor Bahru stores as well, but is optimistic that the company will be able to offer competitive salary packages given that these outlets are expected to be more profitable than elsewhere in Malaysia. 'I don't think it is a problem for us to actually pay more because Epitex is looking for workers with good quality and also salesmanship. If they are able to explain the products well to our customer with a lot of professionalism, I don't think salary will be an issue,' said Tan. Beyond frontline and service staff, SRA's Ernie Koh acknowledged that Johor Bahru has a talent brain drain especially for personnel in middle management. He added that in terms of hiring foreign workers, Malaysia also has a quota system and firms need to apply with the Human Resources Ministry before they can do so. Malaysia has a foreign worker quota set at 2.5 million people in total, and the services sector of which retail is part of, has a fixed ceiling at 15 per cent of this total. Hence, Koh said that companies looking to set up shop in Johor may have to deploy one or two of their middle management staff from Singapore, while juggling the difficulty of hiring lower-level workers in Malaysia, he said. 'But it can be managed.' He added that some of his member companies are also concerned with bureaucracies and red tape - additional administrative lag which may delay the opening of stores, and that expectations need to be managed. 'Hopefully our more mature member retailers with experience can help the other members,' said Koh, who cited companies like Mothercare and FJ Benjamin as those who have experience expanding operations from Singapore into Johor Bahru. 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SRA's Ernie Koh, who is also Joshua Koh's uncle, cautioned that retailers must be discerning over the location of their outlets in Johor Bahru and not merely be tempted when mall operators dangle cheap leases. 'There are well-managed malls and not so well-managed malls. We just have to be mindful that you just don't go for the price,' he said. SHOULD SEZ INCENTIVES ALSO INCLUDE RETAILERS? For now, Singapore retailers are encouraged by how the JS-SEZ could lead to more higher net worth expatriates being based in Johor Bahru, and this could boost the retail scene. However, some are also expressing hope that the financial incentives for the SEZ could be extended to Singapore retailers too, given that many of the requirements outlined by Malaysia's investment arm Malaysia Investment Development Authority (MIDA) seem to be tailored for industries like manufacturing, artificial intelligence and pharmaceutical. 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QB House's Matsumoto told CNA that the JS-SEZ was one reason why it decided to expand into Johor as it expects 'an increase in population'. While he noted that the firm is unlikely to qualify for any tax incentives stipulated by MIDA, Matsumoto was hopeful that this is something both the Malaysia and Johor governments can consider. 'With more tax incentives and support, I believe Johor will be able to attract more high-end retail brands to come over and open their flagship stores,' he said. SFIC's Joshua Koh shared similar sentiments, highlighting how corporate tax subsidies for retailers would have a multiplier effect for Johor because it would provide jobs for locals and trigger a more vibrant retail scene. 'Some funding for consultancy fees may help companies make the shift quicker,' he said. 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International Business Times
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Malaysia Set to Enforce VEP for Singapore-Registered Vehicles from July 1
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