More than four in 10 employers also planning to freeze wages
Fewer employers in Singapore are planning to expand headcount and lift wages, indicating cautious sentiment amid lower confidence among businesses, according to a new report.
Singapore Business Federation's (SBF) latest National Business Survey revealed that only 36% of employers are planning to expand their full-time employee base in the next 12 months, down from 40% in 2024.
Just 59% of employers are planning to raise salaries in the coming year, down from 64% in 2024. Another 41% said they are planning to freeze wages, up from 35% a year ago.
"The survey findings reflect a more cautious business outlook, reinforcing the need for companies to adapt quickly to cost pressures and shifting market dynamics," said Kok Ping Soon, SBF Chief Executive Officer, in a statement.
Weaker business confidence
The cautious approach from businesses stems from lowered expectations on economic development, according to the SBF report.
The overall Business Sentiment Index, which measures business confidence, went down to 55.4 in the second quarter of 2025.
A greater proportion of employers are also expecting business conditions to worsen (35%) rather than improve (14%) over the next 12 months.
According to the report, businesses are still preparing for turbulent conditions ahead amid tariff changes from the United States.
It noted, however, that the proportion of employers who believe they are exposed to the ongoing impact of tariffs went down from 81% to 59% in June 2025.
"Initial shock from U.S. tariffs appears to be easing, with a decline in the proportion of businesses reporting negative impact from the current tariff measures," the report read.
Labour costs as key challenges
Meanwhile, the report also found that rising cost of labour remains the top manpower challenge for businesses, despite fewer employers citing it as a problem.
In 2025, 63% of businesses said rising manpower costs are a major challenge, down from 75% in 2024 and 82% in 2023.
On the other hand, the proportion of employers citing upskilling and reskilling as a manpower challenge has risen, becoming the second-biggest challenge for employers in 2025.
According to the report, 44% of employers have cited challenges in upskilling and reskilling, up by 22% from the previous year.
Upskilling challenges come in the wake of rapidly evolving workplaces, thanks to factors such as AI and other emerging technologies.
"Singapore businesses should leverage the strong public-private support and available schemes to alleviate challenges and remain competitive," Kok said.
"SBF will work alongside our ecosystem partners to help local enterprises build resilience, manage rising costs, and position themselves for long-term growth."
