High inflation rate meant decline in wages in 2023
Singapore is forecast to see a rebound in real wages for workers in 2024 after experiencing a 1.5% decline in 2023, according to a report from ECA International, which analyzed current and projected salary increases in over 70 locations worldwide.
In 2023, nominal salaries in Singapore increased by 4%, but the high inflation rate of 5.5% resulted in a 1.5% decline in real wages.
However, the outlook for 2024 is optimistic, with an expected 0.5% increase in real wages.
“Singapore was expected to see a return to real salary growth in 2023,” said Mark Harrison, General Manager, Asia for ECA International, highlighted the unexpected challenges faced in 2023.
“However, as a relatively high rate of inflation persisted, workers in Singapore are worse off this year in real terms than they were in 2022. Looking forward to next year, it is expected that Singapore will see a return to real salary growth.”
Asia highlights for salary increases
The Asia-Pacific (APAC) region outperformed the rest of the world in real salary increases in 2023, with nine out of the 12 locations with the highest real salary increases worldwide, said ECA International.
The average forecasted rate of increase in real terms in the APAC region for 2024 is 2.2%, more than double the global average of 1%.
Hong Kong, in particular, experienced a 4.0% nominal salary increase in 2023, with a projected increase at the same level in 2024. The real forecasted salary increase in Hong Kong, accounting for inflation, is expected to be 1.7% in 2024, a slight decrease from 2023.
“As we look ahead, it's promising to see that the nominal salary increase in Hong Kong has rebounded to pre-COVID levels in 2023, as expected. Although real salary growth in Hong Kong in 2023 is in the middle of APAC regional ranking, squarely at the median percentage, this growth remains substantially higher than the 1.5% fall in salaries in real terms observed in Singapore,” said Harrison.
Salary growth in Malaysia and other ASEAN countries varied, with Malaysia experiencing a 2.1% real salary increase in 2023, projected to grow by 2.3% in 2024. In Vietnam, a leading country in ASEAN, a 3.6% real salary growth in 2023 is expected to continue in 2024, said ECA International.
Conversely, Laos saw a significant decrease in real salaries in 2023 due to a high inflation rate of 28.1%. Although salaries are forecasted to continue decreasing in real terms in 2024, the rate of decline is expected to improve to 3.0%.
In Greater China, including mainland China and Taiwan, nominal salary increases in 2023 were substantial, with a 5.3% increase in China and the lowest inflation rate in the region at 0.7%. The real salary increase in China stood at 4.6% in 2023, ranking it third-highest globally and second-highest in the region. The forecast for 2024 anticipates a continued real salary increase of 4.1%, maintaining its position among the top three globally and regionally, said ECA International.
Japan, however, faces challenges, with the lowest nominal salary increase in the region at 2.8% in 2023. The forecast for 2024 is modest at 3.0%, placing Japan at the bottom of the regional ranking. Despite a history of very low inflation rates, Japan experienced a rise to 3.2% in 2023, expected to fall slightly to 2.9% in 2024. Workers in Japan will see little improvement in real incomes, with a decrease of 0.4% in 2023 slightly offset by a 0.1% real salary growth in 2024.
