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SINGAPORE: Wages in Singapore are expected to continue on a downward trend for 2009, despite steady figures for 2008.
A report on wages by the Ministry of Manpower (MOM) revealed on Tuesday that wages and bonuses in the private sector rose by 4.2 per cent in 2008, down from 5.9 per cent in 2007.
Basic wages in the private sector were broadly unchanged, increasing 4.4 per cent, compared to 4.3 per cent the year before. But workers took home slightly less in bonuses, averaging 2.31 months.
Observers attributed these healthy numbers to the fact that Singapore's economy only dipped in the last quarter.
David Cohen, director of Asian Economic Forecasting, Action Economics, said: "The economy certainly deteriorated at the very end of last year, along with the world economy. We're still feeling the impact in 2009.
"Last year, the average was a little better than the end of the year. But this year, the average will be pulled down because we started the year well below."
The picture is expected to be less rosy this year. With businesses scaling back in the face of the global downturn, wages are expected to suffer and growth is unlikely.
Song Seng Wun, CEO and regional economist, Singapore Research, CIMB-GK Research, said: "We have seen businesses cut back on hiring. We have seen the starting pay of new hires significantly reduced, compared to last year. I wouldn't be surprised if we see a drop in the average wage growth, perhaps of 4 to 5 per cent."
In fact, the MOM report said two in five respondents foresee a need to cut wages in 2009 if conditions worsen.
Experts said given how the labour market tends to lag the economy, it will take at least six to nine months, after a period of sustained GDP growth, for firms to start hiring and for wage rates to recover.
- CNA/yb/so
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