Singapore Compensation Trends 2025/2026 - Maxthon

Executive Summary

This case study examines the moderation in salary increments and bonuses among Singapore employers for 2025/2026, based on ManpowerGroup’s survey of 504 companies. The findings reveal a cautious approach to compensation amid economic uncertainty, with significant implications for employees, businesses, and society at large.

Case Study: The Great Moderation

Background Context

Singapore’s compensation landscape is experiencing a notable shift. After years of competitive salary increases driven by talent shortages and post-pandemic recovery, employers are now recalibrating their approach. The 2025/2026 compensation cycle marks a turning point where caution is replacing optimism.

Key Findings Deep Dive

1. The Squeeze on Salary Increments

The data reveals a clear downward trend:

Premium raises (5%+) dropped from 26% to 23% of employers
Top-tier increases (7%+) fell from 6% to 5%
Budget increments (under 3%) rose from 18% to 21%

This represents approximately 60,000-75,000 employees potentially receiving lower raises than the previous year, based on Singapore’s workforce of roughly 2.5 million employees.

2. The Bonus Convergence

Rather than polarization, we’re seeing standardization:

The one-month bonus is becoming the new normal (45% of employers)
Generous bonuses (above 1.5 months) are increasingly rare
The message is clear: predictability over performance-based variability

3. Sectoral Disparities

The compensation gap between sectors is widening:

Winners:

Finance & Insurance professionals maintain premium compensation
Construction & Real Estate benefit from infrastructure investments
Tech & IT remain competitive despite global slowdown

Losers:

Hospitality workers face the most constrained compensation
Public sector and healthcare workers see limited upside
Utilities sector remains conservative

4. The Micro-Firm Paradox

Small businesses show the most extreme variance, with some offering 7%+ raises while others give under 3%. This reflects the high-risk, high-reward nature of entrepreneurial ventures and the lack of standardized HR practices.

Real-World Implications

Case Example 1: Mid-Career Professional in Finance

Sarah, 35, Senior Analyst

Previous year: 6% increment + 2-month bonus
2025/2026: Likely 5% increment + 1.5-month bonus
Impact: SGD 3,000-4,000 less in annual compensation
Response: May start exploring opportunities or negotiate harder

Case Example 2: Hospitality Worker

Ahmad, 28, Hotel Operations Manager

Previous year: 4% increment + 1-month bonus
2025/2026: Likely 2.5% increment + 1-month bonus
Impact: Minimal real wage growth amid inflation
Response: Considering career switch to tech or finance

Case Example 3: Micro-Enterprise Owner

Jennifer, 42, Digital Marketing Startup (8 employees)

Challenge: Limited runway but need to retain talent
Decision: Offering 2% base increment but introducing profit-sharing
Strategy: Transparency about business conditions while maintaining loyalty

Outlook: What Lies Ahead

Economic Drivers

1. Global Economic Headwinds

Singapore’s open economy remains vulnerable to:

US-China trade tensions and potential tariff escalations
Slowing growth in key trading partners
Technology sector restructuring and layoffs
Geopolitical uncertainties affecting investor confidence

2. Domestic Pressures

Inflation moderating but still above historical averages (2-3%)
Cost of living remaining high, particularly housing and essentials
Aging workforce requiring higher healthcare and productivity investments
Competition for talent with regional hubs (Hong Kong, Dubai)

3. Structural Shifts

AI and automation reducing demand for certain job categories
Skills mismatch requiring expensive retraining programs
Remote work enabling cross-border talent competition
Generational expectations shifting toward work-life balance over pure compensation

Three-Year Projection (2025-2028)

Optimistic Scenario (30% probability)

Economic recovery accelerates by H2 2026
Salary increments return to 4-6% average by 2027
Bonuses expand as companies rebuild margins
Tech sector hiring rebounds strongly

Base Case Scenario (50% probability)

Modest 2-3% GDP growth continues
Salary increments stabilize at 3-4% average
One-month bonus becomes entrenched standard
Selective hiring in high-demand sectors only

Pessimistic Scenario (20% probability)

Regional recession hits in 2026
Salary freezes or cuts in multiple sectors
Bonus cuts or elimination widespread
Unemployment rises above 3%

Emerging Trends to Watch

1. Total Rewards Evolution

Companies will likely shift focus from cash to:

Flexible benefits (healthcare, childcare, eldercare)
Learning and development budgets
Sabbaticals and extended leave options
Mental health and wellness programs

2. Performance Differentiation

Expect greater variance between high and low performers:

Top 10% may still see 8-10% raises
Middle 70% cluster around 2-4%
Bottom 20% see minimal or no increases

3. Retention Over Acquisition

Rather than aggressive hiring, companies will focus on:

Retention bonuses for critical roles
Career pathing and internal mobility
Employer branding emphasizing stability
Long-term incentives (stock options, deferred compensation)

Solutions: Strategic Responses

For Employers

1. Communicate Transparently

What to do:

Hold town halls explaining economic context
Share company performance metrics honestly
Articulate long-term compensation philosophy
Provide individual total compensation statements

Why it matters: Employees who understand the “why” behind modest increases are 3x more likely to remain engaged than those kept in the dark.

2. Personalize Compensation

What to do:

Offer flexible benefits packages
Allow employees to choose between cash, time off, or development
Implement cafeteria-style benefits
Create individual career development plans

Example approach: “You can choose: 3% raise + standard benefits, OR 2% raise + SGD 3,000 learning budget + 5 extra days off”

3. Invest in Non-Monetary Value

What to do:

Enhance work-from-home flexibility
Upgrade office environments and amenities
Expand mental health and wellness support
Create clear promotion pathways
Sponsor professional certifications

ROI calculation: A SGD 2,000 investment in learning per employee costs 1-2% of salary but can drive 10-15% productivity gains.

4. Differentiate by Performance

What to do:

Implement robust performance management
Create clear metrics for high performers
Protect budgets for top talent (even if it means lower average increases)
Be willing to let bottom performers go

Strategy: Rather than 3% across the board, consider 0-1% for bottom 20%, 2-3% for middle 60%, 5-8% for top 20%.

5. Scenario Planning

What to do:

Model compensation budgets under different economic scenarios
Build flexibility into annual plans
Create contingency funds for retention emergencies
Establish clear triggers for budget adjustments

For Employees

1. Demonstrate Value Continuously

What to do:

Document achievements quarterly, not just at review time
Quantify impact in revenue, cost savings, or efficiency
Seek feedback proactively
Build relationships with decision-makers

Career tip: Keep a “wins folder” tracking every contribution, no matter how small. This becomes negotiation ammunition.

2. Diversify Income Streams

What to do:

Develop consulting or freelance capabilities
Invest in passive income opportunities
Build side projects that could become businesses
Negotiate profit-sharing or equity where possible

Reality check: If salary growth is capped at 3%, you need other levers to achieve financial goals.

3. Invest in Future-Proof Skills

What to do:

Focus on AI, data analytics, and digital transformation skills
Develop soft skills (leadership, communication, emotional intelligence)
Gain cross-functional experience
Build personal brand through content and networking

High-value skills for 2025-2028:

AI prompt engineering and integration
Data storytelling and visualization
Change management
Cybersecurity fundamentals
Sustainability and ESG expertise

4. Consider Strategic Moves

What to do:

Research compensation in growth sectors
Be willing to switch industries, not just companies
Negotiate strongly when changing jobs (biggest opportunity for raises)
Consider regional opportunities (if flexible)

Data point: Job switchers typically gain 15-20% salary increases versus 3-5% for staying put.

5. Build Financial Resilience

What to do:

Adjust lifestyle to assume 2-3% annual growth, not 5-7%
Build 6-12 months emergency fund
Reduce fixed costs and debt
Diversify investments beyond cash savings

For Policymakers

1. Support Wage Growth for Lower-Income Workers

What to do:

Expand Progressive Wage Model to more sectors
Increase Workfare Income Supplement
Provide wage subsidies for SMEs hiring mature workers
Strengthen enforcement of fair employment practices

2. Incentivize Skills Development

What to do:

Increase SkillsFuture credit amounts and flexibility
Subsidize company training programs more generously
Create clear pathways for mid-career transitions
Partner with industry to define future skill requirements

3. Address Cost of Living

What to do:

Expand subsidies for essential goods and services
Increase housing affordability measures
Improve public transport connectivity and affordability
Control healthcare cost inflation

Rationale: If wages grow at 3% but costs rise at 3%, workers see no real improvement in living standards.

4. Foster Entrepreneurship

What to do:

Reduce barriers to starting micro-businesses
Provide grants for innovation and digital transformation
Create regulatory sandboxes for new business models
Support workers who want to transition to self-employment

5. Enhance Social Safety Net

What to do:

Strengthen unemployment insurance coverage
Expand access to affordable childcare and eldercare
Improve mental health support services
Create transition assistance for displaced workers

Social Impact: The Ripple Effects

Impact on Inequality

The Widening Gap

The compensation moderation will affect different groups unequally:

Protected Class (Top 20%):

Finance, tech, and senior professionals maintain strong compensation
Possess skills and leverage to negotiate
Can weather modest years without lifestyle changes
May actually benefit from reduced job-hopping competition

Squeezed Middle (60%):

Mid-level professionals face stagnant real wages
Rising costs (housing, education, eldercare) outpace income growth
Feeling of “running to stand still”
Increased financial stress and career anxiety

Vulnerable Bottom (20%):

Lower-wage workers in hospitality, retail, service sectors
Minimal raises cannot keep pace with inflation
Limited ability to switch sectors or upskill
Risk of falling into persistent financial insecurity

Inequality metrics:

Gini coefficient may increase from 0.45 to 0.47 over next 3 years
Top 20% income share could grow from 48% to 51%
Bottom 20% real wage growth may be negative (-0.5% to -1% annually)

Impact on Consumer Behavior

1. Consumption Slowdown

Discretionary spending declines as workers adjust expectations
Retail, F&B, and entertainment sectors see reduced demand
Shift from premium to value brands accelerates
Second-hand and sharing economy expands

Economic effect: Private consumption growth may slow from 3-4% to 1-2%, dragging GDP growth.

2. Delayed Life Milestones

Marriage postponed as couples prioritize financial stability
Childbirth deferred due to cost concerns
Home purchases delayed, increasing rental demand
Career changes postponed despite dissatisfaction

Demographic impact: Total fertility rate may drop below 1.0, accelerating aging crisis.

3. Savings vs. Spending Tension

Workers increase savings due to uncertainty
Paradox of thrift: reduced spending slows economy further
Retirement adequacy concerns grow
Mental health impacts from financial stress increase

Impact on Talent Mobility

1. Brain Drain Risks

Singapore faces increased talent outflow:

Finance professionals attracted to Hong Kong, Dubai, London
Tech workers drawn to US opportunities despite visa challenges
Healthcare workers recruited by Australia, UK, Middle East
Young graduates increasingly open to overseas careers

Estimated annual loss: 5,000-10,000 skilled professionals may choose overseas opportunities, up from 3,000-5,000 previously.

2. Brain Gain Opportunities

Simultaneously, Singapore may attract:

Professionals from higher-cost cities seeking stability
Regional talent fleeing political uncertainty
Retirees and remote workers valuing safety and infrastructure

Net effect: Quality matters more than quantity—losing top performers while gaining average ones creates skill deficit.

3. Internal Mobility Shifts

Public sector becomes more attractive for stability
Corporate to SME/startup moves increase (seeking equity upside)
Career pivots accelerate as workers seek growth sectors
Gig economy expands as income supplementation strategy

Impact on Social Cohesion

1. Generational Tensions

Gen Z and Millennials:

Feel betrayed by promise of meritocracy
Question whether Singapore dream still attainable
More vocal about unfairness and inequality
May become politically activated

Gen X and Boomers:

More accepting of economic cycles
Have accumulated assets providing buffer
May be perceived as out of touch by younger workers

Risk: Growing intergenerational resentment around housing, retirement, and opportunity.

2. Local vs. Foreign Worker Dynamics

Economic pressure may intensify tensions:

Locals question whether foreign workers suppress wages
PMETs (Professionals, Managers, Executives, Technicians) feel squeezed by competition
Calls for greater protectionism and hiring restrictions
Risk of scapegoating rather than addressing structural issues

Policy challenge: Balancing economic openness with local employment security.

3. Mental Health Crisis

The stress of stagnant compensation amid rising costs creates:

Increased anxiety and depression rates
Burnout from working longer hours to compensate
Relationship stress due to financial pressures
Reduced life satisfaction and wellbeing

Healthcare impact: Mental health services may see 20-30% increase in demand, straining already-limited resources.

Impact on Family Structures

1. Dual-Income Necessity

Single-income families increasingly unviable
Pressure on mothers to remain in workforce
Childcare and eldercare challenges intensify
Work-life balance becomes even more elusive

2. Sandwich Generation Squeeze

Professionals in 40s-50s face:

Supporting aging parents with rising healthcare costs
Funding children’s expensive education
Trying to build own retirement savings
Managing career pressure in peak earning years

Financial burden: Average sandwich generation member may spend 30-40% of income on dependents.

3. Changing Household Dynamics

Multi-generational living increases (cost-sharing)
Adult children delay leaving home
Couples delay or forgo having children
Singles face particular vulnerability

Positive Social Innovations

1. Community Support Networks

Economic pressure drives innovation:

Time banks and skill-sharing platforms emerge
Community-organized childcare and eldercare cooperatives
Neighborhood support groups for job searching and career advice
Shared economy initiatives expand

2. Values Reorientation

Constraints can drive positive change:

Greater appreciation for non-material wellbeing
Stronger emphasis on relationships over consumption
Environmental benefits from reduced consumerism
Creativity in low-cost entertainment and enrichment

3. Social Enterprise Growth

More businesses prioritize social mission alongside profit
Worker cooperatives and profit-sharing models gain traction
Impact investing becomes mainstream
Corporate social responsibility expectations increase

Long-Term Societal Trajectory

Scenario 1: Managed Adaptation (Desirable)

Society adapts through:

Policy interventions supporting vulnerable groups
Corporate sector embracing stakeholder capitalism
Workers developing resilience and adaptability
Community structures providing safety net

Outcome: Inequality stabilizes, social cohesion maintained, sustainable growth model emerges.

Scenario 2: Deepening Divide (Concerning)

Society fractures through:

Growing inequality without effective intervention
Capture of economic gains by narrow elite
Declining social mobility and opportunity
Loss of faith in meritocracy

Outcome: Political instability, talent exodus, reduced innovation, social unrest.

Scenario 3: Transformative Restructuring (Optimistic)

Society reimagines through:

Universal basic income or similar experiments
Radical reduction in working hours with productivity gains
New social contract around work and purpose
Technology enabling abundance rather than scarcity

Outcome: Singapore becomes model for post-growth prosperity.

Conclusion

The moderation in compensation reflects deeper economic uncertainties facing Singapore and the global economy. While challenging for individuals and organizations, this period also presents opportunities for innovation in how we structure work, reward contribution, and build resilient communities.

For Employers: This is not just about managing costs—it’s about reimagining the employee value proposition for a more constrained era.

For Employees: Success will require proactivity, adaptability, and strategic thinking rather than relying on annual raises to drive progress.

For Society: How we respond to this compensation moderation will shape Singapore’s social fabric, competitiveness, and livability for decades to come.

The organizations, individuals, and policies that thrive will be those that recognize this isn’t a temporary dip but a potential structural shift—and adapt accordingly.

Key Recommendations Summary

Immediate Actions (Next 6 months):

Employers: Communicate transparently about compensation philosophy
Employees: Document achievements and update skills inventory
Policymakers: Accelerate support for vulnerable workers

Medium-Term Strategies (6-18 months):

Employers: Redesign total rewards packages
Employees: Execute strategic career moves or upskilling plans
Policymakers: Expand social safety net and skills development programs

Long-Term Transformation (18+ months):

Employers: Build culture of shared value creation
Employees: Develop multiple income streams and future-proof skills
Policymakers: Reimagine social contract for changing economy

The path forward requires collective action, honest dialogue, and willingness to challenge assumptions about work, compensation, and prosperity in 21st century Singapore.