Salary increments are a crucial aspect of employee compensation, reflecting economic conditions, company performance, and labour market trends. In Singapore, salary adjustments are influenced by various factors, including government regulations, industry benchmarks, and global economic conditions.

Projected Salary Increment in Singapore

According to recent HR reports and expert insights, salary increments for Singapore employees in 2025 are expected to range between 2% to 5%. This projection is based on economic recovery, inflation rates, and company performance. Industries such as technology, healthcare, and finance are likely to experience higher salary growth due to sustained demand and talent shortages.

The latest report from The Straits Times indicates that businesses are taking a cautious yet optimistic approach towards salary adjustments, balancing cost management with employee retention strategies.

Regulations Governing Salary Increment in Singapore

Unlike some countries where salary increments are mandated by law, Singapore follows a market-driven approach. However, companies must comply with Employment Act regulations, ensuring fair and timely salary adjustments. Key aspects include:

• Minimum salary benchmarks for foreign employees under the Employment Pass (EP) and S Pass schemes.
• Annual wage supplement (AWS) as a non-mandatory year-end bonus for employees.
• Collective agreements for unionised employees, which may include salary increment clauses.
• Fair employment practices, ensuring non-discriminatory pay adjustments.

Factors Affecting Salary Increment

Several factors influence salary adjustments in Singapore:

1. Economic Growth – Strong GDP growth encourages higher salary increments.
2. Inflation Rates – Rising living costs may lead to higher adjustments to maintain purchasing power.
3. Industry Trends – High-growth sectors experience better salary prospects.
4. Company Performance – Profitability and revenue impact increment decisions.
5. Individual Performance – Performance-based increments remain a key determinant.

Average Salary Increment by Industry

According to Mercer’s latest Total Remuneration Survey (TRS), the findings, derived from over 1,100 organisations spanning sectors such as technology, life sciences, manufacturing, and education, provide an estimation of Singapore’s employment salary increment. 

• Real estate & banking: up to 4.5%
• Aerospace, construction, & energy anticipate : 3.9% - 4.2%
•  Healthcare & education: 3.6% - 4%

How Employers Can Manage Salary Increment Effectively

For businesses, managing salary increments strategically ensures both employee satisfaction and financial sustainability. Employers can consider:

• Performance-based salary adjustments – Implementing a structured performance review system ensures that salary increments are directly tied to individual contributions. This fosters a culture of meritocracy, motivating employees to excel in their roles and contribute to business growth.
• Market benchmarking – Conducting regular salary benchmarking exercises helps businesses stay competitive. Employers should compare salary trends within their industry and geographic region to attract and retain top talent while maintaining payroll affordability.
• Non-monetary benefits – In cases where budget constraints limit salary increments, offering non-monetary benefits can help maintain employee satisfaction. Flexible work arrangements, professional development opportunities, wellness programmes, and enhanced medical coverage can serve as valuable alternatives to financial raises.
• Transparent communication – Employees value transparency when it comes to salary increments. Employers should communicate the rationale behind increment decisions, performance expectations, and future salary growth opportunities to build trust and engagement.
• Seamless salary increment processing – Ensuring compliance and efficiency in salary adjustments is crucial for businesses. Using GutsyHQ’s Payroll Service can help employers automate salary changes, maintain accurate payroll records, and comply with statutory requirements, reducing administrative workload and errors.

Ensure Accurate and Compliant Salary Increment

While there are no mandatory laws governing salary increments, businesses must navigate market trends and fair employment practices to stay competitive. A well-structured payroll system helps ensure seamless and accurate salary adjustments, reducing administrative complexity. With GutsyHQ’s Payroll Service, businesses can efficiently manage salary changes while staying compliant with regulations and industry standards.