From 5.5% to 7.5%: National Wage Council recommends pay raise for lower-wage workers

Employers of lower-wage workers should give salary increases between 5.5 and 7.5 per cent, said the National Wages Council (NWC).

At a press conference on Tuesday (Nov 11), the NWC released new wage guidelines that will cover the period from Dec 1, 2025, to Nov 30, 2026, and are applicable to all employees in unionised and non-unionised firms and in both public and private sectors. 

"This year's guidelines involved extensive discussions amongst tripartite partners," said NWC chairman Peter Seah, who added that the significant uncertainties facing the global economy were also taken into consideration.

"To narrow the wage gap between LWWs (lower-wage workers) and the median wage worker over this decade, wages of LWWs must consistently grow faster than the median wage," said the council in its annual guidelines on pay and employment issues.

It suggests that employers who have done well should provide their lower-wage workers with a built-in wage increase at the higher end of the stipulated percentage range, or a hike of at least $105 to $125, whichever is higher.

As for employers who have not done well, the council recommended providing their workers with a built-in wage increase at the lower end of the recommended percentage range, but that they should consider further wage increases if business prospects improve.

NWC defines lower-wage workers as those who earn up to $2,700 in gross monthly wages, which corresponds approximately to the 20th percentile wage level of full-time employed residents in 2024.

The council also recommended that employers provide higher percentage wage increases for workers who are earning comparatively lower wages.

The proposed wage increases for lower-wage workers account for the current economic outlook and historical median income growth, said the NWC.

According to the Ministry of Manpower (MOM), 26.2 per cent of firms adopted the NWC-recommended quantum of wage increase for their lower-wage workers in 2024. 

In addition, 60 per cent of firms gave wage increases of any amount to lower-wage workers. 

Wage increases for these workers will also be co-funded by the Government in accordance to the enhanced Progressive Wage Credit Scheme announced during Budget 2025.

For 2025 and 2026, Government will co-fund wage increases of at least $100 for resident low-wage workers by 40 per cent and 20 per cent respectively. 

MOM also said in a press release on Tuesday that it accepts the wage guidelines, and that it will continue to work with tripartite partners to champion fair, inclusive and sustainable wage growth for our workers, as recommended by the NWC.

Flexible Wage System encouraged

The NWC also advised employers to adopt the flexible wage system (FWS), so that they can maintain wage flexibility during adverse business conditions to sustain  businesses by cutting costs rather than jobs.

At the same time, the FWS allows for quick adjustments of wages during an upturn.

"Wage flexibility is not just a 'good to have', it's essential," said Tan Hee Teck, president of the Singapore National Employers Federation.

The council also recommended that employers who have done well should reward their employees with built-in wage increases and variable payments, such as bonuses or one-off payments.

Conversely, employers who have not done well may exercise wage restraint, said the NWC, who added that management should lead by example.

The council also noted that the CPF monthly salary ceiling will be increased from $7,400 to $8,000 from Jan 1, 2026, to keep pace with rising salaries. 

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dana.leong@asiaone.com