Latest figures from the Manpower Ministry's third-quarter labour market report show that workers were worse off compared to a year ago.
Real earnings - pay minus the effect of inflation - went down 0.9 per cent between July and September, slipping for the second quarter in a row.
But it is better than in the previous quarter when real earnings declined by 4 per cent as inflation hit a 26-year-high of 7.5 per cent.
In the third quarter, inflation came down to 6.6 per cent.
The only sector to escape the slip in real earnings was construction, where real wages inched up by 0.9 per cent compared to a year ago.
Other sectors such as services and manufacturing were not so lucky.
Financial services, administrative and support services and transport and storage were the hardest hit.
After years of having healthy increases, real wages in the financial services sector slipped 2.1 per cent in the third quarter. They also went down by the same amount in the second quarter.
But even as inflation continues to slide, analysts warn that workers' pockets might be hit even harder in the coming year.
The threat this time is not inflation, but wage cuts.
Standard Chartered economist Alvin Liew expects pay packets to shrink due to lower bonuses or pay cuts as companies cut costs, although declining inflation will temper the effects.
'The question mark is how much lower inflation will help offset it,' he said.
JEREMY AU YONG