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Wages rose last year by 5.9 per cent - a seven-year high - from 4.5 per cent in 2006.
However, after adjusting for inflation, the increase was 3.8 per cent, said the Manpower Ministry's annual report on wages released yesterday.
But for the lowest-paid group of cleaners, labourers and related workers, the picture is bleak.
Their wages have remained stagnant for 10 years, unlike other groups such as managers, professionals, sales and service workers, as well as plant and machine operators.
Last year, managers - the best-paid group - earned 4.86 times more than cleaners and labourers. The gap has widened in 10 years. It was 4.13 times in 1997.
Following the service sector's buoyant growth, sales and service workers are the best-paid among lower-skilled and blue-collar groups. Their pay is double that of cleaners and labourers.
The ministry's Report On Wages In Singapore surveyed 216,270 full-time workers in 2,909 companies.
The findings show the top earners are specialised surgeons ($22,196), followed by managing directors ($15,200) and general surgeons ($13,781).
Occupations in the bottom 10 per cent include private security guards ($1,278) and hospital attendants ($1,260), while cleaners, food and drink stall assistants as well as labourers were paid around $750 to $800.
Apart from the widening wage gap, the other piece of bad news is the decline in the productivity of workers. It fell 0.9 per cent last year after experiencing slowing growth in the previous two years.
From the viewpoint of companies, this means 'labour costs are growing faster than productivity', said Mr Kwan Chee Wei, chief human resources officer of logistics and shipping company IMC Corp.
Labour analysts and economists blamed the slide on employers stepping up their hiring of cheaper foreign workers, instead of spending money on retraining staff.
'It's an easy way out to keep costs down. We see it especially in the lower-skilled segment of the workforce,' said Mr Chua Hak Bin, strategist for Deutsche Bank's private wealth management.
He said the stagnant wages of the poorest among the lower-skilled are 'unlikely to go away anytime soon'.
The wage gap is even more acute among older workers.
Managers in their 40s appear to be making top dollar. Those aged between 40 and 44 made nearly twice that of managers aged 25 to 29.
However, growing older seems to work against lower-skilled and blue-collar workers owing to the physical nature of their jobs. Their wages rose only slightly and peaked early in their 30s.
To ease the pain for low-wage workers above age 35, the Government has been giving them payouts under the Workfare Income Supplement scheme.
Companies were also urged by the National Wages Council to give a one-off inflation bonus amid rising prices. Inflation is running at a 26-year high of 6.6 per cent.
However, analysts are not optimistic that the real earnings of low-wage workers can keep up.
'At the lower end (of the job market), increments are just going to be slightly ahead of inflation,' said Mr Kwan.
He added that 'the upper end is where competition for talent will drive up salaries, especially in growth sectors like hospitality and leisure'.
Economists say the Government is now juggling the twin challenges of growing the economy while trying to improve the average Singaporean's standard of living.
'It is going to have to balance the need for foreign workers - to cope with increasing labour demand - and the resulting downward pressure on residents' wages,' said Mr Chua.
