More Singapore firms plan to freeze or moderate wages and boost AI focus in 2027: SNEF

SINGAPORE – More employers in Singapore are planning to freeze salaries or give smaller wage increases in 2027 compared with 2026, as rising manpower costs and continued uncertainty over the business outlook push companies to be more cautious.

According to a new survey commissioned by the Singapore National Employers Federation (SNEF), just over half, or 51 per cent, of the 320 employers polled are planning to freeze salaries or moderate wages in 2027, up from 48 per cent in 2026.

Less than half, or 49 per cent, are planning to give salary increments in 2027, down from 51 per cent in 2026.

“This indicates continued caution in wage outlook among employers, particularly among small and medium-sized employers,” said the federation in a press statement on Sept 3.

The survey also found that most bosses (86 per cent) employing lower-wage workers remain committed to giving built-in salary increases in 2027, although the proportion has declined compared with 96 per cent in 2026. The remaining 14 per cent are planning a salary freeze.

In 2026, more than half of the employers (54 per cent) are not planning to increase their headcount, while two in five companies (40 per cent) plan to increase theirs.

The remaining 6 per cent of employers are planning to reduce their headcount, a smaller figure than 2025’s 8 per cent.

Similar to 2025, most employers (83 per cent) cited rising manpower costs as the top challenge in 2026, up from 79 per cent.

More companies (30 per cent) also reported concerns about the rising cost of upskilling and reskilling their workforce as they prepare for evolving business and technology needs, versus 23 per cent in 2025.

At the same time, survey results indicated that more bosses (48 per cent) are looking to prioritise exploration, adoption and enhancement of artificial intelligence at work in 2027, up from 39 per cent in 2026.

SNEF council vice-president Kuah Boon Wee said it is encouraging to note that many employers are continuing to invest in workforce capabilities, job redesign and AI adoption to strengthen productivity and competitiveness.

“Nevertheless, labour market tightness has eased compared with a year ago as fewer companies reported difficulties in attracting and retaining professionals, managers, executives and technicians, and a shortage of local high-skilled talent in the next 12 months,” said SNEF.

Although competition is less acute than it was a year ago, noted the federation, attracting suitable talent remains the top human resources priority (59 per cent) for employers.

SNEF said the business outlook has improved modestly compared with 2026. Fewer employers (63 per cent) expect uncertain business prospects in 2027, down from 72 per cent in 2026.

However, the business outlook remains highly uneven. While some outward-oriented sectors benefit from stronger external and technology-driven demand, domestically oriented sectors such as retail trade and food and beverage services are grappling with weaker consumer demand and rising operating costs, added SNEF.

“This divergence underscores the increasingly K-shaped nature of Singapore’s economy, where sectors employing a larger share of lower-wage workers and relying more heavily on local demand face greater business and manpower cost pressures, despite improvements in the overall economy.”

The annual survey was conducted between June and August 2026. It polled 320 companies employing close to 160,000 workers across 20 industries.