More than half of employers in Singapore do not plan to increase headcount and intend to freeze or moderate wages in 2027 despite a slight improvement in their business outlook for the year, according to a survey by the Singapore National Employers Federation (SNEF).
The survey was conducted between Jun and Aug 2026. It gathered responses from over 300 companies employing close to 160,000 workers across 20 industries, representing a diverse mix of small, medium-sized and large enterprises.
The proportion of employers expecting uncertain business prospects in 2027 fell to 63% from 72% in 2026, and slightly more companies expect to perform well in 2026 (65%) than in 2025 (63%).
This year’s survey also found that a slightly higher number of companies anticipate performing well in 2026 (65%), compared with 2025’s 63%.
“Nonetheless, the business outlook remains highly uneven,” SNEF added.
While some outward-oriented sectors benefit from stronger external and technology-driven demand, many domestically oriented sectors such as Retail Trade and Food and Beverage Services are grappling with weaker consumer demand and rising operating costs.
“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,” said SNEF.
“Small and medium-sized employers were more likely to report uncertain business prospects and poorer business performance, and were also more likely to implement wage moderation or wage freezes in 2027.”
Companies are proceeding with caution
SNEF highlighted the “measured approach” taken by companies to hiring and wages.
More than half (54%) of employers surveyed said that they do not plan to increase their headcount next year, down from 58% in the 2025 survey.
Nonetheless, 40% of companies plan to hire in 2027, up from the 33% that had a similar agenda for 2026. The percentage of respondents in this year’s survey planning to reduce headcount (6%) was also lower than last year’s (8%).
As for wages, 51% of employers surveyed said that they plan to carry out wage moderation or wage freezes in 2027, up from 48% in 2026.
The remaining 49% are planning to implement wage increases, down by 2% from the year before.
“This indicates continued caution in the wage outlook among employers, particularly among small and medium-sized employers,” noted SNEF.
For companies that employ lower-wage workers, the majority (86%) remain committed to giving built-in wage increases in 2027, down from nearly all (96%) in 2026.
The remaining 14% of respondents this year are planning a wage freeze for lower-wage workers, while none intend to cut wages for this group in 2027.
Rising manpower cost remains the biggest obstacle
Rising manpower cost remains the top manpower challenge for businesses in Singapore, with 83% in 2026 flagging this concern, compared to 79% in 2025.
More companies (30%), also reported worries over the rising cost of upskilling and reskilling their workforce as they prepare for evolving business and technology, up from 23% the year before.
However, labour-market tightness has eased from a year ago, SNEF added.
Over the 12 months to May 2027, fewer companies reported difficulties attracting and retaining professionals, managers, executives and technicians (41%, down from 47%), as well as a shortage of local high-skilled talent (35%, down from 42%).
Attracting suitable talent remains the top human resource priority for 59% of employers, lower than 61% in the previous period.
Employers are also prioritising the exploration, adoption and enhancement of artificial intelligence (48%), as well as upskilling and reskilling their workforce (46%).
SNEF Council vice-president Kuah Boon Wee said: “The survey findings suggest that while labour-market pressures have eased somewhat, most employers continue to face significant cost pressures and uncertainties in business outlook.”
Still, he noted it was “encouraging” that employers continue investing in workforce capabilities, job redesign and AI adoption to boost productivity and competitiveness, adding that it was also “heartening” that most remain committed to supporting lower-wage workers.
“To ensure that this is sustainable in the long term, we need to continue helping employers, especially SMEs, access practical support to transform their operations and workforce for greater productivity uplift.”
- Read other articles we’ve written on Singapore’s current affairs here.
- Read other articles we’ve written on Singaporean businesses here.
Featured Image Credit: Shadow_of_light/ depositphotos
