As 2025 draws to a close, one thing is clear: wages in Singapore have continued to rise across industries, driven by tighter labour markets, evolving skills requirements, and stronger expectations around employee well-being. For business leaders, HR teams, and finance departments, these shifts aren’t just interesting statistics—they’re crucial signals of what to prepare for in 2026.
If your company hasn’t started planning for next year, now is the time. Understanding what happened in 2025 will help you build a smarter, more accurate, and more sustainable budget for 2026.
Wage Growth in 2025: A Year of Upward Pressure
Singapore saw steady wage increases in 2025, shaped by several key factors:
- Tight labour supply and competition for talent
With unemployment staying low and industries fighting for experienced workers, companies had to offer higher salaries to attract and retain staff. - Skills-first hiring and transformation needs
Digital skills, automation, and AI adoption became mainstream in 2025. Employees with skills in data, cybersecurity, engineering, or digital operations enjoyed stronger bargaining power, pushing wages up for high-demand roles. - Rising standards under the Progressive Wage Model (PWM)
More sectors came under the PWM in 2025, lifting baseline wages across cleaning, security, retail, and food services.
For businesses relying heavily on these segments, total payroll costs increased even without headcount growth. - Inflation and cost-of-living adjustments
Living costs remained a major discussion in 2025, and employers responded with incremental adjustments to keep compensation competitive.
The result: wage growth outpaced previous years, and many companies spent more on salary adjustments than initially budgeted.
What These Trends Mean for Your 2026 Budget
Here comes the essential question: Are you financially ready for 2026?
Because if 2025 was the “reset,” 2026 will be the “reality check.”
Higher payroll baselines will carry over into 2026
Any salary increments given in 2025 will form your new salary baseline. This directly affects:
- Annual increments
- Annual Wage Supplement (AWS) and bonuses
- Employer contributions (CPF, SHG Funds, etc.)
- Overtime and shift differentials
This means your 2026 payroll budget should assume higher monthly costs from day one.
More Progressive Wage Model (PWM) updates are expected
PWM will continue its multi-year adjustments in 2026, bringing:
- Minimum wage increases
- Mandatory training requirements
- Higher reporting and compliance standards
Industries such as cleaning, security, retail, and F&B must tighten their payroll planning to avoid unexpected jumps.
Demand for digital talent will push salaries further
AI and automation projects are accelerating.
Roles in tech, engineering, and digital operations are expected to see above-average increments, so budgeting conservatively may result in underestimating actual costs.
Companies will need stronger retention strategies
Turnover became more costly in 2025, and the trend will continue.
Replacing an employee in Singapore can cost 3–6 months of their salary.
Investing in:
- Better employee experience
- Learning & development
- Flexible work arrangements
- Accurate, timely payroll
…will be more important (and more cost-effective) than reactive hiring.
Why Many Singapore Businesses Struggled in 2025
A surprising number of companies ran into the same challenges last year:
- Manual payroll updates each time wages changed
Some businesses spent hours recalculating increments, CPF changes, and PWM adjustments manually. - Underestimating annual salary increases
Without forecasting tools, businesses ended up overspending, adjusting budgets mid-year. - Compliance complexity
IRAS, CPF, PWM, SHG Funds, overtime rules—all updated at different times. - Lack of visibility across multiple branches/outlets
Retail, F&B, and services companies struggled to consolidate cost reports across locations.
If you experienced any of this in 2025, it’s a sign to tighten your systems before 2026.
Preparing for 2026: It’s Time to Upgrade How You Manage Payroll
2026 will reward companies that plan early and automate smartly. With rising wages and increasing compliance complexity, technology is the strategy.
This is where HRMLabs makes a measurable difference.
Why HRMLabs is the right solution for 2026:
- Always up-to-date with local regulations
Automatic updates for CPF, IRAS, PWM, SHG, OT rules—no manual recalculations. - Scalable for any workforce size
Whether you operate a single outlet or dozens across Singapore, HRMLabs grows with you. - Affordable for SMEs and mid-sized companies
Pay only for what your business actually needs—modular, cost-efficient pricing. - Human-centric support
Real humans assisting your HR team, not chatbots or slow-response ticketing systems.
As we step into 2026, businesses with the right HR and payroll system will have a smoother, more predictable, and more compliant year.
Final Takeaway: Preparing Today Sets You Ahead Tomorrow
2025 made one thing clear: wage growth in Singapore isn’t slowing down anytime soon. Businesses that start preparing early for 2026 will avoid budget shocks, stay competitive in hiring, and maintain healthy cash flow throughout the year.
But preparation isn’t just about forecasting. It’s also about choosing the right tools. And this is where HRMLabs gives companies a real strategic edge.
You don’t need to wait for PSG grants, approvals, or long application cycles to modernise your HR and payroll. HRMLabs is already priced affordably for SMEs, making it cheaper even without the PSG. That means you save money and time right now, without the months-long wait for subsidies that may or may not fit your timeline.
By adopting the right system early, your HR team becomes ready for 2026 from day one.
