More employers in Singapore are preparing to freeze salaries or moderate wage increases in 2027, as rising manpower costs and continued uncertainty over business conditions prompt companies to take a more cautious approach to workforce spending.
According to a survey commissioned by the Singapore National Employers Federation (SNEF), 51% of 320 employers surveyed plan to freeze salaries or moderate wage increases in 2027, up from 48% in 2026. The proportion planning to provide salary increments has correspondingly fallen to 49%, from 51% this year.
SNEF said the findings point to continued caution over the wage outlook, particularly among small and medium-sized employers.
Despite the more cautious approach, most employers of lower-wage workers remain committed to built-in salary increases. Some 86% said they plan to provide such increases in 2027, although this is down from 96% in 2026. The remaining 14% expect to freeze wages.
Rising manpower costs remain key concern
Manpower costs continue to weigh heavily on employers. Some 83% identified rising manpower costs as a top business challenge in 2026, compared with 79% in 2025.
The cost of preparing employees for changing business and technology requirements is also becoming a bigger concern. Around 30% of employers cited rising costs of upskilling and reskilling as a challenge, up from 23% in 2025.
Hiring plans remain cautious. More than half of employers, or 54%, do not intend to increase headcount in 2026, while 40% plan to expand their workforce. The remaining 6% expect to reduce headcount, an improvement from 8% in 2025.
While labour market pressures have eased somewhat, attracting suitable talent remains the leading HR priority, cited by 59% of employers.
Employers turn to AI to manage productivity pressures
Against this backdrop, AI is emerging as a more prominent part of employers' workforce strategies.
Nearly half of respondents, or 48%, said they plan to prioritise the exploration, adoption or enhancement of AI at work in 2027. This marks a significant increase from 39% in 2026.
SNEF council vice-president Kuah Boon Wee said employers' continued investment in workforce capabilities, job redesign and AI adoption was encouraging, particularly as companies seek to strengthen productivity and competitiveness.
The survey found that employers are also facing a changing talent environment. Fewer companies reported difficulties attracting and retaining professionals, managers, executives and technicians, as well as concerns over shortages of local high-skilled talent over the next 12 months.
Business outlook improves but remains uneven
Employers' expectations for 2027 have improved modestly, although uncertainty remains widespread. Some 63% expect uncertain business prospects next year, down from 72% in 2026.
SNEF said the improvement is uneven across the economy. Outward-oriented industries are benefiting from stronger external and technology-driven demand, while domestically focused sectors such as retail and food and beverage services continue to face weaker consumer demand and higher operating costs.
The federation described this as an increasingly "K-shaped" economy, in which sectors employing more lower-wage workers and relying heavily on domestic demand face greater business and manpower cost pressures despite an improving overall economic environment.
The annual survey was conducted between June and August 2026 and covered 320 companies employing nearly 160,000 workers across 20 industries.