Meanwhile, moderating labour demand in the first half of 2024, compared with 2023, pushed down nominal wage growth, which does not account for inflation, to 4.1 per cent in the second quarter of 2024, from an “unexpectedly high” 6.4 per cent in the previous quarter.
MAS said the percentage of sectors with nominal wage growth exceeding pre-Covid-19 averages has fallen steadily from its peak of 97.7 per cent in the second quarter of 2023 to 56.2 per cent for the same quarter in 2024.
“Growth in nominal average monthly earnings should continue to moderate in the quarters ahead, reflecting in part the high base effects from large bonuses paid in Q1 this year.”
Still, wage growth could be firmer in sectors with high job vacancies such as health and social services, as well as those covered by the progressive wage model (PWM), such as food and beverage, retail trade, and administrative and support services.
The PWM is a wage ladder tied to skill and productivity improvements currently in place for lower-wage workers in seven sectors and two occupations, with wage floors at each rung that are increased according to a pre-determined schedule.
MAS also said labour productivity growth is expected to recover discernibly in 2024 and pick up further in 2025, which will be led by cyclical improvements in the trade-related cluster, which includes industries such as manufacturing.
Output per worker in the services sectors could also improve as firms are able to use more of their capacity and make capital-intensive investments such as into automation.
“Overall, improved productivity growth alongside easing nominal wage growth should help bring down overall unit labour cost growth, while helping to secure sustainable real wage gains for workers,” MAS said.
The easing of inflation is set to provide more headroom for real wage
