Singapore employers redirect pay towards scarce skills

Broad salary increases are giving way to targeted rewards as companies manage costs whilst directing more workforce spending towards AI, reskilling, and specialist capabilities.

Singapore employers are becoming more selective about compensation, directing wage budgets towards critical skills and top performers rather than broad-based salary increases.

Kirsty Poltock, Singapore Country Manager at Robert Walters, said employers are balancing cost pressures and cost-of-living concerns against the need to retain talent, particularly where skilled workers remain difficult to find.

“Organisations are practising careful wage management this year, but they are trying to re-emphasise on areas like benefits, cultural enhancements, or rotations internally to retain their talent,” Poltock said.

Ravi Nippani, Partner and Regional Industries and Solutions Leader at Marsh, said employers are also becoming more targeted in allocating compensation, with 82% of organisations planning to maintain 2025 headcount levels.

“The budgets are being channelled selectively towards market adjustment, internal pay equity corrections, retention of key talent,” Nippani said.

Artificial intelligence is also changing workforce spending. Nippani said 64% of Singapore C-suite leaders expect redesigning work around AI and automation to deliver the greatest people-related return, whilst 70% prioritise improving managers’ ability to lead workforces comprising people and AI agents.

Employers are consequently investing in AI governance and reskilling, adopting skills-based pay for AI literacy and digital fluency, and prioritising internal mobility over external hiring. Nippani said 63% of employers identify skills gaps as a major barrier to transformation.

Pay growth is therefore becoming concentrated in scarce roles. Overall Singapore salary increases are expected at around 4%, whilst AI and machine-learning engineers could see 15%–20% annual growth. Cybersecurity specialists can command premiums of 20%–40%.

ESG and sustainability specialists can attract 10%–20% premiums, whilst digitally skilled financial-services roles including fintech, AI risk analytics, and regulatory technology can command 15%–25% premiums.