Only 47% of SMEs see growth as domestic wage bills surge

Domestic sector wage bills rose 10% in Q4 2025, as 36% of SMEs cite stiff competition.

Less than half of Singapore's small and medium-sized enterprise (SME) owners (47%) expect business conditions to improve over the next six months, whilst domestic sectors navigate a 10% increase in total wage bills.

Another 37% of respondents expect conditions to remain the same, whilst 15% anticipate a deterioration, according to an OCBC SME Index report.

Stiff market competition was cited by 36% of SME owners as the biggest issue facing their businesses in the next six months, with geopolitical uncertainties following at 20%.

Business owners from the domestically oriented sectors remain more concerned with cost pressures and manpower constraints, as the total wage bill of SMEs from the domestically oriented industries rose by 10% in the fourth quarter of 2025 (Q4 2025).

Meanwhile, optimism was stronger amongst outward-oriented sectors, on the back of sustained demand momentum in Q4 2025.

Looking back, 37% said business conditions had improved compared with three months earlier, whilst 38% reported no change and 25% said conditions had worsened.

Outward-oriented businesses reported stronger recent performance, with 40% indicating improved conditions over the past quarter, compared with 33% amongst domestically oriented sectors.

By contrast, 28% of domestically oriented SMEs said their business performance had worsened during the same period.

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