According to the Monetary Authority of Singapore (MAS), wages are likely to be harder hit than employment amid the COVID-19 outbreak, although workers in the retail trade, food and beverage, and recreation sectors are most vulnerable to layoffs.

Labour demand will decline significantly across most sectors of the economy as overall activity falls, and employment will be most affected in industries that have been halted as a result of the coronavirus pandemic, said the central bank in its latest macroeconomic review.

Travel-related and consumer-facing service industries such as accommodation and retail trade, as well as both air and land transport, have been most affected by the pandemic.

Employment in these industries, which collectively employ close to one-fifth of Singapore's workforce, was already seeing weak growth prior to the outbreak, MAS noted.

Across the economy, firms are likely to reduce labour costs via a combination of wage and headcount reductions as revenues shrink, it said.

Some companies could also ask employees to take pay cuts, and bonuses could also be reduced in some sectors, leading to a decline in overall remuneration, it added.

MAS said that should government support be insufficient to offset business losses, firms are likely to first turn to shorter working hours and pay reductions for employees, before turning to retrench staff.

But overall, the sudden shock to the Singapore economy - forecast to contract by between one percent and four percent - is still likely to cause an increase in retrenchments and overall unemployment.

The MAS noted that wage cuts are likely to occur swiftly and sharply in the financial services as well as transportation and storage industries, where pay is highly responsive to changes in business cycle conditions, pointing out that transportation and storage activity is expected to be most heavily affected by virus containment measures.

The accommodation and food services industry is expected to see significant monthly wage declines because of a fall in working hours.

The high variable components in pay for the financial services, as well as the community, social and personal (CSP) services industries, will also contribute to overall wage falls in Singapore for the year.

But the higher demand for healthcare workers and increased bonuses from the Government to the healthcare sector should provide some support to wages in the CSP sector, MAS said.