Higher wages can push up business costs, affecting competitiveness and may cause higher inflation, warned Prime Minister Lee Hsien Loong.
In order to sustain better wages and higher living standards, productivity among workers must be raised.
Mr Lee said that raising productivity is "more important than ever in our mature economy, because it is the only way to upgrade ourselves and our lives."
In his May Day message, the prime minister also urged every worker, whether rank-and-file or Professionals, Managers, Executives and Technicians (PMETs), to continue to upgrade and master new skills.
"Raising our productivity will benefit workers, firms, and our economy as a whole. Workers can earn more in higher-quality jobs.
"Firms can prosper and expand their businesses here. Our economy can continue to thrive despite more intense global competition," said Mr Lee.
Looking ahead, Mr Lee said that Singaporeans must prepare for a more challenging economic environment, as globalisation has shortened economic cycles, and ups and downs happen much faster, with less warning.
The prime minister's message is the latest to come from employers and politicians over a highly debated suggestion on raising wages substantially.