Household Incomes In Singapore Rise But Income Gap Remains Largely Unchanged

The earnings of households across income levels grew last year, even after accounting for inflation, while the income gap between the rich and the poor remained largely unchanged from 2013.

Numbers released yesterday by the Department of Statistics (SingStat) on key household income trends last year showed that the median monthly household income from work grew to S$8,290, up 4.1 per cent after accounting for inflation. This was the highest real increase since 2011, which saw a 5.6 per cent growth from 2010.

Factoring in the household sizes, the median monthly household income from work per household member also rose by 4.7 per cent last year, after accounting for inflation.

Meanwhile, the Gini coefficient — a measure of income inequality — was 0.464 last year, compared with 0.463 in 2013. After adjusting for Government transfers, it was 0.412 last year, slightly higher than 0.409 in 2013.

SingStat said this was because the amount of Government transfers and taxes was lower last year compared with 2013, when there were more one-off payments such as one-off Medisave top-ups and special payments on top of the permanent GST voucher payments. “In the past two years, the Gini, after accounting for Government transfers and taxes, had been at its lowest level in a decade,” added SingStat.

Experts whom TODAY spoke to attributed the growth in real household income to a tighter labour market, where there could have been wage increments, given the need to retain labour.

While the experts felt the Government would be able to continue with the transfers and taxes for the lower income, given that it had been careful with such payments so far, they said it would need to look at increasing productivity levels and upgrading employers’ skills in the longer term.

OCBC economist Selena Ling felt it was encouraging to see the Gini coefficient stabilising at a relatively lower level, but said the Government would need to continue to balance the short-term wants of people with the longer-term issue of fiscal sustainability. Nonetheless, she noted that the Government had been “fairly prudent”. “Even last year’s budget, the fact that it can fund, completely upfront, S$8 billion (for the) Pioneer Generation Package tells you something about the health of the fiscal position for Singapore,” she said.

CIMB economist Song Seng Wun felt that raising household income through Government transfers was “not a sustainable model”, and said the focus would continue to be on the drive to increase productivity. “What we want to do is to (look) at income as a whole, how it can be lifted through a more broad-based rise in wages,” he added.

On the other hand, pointing to the cumulative growth in average income per household member over the past five years, UOB economist Alvin Liew noted that the lowest-income group at the 1st to 10th percentile saw a lower income growth of 17.2 per cent, compared with those at the 11th to 40th percentile.

Noting that there could be “something chronic” within that group preventing them from being able to raise their incomes at a faster pace, Mr Liew said this group needed more help.

He added that those in the middle-income groups also saw lower income growth of less than 5 per cent last year. The 41st to 50th percentile recorded a 4.8 per cent growth in income, while the 51st to 80th percentile saw an income growth of 4.6 per cent.

While this could be too broad a group to be classified as a sandwiched class, Mr Liew said these were the people who do not qualify for Government transfers and taxes, though their income levels are not growing as fast.

“The question is, how do you help these people who are probably not getting the transfers, but their incomes are not growing as fast … while you have other things that are moving against them, like elevated property prices and the growing cost of living in Singapore,” he added.



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