Real median monthly income higher but bottom 10% see real average income slip

Neo Chai Chin | 21 Feb, 2013 12:00 PM

SINGAPORE - Nine in 10 Singaporean households with at least one working member saw increases in income last year, after taking into account inflation, even though the income gap continued to widen, a government report released yesterday showed.

Real median monthly income from work rose 2.7 per cent to S$7,570 last year.

Per household member, the increase was 1.9 per cent in real terms.

At the two ends of the income spectrum, however, the bottom 10 per cent saw real average earnings - which accounts for inflation - from work per household member slipping by 1.2 per cent, while the top 10 per cent of households experienced a 5.1-per-cent increase per household member.

The income groups in between had average real monthly household income increases of 1 to 2.3 per cent from work per household member last year.

The Key Household Income Trends 2012 report released by the Department of Statistics noted the real income decline for the lowest tier last year, but added that when adjusted for inflation that excludes rentals from owner-occupied accommodation, which have no impact on cash expenditures, their real earnings actually rose 0.8 per cent.

Over a longer time horizon of five years from 2007 to 2012, this group's real incomes went up by 1.1 per cent on an annualised basis.

"It is important to recognise that not all households are consistently in the same decile group from one year to the next," the report added.

A household member may be temporarily unemployed and find work in the subsequent year, for instance.

The report, derived from surveys done on 30,000 households headed by either Singaporeans or permanent residents, also found that the Gini coefficient - an indicator of income inequality - rose from 0.473 in 2011 to 0.478 last year.

After government transfers and taxes, which have a redistributive effect, the Gini coefficient last year was 0.459, higher than 2011's 0.448.

Experts told TODAY that Singapore is not the only country with increasing income disparity, and that retraining of workers and raising productivity are key to helping the lower-income group.

Income increases usually arise from better technology and higher productivity, which tend to favour the higher-income group, said economist Tan Khay Boon, senior lecturer at SIM Global Education. The lower-income may be unable to capitalise on technological changes due to "insufficient education and training", and face challenges of competition from foreign labour and replacement by capital, he added.

"The restriction of foreign labour quota will in some ways create more job opportunities with higher income for the local workers who hold the same skills," Dr Tan said.

Increasing Government transfers and raising taxes of the higher-income are also options, but raising incomes at the lower end and facilitating skills upgrading and productivity are probably preferred approaches, said National University of Singapore sociologist Tan Ern Ser.

Asked why the increase in Gini coefficient from 2011 to 2012 after accounting for Government transfers and taxes was greater than before transfers and taxes were taken into account, UOB senior economist Alvin Liew said it could be due to less transfers last year, compared to 2011.

On average, resident households (including unemployed ones) received S$1,340 per member through various Government schemes last year, down from S$1,660 in 2011, according to the 2012 and 2011 Household Income Trends reports. Households without working persons living in one- to two-room HDB flats received the most - over S$8,000 in Government transfers last year.

The experts sounded a cautious note on last year's higher household incomes and called for a greater breakdown of statistics. SIM's Dr Tan said the tight labour market creates the upward trend in wage growth and warned that this "may not be sustainable without significant GDP (gross domestic product) increase".

"In fact, the wage growth appears to have slowed down and this can be attributed to slower GDP growth in 2012," he said. The 2.7 per cent real growth in median monthly household income from work among resident employed households last year is lower than the 5.6 per cent growth in 2011; the economy is estimated to have grown about 1.2 per cent last year, lower than the 4.9 per cent growth in 2011.

NUS' Associate Professor Tan suggested also releasing household income figures for Singapore citizens alone. "Is income disparity greater among citizens, if we exclude permanent residents?" he wondered. "I would also like to see how the situation would pan out if we include non-working households. If the report is a 'report card' on how Singaporeans are doing, then we ought to have figures on Singapore citizens.
Ref:todaynews