Saturday, 18 February 2017

Household incomes up in 2016, but at a slower pace

Gap between rich and poor also narrowest in a decade as top earners see drop in wage growth
By Charissa Yong, The Straits Times, 17 Feb 2017

Families earned more from work last year, but their rise in monthly income was smaller than in the previous year, figures released yesterday show.

Additionally, income inequality in Singapore last year was the lowest in a decade, as households with the highest incomes experienced the biggest slump in wage growth.

This, along with government transfers to the less well-off, narrowed the gap between the rich and the poor.

Last year saw the Gini coefficient - a measure of income inequality from 0 to 1, with 0 being most equal - at its lowest in a decade.

Singapore's score dipped from 0.463 in 2015 to 0.458 last year. It stood at 0.470 in 2006.

After taking government transfers and taxes into account, this score fell from 0.409 in 2015 to 0.402 last year.

The latest numbers on household income from the Department of Statistics' annual Key Household Income Trends 2016 report come amid a sluggish economy, and economists said they are a reflection of the weaker wage growth that has been reported in recent months.

The median monthly income for Singapore and permanent resident households with at least one working member grew from $8,666 in 2015 to $8,846 last year, without taking inflation into account.

After accounting for inflation, it was an increase of 2.6 per cent in real terms, about half of the 4.9 per cent recorded in 2015.

On the slower growth, DBS economist Irvin Seah noted that the labour market had softened significantly, with the number of retrenchments hitting a seven-year high last year.

Employment growth was at a 13-year low, while the overall number of job vacancies dipped.

Mr Seah said: "All this definitely points to slower income growth. This is part of the whole landscape of a slower economy."

SIM Global Education senior lecturer Tan Khay Boon said it was good that real incomes had gone up despite the challenging environment.

Households across all income groups also earned more per household member last year, but the rise was much less than in the year before.

The average household income per household member grew by between 0.2 per cent and 4.3 per cent in real terms last year. This was lower than the range recorded in 2015 of 5.7 per cent to 10.7 per cent.

Top-earning households - in the top 10 per cent - recorded slower income growth than those in other income groups, and saw their monthly income go up by 0.2 per cent, compared with 7.2 per cent in 2015.

The lowest-income group had the second-smallest percentage increase in real monthly income: A rise of 1.4 per cent.

Experts said more needed to be done to help these low-income working households, depending on their profiles, and cited more skills training as one possibility.

The report noted that families living in one-room and two-room Housing Board flats received more government transfers than those living in larger flats.

On average, those living in one- and two-room flats received $9,806 per household member from various government schemes last year.

This was more than double the average of $4,168 received per household member across all housing types.









Lowest rises in income for families at both ends
Income gap narrows, but experts call for more to be done to help the lowest earners
By Rachel Au-Yong, The Straits Times, 17 Feb 2017

The gap between top and bottom earners was at its narrowest in a decade last year, but observers say more can still be done for the lowest-earning families as their income did not grow as quickly as that of other groups overall.

For the bottom 10 per cent of households with at least one working member, the rise in income was among the smallest last year - 1.4 per cent per household member. The only decile with a lower rise was the top 10 per cent of households.

By comparison, median income growth per household member was 3.8 per cent. "This shows that more needs to be done to improve the well-being of the lowest-income households," said UniSim senior lecturer Tan Khay Boon.

DBS economist Irvin Seah attributed the smaller rise in incomes at the bottom in part to last year's 19,000 layoffs - the highest since the global financial crisis in 2009.

"The moment a sole breadwinner loses his job, the household income drops to zero," he said.

Meanwhile, Bank of America Merrill Lynch economist Chua Hak Bin said the bottom 10 per cent of households saw a "huge jump" in income in 2015, a lift that is hard to sustain. That year, their income grew by 10.7 per cent, the highest for all deciles.

"Perhaps some companies are facing pressures, and cannot reward their workers at the lower end as much this time," he suggested.

National University of Singapore sociologist Paulin Straughan said more details about those in this group - for instance, ages and occupations - should be made available.

"We need to know the make-up of the bottom 10 per cent so we can chart the way forward," she said. "If it's older workers , we have to pay attention to the effects of ageing on the low-income. If it's young graduates, then we must make sure they level up on the appropriate skills."

Households at the top saw slow growth too. Incomes for the top 10 per cent of households grew by 0.2 per cent, the slowest across deciles.

Observers said this was not surprising, given the challenging economy that has affected business owners as well as professionals, managers, executives and technicians (PMETs). PMETs made up the majority of those retrenched last year.

Around 20 per cent of those in the top decile had earners from the financial and insurance sectors, which saw negative 1 per cent growth in median real wages.

Slower income growth among top earners also helps explain why the income gap narrowed last year. The Gini coefficient, which measures income equality, was 0.458, the lowest in a decade. It was 0.463 in 2015.

After taking into account government transfers, it was 0.402, down further from 0.409 in 2015.

Mr Seah said the dip is also the result of several Budgets aimed at strengthening safety nets, as well as policies meant to lift those at the bottom taking effect, such as lower education costs for children in low-income families. "The Gini coefficient has been trending downwards after many years of targeted and robust social policy ," he added.

Several families told The Straits Times they were bracing themselves for tougher times ahead.

Taxi driver Chia Teck Chai, 59, said his income did not change much in absolute terms last year, but he will take fewer rest days now.

"I'm getting older and not as energetic now, but if I take a break, that's less money for the month," he said.

Telco project coordinator Kenneth Chen, 33, said his income went up by 5 per cent last year.

His tip for tough times? "Save. Just because your pay has risen doesn't mean you must spend more."


No comments:

Post a Comment