Thursday, 2 August 2012

Singapore a costly city? It depends

Average resident fares far better than expat in terms of living costs: Survey
By Aaron Low, The Straits Times, 1 Aug 2012

MANY private sector surveys paint Singapore as an expensive city to live in but a new study suggests that the high cost of living applies mostly to expatriates.

It found that the average man in the street fares far better, with Singapore ranking in the middle when it comes to living costs.

The survey was conducted by the Asia Competitiveness Institute (ACI). One of its lead authors, Lee Kuan Yew School of Public Policy Associate Professor Tan Khee Giap, said a reason for undertaking the study was to debunk the UBS' "flawed" survey.

The UBS report, which was updated last August, named Singapore as the 10th most expensive city to live in.

It also ranked Singapore 42nd out of 73 cities in terms of gross wage levels, and found that Singaporeans earn only 36 per cent of what New Yorkers do.

"The survey put Singapore and Kuala Lumpur as having lower purchasing power than Sao Paulo, a developing city. Surely, that can't be right," said Prof Tan at the ACI conference held at Orchard Hotel yesterday.

Using a range of databases from the World Bank, the International Labour Organisation (ILO) and the Economist Intelligence Unit, the ACI study broke down the cost of living into two categories: for expats and residents.

For the expat cost of living index, Singapore was ranked the fifth-most expensive city in the world and second in Asia, after Tokyo. The city scored 129.3, which means that it is 29.3 per cent more expensive for an expat to live here compared with New York, which was used as a base of comparison.

Dublin was the most expensive out of 109 countries, with a score of 141.

But when it came to the cost of living for the average resident, Singapore ranked 61st out of 109 cities with a score of 66.3, meaning that it is 33.7 per cent cheaper to live in Singapore compared with New York.

One reason for the difference in rankings was that other surveys tended to use a similar basket of goods and services across all cities to measure costs, whether it was emerging economies or developed countries. But for the average worker cost of living index, the study used tailored weights taken from the World Bank, which interviewed thousands of people in each city on their spending habits.

It used the ILO's database to assess wages. This said Singapore's gross hourly wage was US$17.71 (S$22.30) last year, or about 88.8 per cent of New York's.

Copenhagen had the highest gross hourly wage, at about US$61.54, or more than three times the level in Singapore.

The ACI's study then calculated the purchasing power of workers in each city by dividing the average wage by the cost of living.

It found that Singapore was ranked 25th with a score of 134.

This means an average worker here has 34 per cent more purchasing power than one in New York, said Dr Vu Minh Khuong, another author of the study and a senior research fellow at the Lee Kuan Yew School of Public Policy.

"It also means that the Singapore worker is among the top 25 most prosperous of workers in the world," he said.


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