Real income growth highest since 2008

Proportion of Singapore residents in workforce also up, says MOM report

By Janice Heng And Joanna Seow, The Straits Times, 30 Nov 2013

AS INFLATION eased this year, Singapore saw the highest real income growth since 2008, according to a new Ministry of Manpower (MOM) report released yesterday.

It also showed that in the current tight labour market, the proportion of locals in the workforce was now greater than before.

The numbers showed that in money terms, the median monthly income of Singaporeans and permanent residents rose 6.5 per cent this year to $3,705 - slightly slower than the corresponding 7.1 per cent rise in 2012.



But inflation was also higher in 2012, and pricier goods and services eroded more of a worker's wage increases then.

This is why, in real terms - after adjusting for inflation - workers' incomes went up more this year. The 3.9 per cent rise was not only higher than last year's 2.5 per cent, it was the highest increase since the onset of the 2008 global financial crisis.

In tandem with the rise in real incomes, more local residents sought jobs and found them.

A record 66.7 per cent of residents aged 15 and over were working or looking for work this year, and the employment rate of those aged 25 to 64 also rose to a high of 79 per cent.

Older workers fared well. Figures showed that the employment of residents aged 55 to 64 rose to 65 per cent, hitting the government target two years early.

In particular, more older women gained employment. The proportion is now more than half, up from 48 per cent last year.

National Trades Union Congress (NTUC) deputy secretary-general Heng Chee How highlighted yesterday that employment also rose for elderly workers aged 65 to 69.

He wrote on Facebook that the total higher employment rates were the result of a tight labour market and painstaking tripartite efforts to reduce barriers to employment.

He said he will continue to push for a higher re-employment age. Companies must now offer re-employment to eligible workers from age 62 up to 65. The NTUC wants this raised to 67.

Commenting on the rise in real incomes this year, economists noted that one question is to what extent the increases will be felt by workers on the ground.

Some cautioned that wage increases will vary across different industries, and the labour demand and supply situations there.

Barclays economist Joey Chew said lower inflation this year was largely due to a fall in certificate of entitlement prices, which did not directly affect lower-income workers, who do not own cars.

As for local workers in the labour force rising to record proportions, experts said this may not ease the burden felt by businesses currently struggling with a tight labour market.

"It depends on the rate of reduction of foreign labour," said UOB economist Francis Tan.

He said the foreign worker policy continues to tighten in Singapore, with higher levies and stricter rules. This is partly why economists expect dollar pay to rise even more next year.

Inflation is also likely to go up, which will threaten real wage gains.

Mr Tan said: "The question is which will grow higher. It is really anyone's call."

Key figures up

Real income goes up 3.9%

Median income rises to $3,705

Labour force participation rate rises to 66.7%

Employment rate for 25-64 rises to 79%

Employment rate of older workers rises to 65%

Income of bottom fifth rises to $1,885

Low earners' wages finally catch up
By Joanna Seow, The Straits Times, 30 Nov 2013

IN JULY, operations support officer Siti Zaidah got her first promotion in nearly nine years, which came with a 20 per cent increase in pay amounting to $200.

"After the pay rise, things got a bit better," said the 46-year-old, who now earns around $1,200 a month. "I can pay more of my bills, and I can go for some religious classes that I wanted to go for."

Low-income workers like her are finally getting wage rises that are in line with those for the rest of the country, according to preliminary figures released yesterday by the Manpower Ministry.

For workers at the 20th percentile of the income ladder, gross monthly incomes have risen 26.6 per cent (or 8.6 per cent in real terms) to $1,885 over the past five years.

For those on the middle rungs of the ladder, income has grown 27.9 per cent (or 9.7 per cent in real terms) to $3,705 over this period.

In the previous five-year period, the gap was far wider.

From 2003 to 2008, gross monthly incomes actually fell by 0.6 per cent for workers at the 20th percentile, whereas median income growth was 7 per cent. That gave rise to a gap of 7.6 percentage points.

Experts put the change down to the increased focus in recent years on helping low earners to catch up.

In addition, noted OCBC economist Selena Ling, curbs on foreign workers might have given employers an added impetus to improve the salaries of low-wage workers.

"Economic restructuring policies have also been more focused on low-skilled workers, with many efforts made to raise minimum wages in the past year or two," she said.

Labour economist Randolph Tan of UniSim said that while it is good for wages to keep up with inflation, "in order for the gains made to be sustainable, they must still keep within the overall framework of not stoking an inflationary spiral".

He was referring to a cycle in which firms raise the prices of goods and services to compensate for the higher wages they are paying their workers, which in turn leads workers to seek higher wages.

The deputy secretary-general of the National Trades Union Congress, Mr Heng Chee How, responded to the report on his Facebook page.

"We must push harder to improve their wages faster and sustainably," he wrote of lower-income workers. "The CPF rate for older workers can also be reviewed further to help increase their savings."

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