Wednesday 18 February 2015

Incomes rose across the board for Singapore households in 2014

Household incomes rise amid labour crunch
By Mok Fei Fei, The Straits Times, 17 Feb 2015

HOUSEHOLDS across all income groups earned more last year amid a tight labour market, although income inequality also crept up.

That is a 5.3 per cent jump in nominal terms, or a 4.1 per cent rise in real terms once inflation is taken into account.

The increase was even more apparent when household size was accounted for, with the median monthly household income per member up by 5.9 per cent in nominal terms and 4.7 per cent in real terms.

The average monthly income for each member of a household in the top one-tenth income bracket jumped 6.7 per cent in real terms.

Incomes in the bottom tenth of households rose 5.1 per cent, according to the Department of Statistics' annual Key Household Income Trends (2014) survey.

Only income from employment and business was used. Interests, dividends and rents were not included.

Economists said the continued tight labour market, coupled with economic growth and lower inflation, all played a part.

"Top income earners traditionally have skill sets that are more marketable and, when you have a labour crunch, you can expect them to see relatively higher wage increases," said DBS economist Irvin Seah.

Barclays economist Leong Wai Ho noted that most of the disinflation last year was due to lower oil prices, which probably benefited top earners more as they are more likely to drive.

Income inequality crept up: The Gini coefficient rose to 0.464 from 0.463 in 2013. A lower Gini coefficient implies a more equal distribution of incomes.

If government transfers and taxes are included, the Gini coefficient last year was 0.412, up from 0.409 in 2013. Last year's figure was the second- lowest on record since it was first calculated in 2000, with the 2013 figure being the lowest.

Part of the reason for greater inequality last year was that government transfers were slightly lower than in 2013. They fell from $3,649 per household member to $3,372 last year.

The higher payouts in 2013 stemmed from one-off transfers such as Medisave top-ups and property tax rebates.

However, people living in one- and two-room HDB flats had more transfers last year than in 2013, receiving $9,026 per member as opposed to $8,839 in the previous year.

OCBC economist Selena Ling said the inclusive growth theme could continue in this year's Budget, with more aid for those in the lower and sandwiched classes.

Make foreigners, PRs count in income data
Latest data shows that incomes have risen in Singapore in the last year. But a closer look reveals gaps in the data released.
By Radha Basu, Senior Correspondent, The Straits Times, 26 Feb 2015

THERE has been some good news for workers here in recent weeks.

As Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam pointed out in his Budget speech on Monday, incomes have continued to rise, outpacing inflation, buoyed by a tight labour market and more jobs.

Recently released government data also bears this out. The Household Income Trends report made public last week shows that among resident employed households, median monthly household income from work has risen steadily from $6,006 in 2009 to $8,292 last year. That's an increase of 3.4 per cent per annum, even after adjusting for inflation.

Personal incomes are also growing, though at a slower pace.

Full-time employed Singapore citizens earned $3,566 last year. This is up from $2,748 five years earlier, according to the Ministry of Manpower's Employment Situation report released on Jan 30.

Real incomes of Singaporeans have grown faster than residents' between 2013 and 2014. Citizens' incomes have risen by 1.4 per cent; residents' incomes, by 0.7 per cent.

This could partly be due to measures in the past year to boost incomes of Singaporean workers in low-wage jobs, such as cleaners.

While all this is good news, it is worth noting that there remain significant gaps in national income data which should be plugged.

Citizen v PR income data

FIRST, there is a need to distinguish more sharply between citizens' incomes and those of permanent residents (PRs) - and both must be made public.

There appears to be no publicly available information right now on how much PRs earn. The latest Labour Force In Singapore report shows that median monthly incomes for full-time employed residents - that is citizens plus PRs - grew to $3,770 last year.

This is higher than the median income of full-time Singaporean workers, which is $3,566.

It is thus clear that PRs - who tend to be better educated than citizens - likely earned more than citizens. Lumping citizen and PR income data can paint too rosy a picture of a community's income trends. For example, there has been concern that the income data of ethnic Indian Singaporeans is being inflated by lumping them together with India-born immigrants who take up permanent residence or citizenship here.

In 2010, the average monthly household income from work in homes where the head of household was an Indian was $7,664, well above the national average of $7,214.

Significantly, a decade earlier, the incomes of Indian-headed households was $4,623 - below the national average income ($4,988) as well as that for the Chinese community ($5,258).

The influx in the 2000s of better-educated - and higher-income Indian nationals who took up PR here - was seen as a possible reason for the rise.

As Singapore citizens age and if fertility rates remain low, more and more younger PRs may flood the Singapore workforce.

Distinguishing between and separately tracking incomes and numbers of citizens and PRs will give a truer picture of Singaporean income trends.

In fact, labour force surveys should clearly distinguish between citizen and non-citizen workers in all aspects of employment, such as salaries and age profiles.

This way, the data can help shed light on the persistent complaint of some older Singaporeans that they are losing out to younger PRs in the workplace.

Make foreign workers count

THE second crucial gap in information on income trends is the size and impact of the foreign workforce in Singapore.

According to the latest MOM data, about 1.35 million of Singapore's 3.6 million-strong workforce - or around 37 per cent - is made up of foreigners. This includes foreign domestic workers, construction workers and others on various work passes.

But it does not include PRs.

Factor them in and non-citizens may well make up more than half the workforce. But we don't know for sure.

This approach differs sharply from Switzerland, which also has a high number of foreign workers.

It routinely makes public the numbers of foreigners and citizens in its workforce. Currently, one in four workers there is a foreigner. Unlike Singapore, Switzerland also routinely makes public the nationality of its permanent residents.

Significantly, despite the fact that the non-PR foreigners make up nearly 40 per cent of the Singapore workforce, they are not counted in median income or inequality calculations, which are based on resident workers. This, it must be noted, deviates from some developed countries' norm.

Spokesmen for the United States' Bureau of Labor Statistics and Statistics Canada told The Straits Times that in both countries, national median income and inequality calculations include data on both citizens and non-citizens. Both countries also make public a breakdown of the median incomes and employment data of immigrant and native workers.

This is although immigrants made up just 16 per cent of the workforce in the US in 2013, the latest year for which data is available. Nearly half were Hispanic and worked in lower-paid, blue-collar jobs as labourers or service staff.

The median weekly earnings of foreign-born, full-time wage and salary workers was US$643 (S$876) in 2013, compared with US$805 for their native-born counterparts.

Spotlight on foreign workers' salaries

FINALLY, there is no official data on the wages of blue-collar foreign workers, despite their vast and growing numbers and the important economic role they play in doing essential jobs that most locals won't deign to do.

There are more than 760,000 foreign work-permit holders who work in construction, shipping, manufacturing and other low-wage jobs. Another 218,000 foreigners work as domestic workers. Together, these workers make up nearly 30 per cent of the workforce. But their wages are not included in government wage surveys here, which consider only resident workers.

Significantly, the non-PR foreign workforce here has more than doubled in the past decade.

Anecdotally, work-permit holders here can earn as little as $18 a day - or around $400 a month before overtime. Their incomes may not have improved much in the past decade. In fact, they may well have fallen as companies try to recover costs of higher foreign worker levies by lowering worker pay. This needs to change.

As Singapore moves towards a more progressive, inclusive society, it is time to ensure that all workers - citizens, PRs and foreigners - earn a fair wage. That, of course, cannot be done without knowing how much each group earns in the first place.

More focus needed on individual, not just household income
By Janice Heng, The Straits Times, 26 Feb 2015

HOW much did incomes rise last year?

According to government data released this month, the median monthly income of households with at least one working member rose just over 4 per cent after inflation to $8,290, from 2013 to last year.

On a per capita basis, income was $2,380.

Another set of government data showed that median income of full-time employed citizens rose by less - 1.4 per cent to $3,566.

One thing to note is that the two sets of data aren't directly comparable: household data is for resident households, which include those headed by citizens and permanent residents (PR), whereas data for individual workers is for citizens.

Why might resident household incomes rise faster than those of individual citizen workers? One reason is that the typical PR may earn more than the typical citizen.

Another reason households earned more is that more people in them are working.

The average number of working persons per household was 1.98 last year, up from 1.95 the year before. The difference looks marginal, but it is a 1.5 per cent increase in the number of workers.

One could thus argue that household income growth was partly fuelled by the rise in the number of people working.

Admittedly, this inference is far from certain. For instance, in the bottom 30 per cent of households, there were slightly fewer working persons on average last year, compared to 2012 - yet incomes were higher last year.

None of this is to say that household income figures should be ignored in favour of data on individual worker income.

If the concern is families' ability to support themselves, then household income figures are relevant. The fact that more people are working - and hence boosting household incomes - might then be a good sign, instead of something to be discounted.

But if the concern is whether workers' actual wages are rising, then data on individual workers' earnings is more relevant.

Here, there is a good measure of such data: the Manpower Ministry's annual wage change figures, which measure actual private-sector pay rises for full-time Singaporean and PR workers. But we will have to wait till June to see those figures for last year.

It's important to look at both resident and citizen data to get a clear picture of income trends.

It's also important to look at both household and individual income trends.

Going beyond the median figures would also help. A median household income of $8,290 means that half of households earned less than that, and the other half, more.

For a more fine-grained picture, there are figures for each decile: the bottom 10 per cent, the next 10 per cent, and so on.

Household income by decile is indeed, publicly available in the Department of Statistics report.

But the Government does not regularly release income data by decile for individual workers.

Doing so could improve the picture we have of Singapore's income trends.

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