Increase across all income groups amid tight labour market, higher employers' CPF rate
By Chong Zi Liang, The Straits Times, 27 Feb 2016
Families in all income groups in Singapore earned more last year because of the tight labour market and higher contribution rate of employers to a worker's Central Provident Fund (CPF) account, government figures show.
For employed households, the median monthly income was $8,666, a 4.9 per cent increase over 2014, after adjusting for inflation.
That means half of all families with at least one working person earned more than $8,666.
By Chong Zi Liang, The Straits Times, 27 Feb 2016
For employed households, the median monthly income was $8,666, a 4.9 per cent increase over 2014, after adjusting for inflation.
That means half of all families with at least one working person earned more than $8,666.
The increase in real income is even greater when the family's income is divided by the number of people in the household. It works out to 5.4 per cent per household member.
But what is most heartening in the figures released yesterday is that the rise is most significant in the bottom 30 per cent.
The biggest jump - 10.7 per cent - is for the 10 per cent of households right at the bottom. For the next 10 per cent of families, it was 8.3 per cent and above them, 7.2 per cent.
The biggest jump - 10.7 per cent - is for the 10 per cent of households right at the bottom. For the next 10 per cent of families, it was 8.3 per cent and above them, 7.2 per cent.
The increases are due to ongoing government schemes that boost the earnings of low-wage workers, like the Workfare Income Supplement programme.
The well-off who are in the top 10 per cent also saw a substantial income rise - 7.2 per cent.
For the rest, the increase in average incomes ranges from 5.7 per cent to 6.7 per cent.
These figures on the family income of citizens and permanent residents are from the annual Key Household Income Trends report put out by the Department of Statistics. The income growth across the board resulted in a relatively stable Gini coefficient of 0.463 last year.
The Gini coefficient is a measure of income inequality. It ranges from zero to one, with higher values indicating greater inequality.
Since 2013, it has been hovering around 0.463, reflecting the Government's efforts to close the income gap through its policies, said Bank of America Merrill Lynch economist Chua Hak Bin.
The Gini coefficient is a measure of income inequality. It ranges from zero to one, with higher values indicating greater inequality.
Since 2013, it has been hovering around 0.463, reflecting the Government's efforts to close the income gap through its policies, said Bank of America Merrill Lynch economist Chua Hak Bin.
So, when government transfers, such as income tax rebates and MediShield Life subsidies, are factored in, the Gini coefficient last year went down to 0.410.
Government figures show that families living in one- or two-room HDB flats received an average of $9,318 in such transfers for each family member.
This was more than double that received by residents in bigger homes and other types of property.
Mr Chua said if the economy weakens this year, as predicted, it will limit the Government's ability to expand income redistribution.
"Fiscal revenue for the Government will be much weaker than in the past, and this will restrict its scope to continue increasing the transfers," he said.
The official statistics also show that from 2010 to last year, families in the bottom half experienced faster real income growth than the top 50 per cent.
Mr S. Iswaran, Minister for Trade and Industry (Industry), told reporters at a business event: "These are strong growth numbers." But he believes the labour market will not remain tight indefinitely because the uncertain global economy will lessen the demand for workers.
He also said that in the past five years, real wage growth outpaced productivity growth.
If this continues, he warned that it would erode Singapore's competitive edge. "The only sustainable way to keep real wages growing is for it to be underpinned by productivity growth," he said.
Policy changes 'helped boost wages at bottom'
Measures like Workfare Income Supplement and tighter rules on hiring foreigners helped: Experts
By Walter Sim, The Straits Times, 27 Feb 2016
The latest data on income trends is a clear indication that recent measures to boost the wages of low-income workers are seeing some results, observers said yesterday.
The bottom 10 per cent of families with at least one working member clocked the fastest real income growth last year at 10.7 per cent, a report by the Department of Statistics said. The average income of this group rose 24.6 per cent between 2010 and last year - the highest among all income groups.
But from 2005 to 2010, their wages rose by only 9.6 per cent - the lowest increase of all income groups.
"The Government has moved from the centre to more centre-left, and its fiscal policy is now more redistributive than in the past," said MP for Pioneer Cedric Foo, who is deputy chairman of the Government Parliamentary Committee for Finance and Trade and Industry.
Measures like Workfare Income Supplement and tighter rules on hiring foreigners helped: Experts
By Walter Sim, The Straits Times, 27 Feb 2016
The bottom 10 per cent of families with at least one working member clocked the fastest real income growth last year at 10.7 per cent, a report by the Department of Statistics said. The average income of this group rose 24.6 per cent between 2010 and last year - the highest among all income groups.
But from 2005 to 2010, their wages rose by only 9.6 per cent - the lowest increase of all income groups.
"The Government has moved from the centre to more centre-left, and its fiscal policy is now more redistributive than in the past," said MP for Pioneer Cedric Foo, who is deputy chairman of the Government Parliamentary Committee for Finance and Trade and Industry.
"This makes for a stable society - you cannot have income distribution that is too wide," he added.
Concern over stagnant wage growth for the poorest workers a decade ago saw the Government adopt measures to help them, such as the Workfare Income Supplement to boost wages. The labour movement also adopted a progressive wage model to boost pay in sectors such as landscaping and security. More recently, rules on hiring foreign workers who depress wages at the lower end were also tightened.
Concern over stagnant wage growth for the poorest workers a decade ago saw the Government adopt measures to help them, such as the Workfare Income Supplement to boost wages. The labour movement also adopted a progressive wage model to boost pay in sectors such as landscaping and security. More recently, rules on hiring foreign workers who depress wages at the lower end were also tightened.
Bank of America Merrill Lynch economist Chua Hak Bin attributed the rise in incomes at the bottom to the tighter regulations, which he said have driven wage growth.
Comparatively, the latest income report in the United States last September shows the bottom 10 per cent of families there earning 2.6 per cent less in 2014 than they did the year before - continuing a downward trend that started in 2009.
Singapore's Department of Statistics report noted that not all households stay in the same tier each year. But those with at least one working person in the bottom 10 per cent may seem well off by other measures.
Last year, 16 per cent of them owned a car, 7.8 per cent employed a maid, and 6.5 per cent lived in private property. Four in 10 of those at the bottom 10 per cent were headed by someone aged 60 and older.
The report added that families may move between bands, for example, when someone is temporarily unemployed in one year and then goes back to work in another.
Incomes last year rose across the board, with median monthly household incomes rising to $8,666 from $8,292 in 2014 - a 4.9 per cent jump after adjusting for inflation.
Singapore residents got an average of $3,985 each from various schemes like income tax rebates and MediShield Life subsidies, up 13 per cent from $3,515 in 2014.
Professor Euston Quah, who heads Nanyang Technological University's economics department, said it was evident "the transfers are working to help the lower- income class". "The most important thing is that without the subsidies, they will be worse off. And this help does not come for free," he added, referring to progressive tax policies.
The result: The Gini coefficient, a measure of income inequality, remained relatively stable at 0.463 last year, down from 0.464 in 2014.
After taking into account government handouts, the figure dipped to 0.41 last year, from 0.411 in 2014.
Other tiers that recorded the fastest growth included those in the 11th to 20th percentile (8.3 per cent). Those in the 21st to 30th percentile and top 10 per cent each saw income growth of 7.2 per cent.
Prof Quah said the greater percentage rise for lower-income earners could be due to their lower base.
Mr Foo added that more could also be done to raise wages for families in the middle- and higher-income brackets. "We need to maybe tighten regulations for Employment Pass holders," he said, citing how some sectors and companies appear to hire a disproportionate number of foreigners - a trend observers fear could dampen income growth at this end too.
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