Household income up in 2016, but at slower rate

Household income up in 2016, but at slower rate

Singapore’s Gini coefficient, a measure of income inequality, drops to its lowest in a decade.

04:34
Singapore’s Gini coefficient, a measure of income inequality, drops to its lowest in a decade.

SINGAPORE: Families across all income groups in Singapore saw their earnings rise last year, although the rate of growth slowed compared to the previous year, according to data released by the Department of Statistics (Singstat) on Thursday (Feb 16).

Among households headed by a Singapore citizen or permanent resident which had at least one working person, the median monthly income was S$8,846 – an increase of 2.1 per cent from S$8,666 in 2015, or a 2.6 per cent increase after taking into account negative inflation. The figure includes employer Central Provident Fund (CPF) contributions.


This compares to 2015 when the rate of growth was 4.5 per cent, or 4.9 per cent after adjusting for inflation.

Across all income groups, employed households saw their average income per member rise between 0.2 and 4.3 per cent in real terms. In comparison, their real income growth in 2015 was between 5.7 and 10.7 per cent.

Among the poorest households – those in the bottom 10 per cent – real income rose by 1.4 per cent. This is a decline from the 10.7 per cent growth that this group saw in 2015.

For those in the top 10 per cent, their income per household member grew by just 0.2 per cent in real terms, down from a 7.2 per cent growth the previous year.

(nc) Household income 2016 chart 3 fragment

INCOME INEQUALITY AT 10-YEAR LOW

Singapore's Gini coefficient – a measure of income inequality – dipped to its lowest in a decade at 0.458, down from 0.463 in 2015. A zero coefficient indicates total income equality while one marks total inequality.

After factoring in government transfers such as GST vouchers, utilities rebates and other subsidies, the Gini coefficient fell further to 0.402 – reflecting the redistributive effect of government transfers, Singstat said.

(nc) Household income 2016 chart 2 fragment

The department also reported that households in one- and two-room flats received an average of S$9,806 per member from various government schemes last year, more than double the average figure received by those staying in other types of accommodation.

Households with no working members also received an average of S$6,424 per member from government schemes in 2016 – 65 per cent more than the S$3,895 received by households with at least one employed person.

“IT’S STILL GROWTH”

Despite the dip in the growth rate, it is still an increase, said sociologist Tan Ern Ser. “It does suggest we are doing better,” he added.

Economist Song Seng Wun agreed. “It’s still growth. The economy overall is slower, as reflected in labour market conditions being weakened and unemployment rising, but there are areas where growth is stronger than other parts.”

Still, he conceded that growth continues to be challenging. “Macro growth last year was slowest, and this is reflected in average incomes,” said Mr Song. “The thing which struck me most was the average monthly household income from work per member for the lowest income group – which went from S$541 to S$543 – the weakest pace of growth since 2009.”

He was referring to the bottom tenth decile of households, which saw their income growth plunge from 10.7 per cent in 2015 to 1.4 per cent in 2016.

(nc) Chart income household 2015 to 2016

“The 10.7 per cent growth in 2015 was an exaggeration,” Mr Song argued. “If you look at dollar value, it was a rise of a few dollars. It’s still very low. These workers are still being exploited. We need to pay them more.”

Member of Parliament Tin Pei Ling, who is deputy chair for the Government Parliamentary Committee on Social and Family Development, said this lowest tier of earners were her main concern.

“We have to make sure they won’t be left behind. The lower deciles are made up of lower skilled workers, who are easily replaced by technological advances,” she said. “We must continue to empower and equip these workers, to make sure they learn and relearn to move into new areas of growth.”

Noting the drop in the Gini coefficient after factoring in Government transfers, Ms Tin added that the state should continue to do so, to see lower earners through tough times.

“We can see an effort by the Government to try and boost wages for the lower income deciles,” Mr Song observed. “The income gap didn’t widen over recent years. Especially in the last four years, we’ve seen more targeted measures in the Budget to help the more vulnerable.”

The top tenth decile of households also recorded a decrease in income growth, from 7.2 per cent in 2015 to 0.2 per cent in 2016.

This group could be dependent on income from investments, and the last 10 years have seen market volatility and economic downturns, said Mr Song.

Assoc Prof Tan said the slowed growth for top income earners could be due retirees, retrenchments, or workers in high-paying jobs not being paid as well as before.

Asked to cast an eye on the future, he said: “Much will depend on the economy’s performance, and whether we still can create good, high value-added jobs; and have people rise to the occasion through retraining and skills upgrading. Then we have reason to be optimistic.”

(Graphics: Nicole Chang)

Source: CNA/cy