SINGAPORE: Households across all income groups earned more last year, with those in the lowest 30 per cent and top 10 per cent seeing the fastest real income growth, according to official data released on Friday (Feb 26).
Based on the Department of Statistics' annual Key Household Income Trends survey, the median household income from work rose to S$8,666 last year, up S$374 from S$8,292 in 2014. This is an increase of 4.5 per cent in nominal terms, or an increase of 4.9 per cent in real terms, after accounting for inflation.
Household income from work includes employer Central Provident Fund contributions.
From 2010 to 2015, the median monthly household income from work of resident employed households rose by 20.4 per cent cumulatively, or 3.8 per cent per annum in real terms, Singstat said in a press release on Friday (Feb 26).
Median monthly household income from work over the last five years. (Infographic: Singapore Department of Statistics)
Taking household size into account, median monthly household income from work per household member rose 5 per cent in nominal terms, or 5.4 per cent in real terms.
This increase came about amid a tight labour market, as well as an increase in the employer CPF contribution rates in 2015.
Speaking to Channel News Asia, Standard Chartered Singapore economist Jeff Ng said it was "positive" that household income growth outperformed GDP growth, which came in at 2 per cent for 2015.
Noting that household income growth was also boosted by government measures, such as the pioneer generation package, Mr Ng said: "Going forward I think further household income growth will rely on productivity growth."
CIMB Private Banking economist Song Seng Wun said that while Singapore's income growth will slow in tandem with a slowing global economy, it is likely to "continue growing at levels above annual GDP growth".
REAL HOUSEHOLD INCOME GROWTH HIGHEST AMONG BOTTOM 20%
The lowest 10 per cent saw real income growth of 10.7 per cent on a per household member basis, while the second and third lowest deciles saw real income growth of 8.3 per cent and 7.2 per cent respectively. Meanwhile, the top 10 per cent of households saw income growth of 7.2 per cent.
Average real household income growth in 2015, on a per household member basis. The rows highlighted in yellow indicate the deciles with the fastest real income growth. (Infographic: Singapore Department of Statistics)
Households in the lowest 20 per cent had the fastest real income growth. Households in the lowest 10 per cent recorded growth of 10.7 per cent, while households between 11 per cent to 20 per cent recorded a rise of 8.3 per cent. Singstat attributed the rise in part to on-going initiatives to raise the wages of low-wage workers.
The top 10 per cent and the 21st to 30th percentile group recorded the next highest rise of 7.2 per cent each. The remaining percentile groups recorded a rise of 5.7 per cent to 6.7 per cent in real terms last year.
REAL WAGE GROWTH HAS OUTPACED PRODUCTIVITY GROWTH
Speaking to reporters on the sidelines of an industry event on Friday, Minister for Trade and Industry (Industry) S Iswaran described the income growth numbers as “strong”.
But he also noted that real wage growth has outpaced productivity growth in recent years, and this deserves attention because the “the only sustainable way to keep wages – real wages – growing, is for it to be underpinned by productivity growth”.
“So generally, real wages have grown by about 3 per cent per annum, and our productivity has been growing at 0.3, 0.4 per cent per annum – averaged out over the last five years,” said Mr Iswaran.
He added: “If real wages continue to outpace productivity growth, then we are impairing our economic competitiveness and that will have, certainly an impact on the longer term, but even in the short term on the businesses and sectors.”
HDB 1- & 2-ROOM FLAT HOUSEHOLDS RECEIVED MORE GOVERNMENT TRANSFERS
Income inequality was broadly unchanged over the last three years, with the Gini coefficient at 0.463 in 2015, similar to 0.464 in 2014. A higher Gini coefficient implies a less equal distribution of incomes.
Including government transfers and taxes, the Gini coefficient last year was 0.410, down from 0.411 in 2014. The 2013 reading - at 0.409 - is the lowest since it was first calculated in 2000.
Singapore's Gini coefficient over the last ten years, both before and after accounting for government transfers and taxes. A higher Gini coefficient implies a less equal distribution of incomes. (Infographic: Singapore Department of Statistics)
According to Singstat, resident households staying in HDB 1- and 2-room flats received S$9,318 per household member on average from government schemes in 2015. This is double the transfers received by resident households in other types of dwelling.
Mr Song noted that besides Government transfers, there were initiatives taken over the past year to raise the incomes of lower-wage workers, from tightening the inflow of foreign workers to setting minimum wage level for workers in the cleaning, landscaping, and security sectors.
"It is hard to compare income inequality between countries, as the measures differ. But what we can see is that at least over the five, 10 year period, Singapore has narrowed the gap somewhat, and is doing better on this front than Hong Kong, for example," he added.