Friday, April 12, 2024
Homesingapore businessReal median income in Singapore fell 4.5% in first half of 2023

Real median income in Singapore fell 4.5% in first half of 2023

SINGAPORE: Real median income in Singapore fell 4.5 per cent in the first half of 2023 compared with the first half of 2022.

The decline, based on preliminary estimates, was due to elevated inflation and a weaker economic outlook, Senior Minister of State for Manpower Zaqy Mohamad told parliament on Tuesday (Nov 7).

While the economic outlook remains uncertain, the government expects inflation to moderate for the rest of the year, he said.

Real median income indicates the income of a typical worker after taking inflation into account.

Nominal median income, which does not account for inflation, grew by 0.9 per cent over the same period.

In comparison, the five-year outlook from 2017 to 2022 showed that income growth outpaced inflation – real median income grew by about 9.4 per cent over that period, or 1.8 per cent a year.

Real wages grew by 0.4 per cent last year, with the pace of growth “significantly dampened” by inflation, said MOM in May.

Singapore’s core inflation rose to 5.5 per cent year-on-year in January, the highest since November 2008. It has since eased to 3 per cent in September.

Mr Zaqy was responding to questions from Members of Parliament (MPs) about real wage growth, and particularly about the impact of price increases on vulnerable workers.

Lower-wage workers have experienced good real income growth over the last five years, he said.

Real income at the 20th percentile rose 15.4 per cent from 2017 to 2022, or 2.9 per cent a year. This was faster than 1.8 per cent annual growth at the median.

“This means that as costs of living rose, the incomes of lower-wage workers rose even more, thereby narrowing the income gap between lower-wage workers and the median worker,” he said.

Mr Zaqy said that wage increments are expected to stay firm in travel-related sectors, where demand is recovering, and in more labour-intensive services sectors, where manpower shortages could be more persistent.

Related:

Singapore government says report on rising minimum income standards 'may not be accurate reflection of basic needs'

National Wages Council urges employers to give workers one-off payment to help with higher cost of living

WHAT THE GOVERNMENT IS DOING

Mr Zaqy said the government recognises the impact of inflation on wages and announced a S$1.1 billion cost-of-living support package in September.

The package includes cash payouts, Community Development Council and public transport vouchers as well as rebates for eligible Singaporeans and households.

He also pointed out that the National Wages Council has called on employers to consider a one-off special lump sum payment to workers, recognising the impact of high prices.

The government’s strategy to sustain real income growth is to raise productivity, Mr Zaqy added. The government has embarked on the 23 Industry Transformation Maps to “transform businesses and upskill workers for jobs of the future across the economy”.

Career conversion programmes by Workforce Singapore provide subsidies to train workers for enhanced or new roles. The Forward SG report also announced that new career health initiatives will be launched.

For lower-wage workers, Mr Zaqy said the progressive wage model was recently expanded to cover more workers.

Workers covered by the progressive wage model can expect cumulative wage increases of up to 80 per cent by 2028, he said.

Amid a tight labour market, low-wage workers not directly covered by the progressive wage model should still see “meaningful” wage increases as employers respond to market forces, he said.

The Workfare Income Supplement Scheme was also enhanced in January and this will be further enhanced, with details to be shared in Budget 2024.

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