Report from Department of Statistic revealed income growth for less well-off families in Singapore moved at slower pace than those of better-off households. According to the report released on Feb 8, the bottom half of Singapore households had increasing real income (after taking inflation into account) between 2.1 percent and 3.6 percent for each household member.
For the next 40 per cent, the increase ranged between 3.7 percent and 4.5 percent. The less well-off families recorded slower income growth last year, but between 2012 and last year, their real income per household member rose to between 4.2 percent and 4.6 percent a year, indicating faster growth of between 2.2 percent and 4.2 percent among the better-off.
The report also showed that overall median household incomes rose by 2 percent in nominal terms, from $8,846 in 2016 to $9,023 a month last year. When inflation is taken into account, the rise was 1.5 percent, Straits Times reports.
Regarding to the report findings, experts said that Singapore needs to pay attention to the income gap in order to ensure social mobility and prevent social stratification that might occur in the society. The danger of widening income gap was also highlighted by Prime Minister Lee Hsien Loong in a recent parliamentary reply. He warned that if this matter left unchecked, it would lead to a rigid and stratified social system that would affect Singapore’s politics to turn vicious, its society to fracture, and the country to weaken.
SIM Global Education senior lecturer Tan Khay Boon commented that the best long-term solution to manage the income inequality is by providing skills training and education. He also said that social mobility is more important and effective over the long term to assist low-income groups to move into the middle income group.
Meanwhile, Maybank Kim Eng economist Chua Hak Bi said that the marginally wider income gap between the top and the bottom half of Singaporean families last year reflected changes in current job market. For example, professionals, managers, executives and technicians (PMETs) with higher skills especially in IT are in greater demand and earning more in today’s digital economy. “At the same time, disruption like e-commerce in the retail sector has reduced demand and wages for blue-collar workers,” Dr Chua added.
Government’s financial schemes also contributed in narrowing the gap. The report noted that last year, resident households, including those with no working person, received $4,433 on average for each family member from various schemes. Families in one-and two-room flats were given $10,245 for each household member on average, more than double the transfers received by households in bigger homes.
Further, the experts emphasised the significance of managing income inequality in Singapore. However, they realised that income gap is inevitable owing to Singapore’s status as a global hub, attracting top talents from around the globe who seek for high salaries.
“The Government walks a fine line. While existing transfers are not insignificant, we don’t want to be too generous until people have no incentive to work,” said Professor Neo Boon Siong, dean of Nanyang Business School.