Keeping the Gini in the bottle

Govt measures help to control income disparity

Thursday • February 14, 2008 (TODAYonline, by Nazry Bahrawi)

AT A time when the economy simply sparkled, wages for the low income and lower-middle income groups went up last year, but not as quickly as they did in 2006.

And if not for Government intervention, the widening income gap would have been more pronounced, according to a Department of Statistics (DOS) report yesterday.

The bottom 10 per cent of households with at least one working Singaporean brought home $310 per member each month — before inflation — compared to $300 in 2006. In real terms, the annual change in income was 3.3 per cent compared to 6.6 per cent growth in 2006 over the year before.

Those in the 11th to 20th percentile took home $570 per household member before inflation compared to $540 in 2006. In percentage terms, this was 3.6 per cent compared to 5.6 per cent the year before.

As Singapore households experienced the highest growth in average wages in almost a decade, the Key Household Income Trends report showed the middle-income and richer households, for whom the rate of wage growth last year eclipsed the increases in 2006, pulling away from the bottom 40 per cent.

In the 41st to 50th percentile, wages increased by 4.7 per cent per household member, to $1,190, compared to an increase of 4.2 per cent in 2006.

Meanwhile, the top 10 per cent of households earned 11.1 per cent more last year — or $7,940 per member.

Due to the demand for skilled and knowledge workers outstripping supply, this latter group was able to demand higher wages — coming especially in an economic upturn, said UOB economist Ho Woei Chen.

She told Today: "For instance, those in the banking sector especially in the field of wealth management would experience a higher wage growth compared to those in the manufacturing sector."

The average income for a resident household headed by a Singaporean or permanent resident with at least one working person, was $6,830 last year, which was a 9.1-per-cent increase over 2006. The increase was 6.9 per cent if inflation was taken into account.
The good news is that the average monthly household income in Singapore rose 9.6 percent to 6,280 Singapore dollars (about 4,423 U.S. dollars) last year, the fastest pace over the last decade.

"The strong household income growth in 2007 may be attributed to strong wage grow on the back of healthy economic growth and a tight labor market," said the report.

The average monthly income among households with at least one employed person grew 9.1 percent to 6,830 Singapore dollars (about4,810 dollars).

After adjusting for inflation, Singaporean households enjoyed a real income growth of 6.9 percent last year.