SINGAPORE — The median monthly household income from work per household member rose from S$2,886 in 2020 to S$3,027 last year, surpassing the pre-pandemic figure of S$2,925, while income inequality narrowed to the second lowest level on record.  

The 2.8 per cent real growth in median monthly household per household member in 2021 year-on-year was also a turnaround from the 1.2 per cent decline in 2020 amid the Covid-19 pandemic. 

The internationally recognised Gini Coefficient, which measures inequality of income distribution, fell from 0.452 in 2020 to 0.444 in 2021. The lower the figure, the less the inequality, with zero representing no inequality at all.

At the same time, the report showed that households in the top 10 per cent saw their average monthly earnings per member slide by 1.1 per cent in real terms last year, while every other income group saw an increase. 

These were among the findings of the yearly Key Household Income Trends report released by the Department of Statistics (SingStat) on Tuesday (Feb 15).

Economists said that the narrowing inequality is partly due to efforts to help lower wage workers, such as the Progressive Wage Model, as well as schemes such as the Jobs Support Scheme to create more jobs for locals. 

The report also showed that resident households — those largely comprising citizens and permanent residents — received less in government transfers in 2021 compared to 2020.

This was due to the cessation of one-off schemes introduced in 2020 to cushion the impact of Covid-19, such as the Self-Employed Persons Income Relief Scheme. 

CLOSING THE WAGE GAP

The Gini Coefficient in 2021 fell to its lowest since the year 2000, when the figure was 0.442: 

• The closing income gap is due to the stronger income growth among lower income groups compared to the higher income groups, it added
• After accounting for government transfers and taxes, the figure was 0.386 in 2021, which was not as low as the 0.375 reading observed in 2020
• This increase is "due to the cessation of one-off schemes introduced in 2020 to cushion the impact of the Covid-19 pandemic," the report noted

Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said that the narrowing inequality gap, without accounting for government transfers and taxes, is partly due to the Progressive Wage Model, which helps to increase wages of workers in the cleaning, security and landscape sectors.

“With the Progressive Wage Model also expanding to help some eight in 10 low-income workers, I expect that income inequality will be manageable,” she said. 

“It also helps that we have a tight foreign manpower policy to ensure a more level playing field for the low value-added jobs.” 

At the height of the pandemic, the Government rolled out the Jobs Growth Incentive supporting companies in expanding local hiring by providing salary support, while the Jobs Support Scheme provides wage support for employers to retain their local employees. 

CIMB Economist Song Seng Wun added that local workers on lower incomes may have also received an “extra helping hand” from the border restrictions imposed during the pandemic. 

“The border restrictions which constrained businesses from taking in more foreign labour, may in turn have supported local wages,” he said. 

DECLINE IN INCOME FOR TOP EARNERS 

Apart from the top earners, every other income bracket saw real income growth:

• This growth was between 0.6 per cent and 5.5 per cent per household member
• Households in the bottom 10 per cent saw 4.7 per cent real growth in income, while those on the second lowest rung — the 11th to 20th percentile — saw the largest growth of 5.5 per cent
• Real growth refers to growth that has been adjusted for inflation. Before accounting for inflation, the top 10 per cent still saw a 1.7 per cent growth in average monthly income per household member

The weaker growth of the top 10 per cent was attributed to a drop in income from work of residents employed as "legislators, administrators and managers", which make up 40 per cent of those in this income bracket, the report said. 

According to statistics from the Ministry of Manpower (MOM), the median monthly income from work for full-time residents employed as legislators, administrators and managers fell by 3.8 per cent, or 6 per cent accounting for inflation, between 2020 and 2021.

"The real household income growth for this group was further dampened by higher inflation in 2021," said the report. 

Ms Ling said that the drop in income for the top ten percentile could be due to the fact that many of those in top management — who typically fetch higher incomes — may have taken pay cuts over the course of the pandemic. 

“For example, (some) lawyers took a pay cut due to Covid-induced recession,” she said. 

DBS senior economist Irvin Seah said that the slight decline in salaries for those on higher incomes may have occurred because they had been less severely affected when the pandemic first hit in 2020, and so relative to the lower income groups, their income growth is more modest. 

In 2020, the bottom 10 per cent of households were the hardest hit by the pandemic, seeing a 6.1 per cent drop in their total earnings from work, while the highest income rung saw only a 2.3 per cent drop in income. 

“When we see this recovery, we see it significantly more in the low income than the mid and higher income, as the low income has borne the brunt of the pandemic,” he said.  

GROWTH IN MEDIAN HOUSEHOLD INCOME 

• The total monthly household income from work — the amount earned by all employed members of a household per month, excluding domestic workers — grew by 3.6 per cent in nominal terms from S$9,189 in 2020 to S$9,520 in 2021
• This surpassed pre-Covid levels in 2019 of S$9,425
• However, accounting for inflation, household income grew by 1.5 per cent in 2021, while it fell by 2.4 per cent in 2020
• Across the last decade, there has also been slower growth in household income. From 2011 to 2016, growth in real household income from work was at 3.2 per cent a year, compared to 0.8 per cent from 2016 to 2021

FALL IN GOVERNMENT TRANSFERS 

• Households also received less in government transfers in 2021 compared to 2020, due to the cessation of one-off support schemes
• While the average household received S$6,324 in government transfers in 2020, this figure dropped to S$5,096 in 2021
• Those living in Housing and Development Board (HDB) one- and two-room flats received S$11,363 per household member on average, the highest across dwelling types and more than twice of what those in HDB three-room flats received — S$5,382
• Households living in condominiums and other apartments received S$3,284 in government transfers last year, the lowest among all housing types

In 2020, the Government had rolled out several one-off schemes such as the Care and Support Package, Self-employed Persons Income Relief Scheme and the Covid-19 Support Grant to "cushion the impact of the Covid-19 pandemic", read the report. 

"These schemes have largely ceased, leading to lower transfers for resident households in 2021." 

However, schemes such as the Goods and Services Tax Vouchers, the Covid-19 Recovery Grant and Baby Support Grant have remained, thus moderating the decline in transfers, said the report. 

CORRECTION: A previous version of this article stated that the second-lowest rung of income earners were those in the 10th to 20th percentile. This was inaccurate. These income earners are in the 11th to 20th percentile. We are sorry for the error.