Singapore’s real median income has witnessed a 4.5% fall in the first half of 2023, a stark contrast to the growth observed in the past five years. Senior Minister of State for Manpower Zaqy Mohamad, addressing the Parliament on the economic challenges, highlighted that “the decline, based on preliminary estimates, was due to elevated inflation and a weaker economic outlook.”
While nominal median income showed a slight uptick of 0.9%, the inflation-adjusted real income presents a more concerning picture. The current economic climate has overshadowed the 9.4% real median income growth from 2017 to 2022, which had successfully surpassed inflation rates.
In his parliamentary address, Mr Zaqy responded to MPs Edward Chia Bing Hui and Saktiandi Supaat on wage growth concerns, particularly emphasizing the plight of vulnerable workers. He reassured that “lower-wage workers have experienced good real income growth over the last five years,” with real income at the 20th percentile climbing 15.4%, exceeding the 1.8% annual growth at the median.
The government’s response to the inflationary pressure has been prompt, with the introduction of a “S$1.1 billion cost-of-living support package in September,” as stated by Mr Zaqy. This package is aimed at providing immediate relief through “cash payouts, Community Development Council and public transport vouchers, as well as rebates for eligible Singaporeans and households.”
Furthermore, the National Wages Council has been proactive, with Mr Zaqy highlighting their recommendation for employers to “consider a one-off special lump sum payment to workers, recognizing the impact of high prices.”
On the productivity front, Mr Zaqy pointed out that the government is focusing on Industry Transformation Maps to “transform businesses and upskill workers for jobs of the future across the economy.” He also cited the progressive wage model expansion, which is set to ensure that workers “can expect cumulative wage increases of up to 80 per cent by 2028.”
In September, core inflation, which provides a more accurate representation of the average Singaporean household’s regular expenses by excluding private transport and accommodation costs, stood at 3.0% year on year. This marks a reduction from the 3.4% recorded in August.
However, the overall Consumer Price Index (CPI) for All Items indicated a slight rise, reaching 4.1% year on year in September, up from 4.0% in August.
This increase was predominantly propelled by soaring private transport inflation, catalyzed by record certificate of entitlement (COE) prices, which counterbalanced declines in core and accommodation inflation.