Singapore’s real median incomes decline 2.3% in 2023 due to high inflation: MOM report

SINGAPORE: In 2023, high inflation impacted the purchasing power of Singapore residents, resulting in a 3% decline in real incomes for resident workers at the 20th percentile compared to the previous year.

Median wage earners also saw a decline of 2.3% in their real incomes despite an increase in nominal wages.

The Ministry of Manpower (MOM) unveiled an advanced report on Thursday (30 Nov), shedding light on Singapore’s labour market performance in 2023.

MOM foresees a potential moderation in the decline of real incomes in the upcoming year as inflation is projected to ease.

MOM highlighted that nominal income in 2023 surpassed that of 2022. Workers at the 20th percentile income level earned S$2,826 (approximately US$2,120) in 2023, up from S$2,779 in 2022.

Similarly, median workers’ earnings rose to S$5,197 in 2023, compared to S$5,070 in the previous year.

Even after considering the Workfare Income Supplement (WIS) and associated payments, real wages for those at the 20th percentile level decreased by 2.1%.

“While real income growth for the remainder of 2023 is likely to remain negative, we expect an improvement in real income growth in 2024 with inflation easing,” said the ministry.

It added: “Over a longer time horizon from 2013 to 2023, real income growth remained positive and wage dispersion narrowed between the (20th-percentile) worker and the median worker.”

The data in the Labour Force in Singapore Advance Release 2023 stems from the annual Comprehensive Labor Force Survey, which collected responses from more than 27,900 representative resident households.

According to Singapore’s Straits Times, Mr Ang Boon Heng, the director of MOM’s manpower research and statistics department, highlighted the considerable impact of the WIS and other payments, which contributed to a 0.9 percentage point reduction in the decline of real wages for 20th-percentile earners.

“Considering that inflation is high… I think with inflation easing, we will be able to see positive impact on the lower-wage workers with all these policies,” he said.

Despite the decline, Singapore maintains one of the world’s highest employment rates, said Mr Ang.

Job vacancies decline, non-PMETs see larger drop in unemployment

Labour demand is showing signs of easing, indicated by a consecutive five-quarter decline in job vacancies and a substantial drop in the ratio of job vacancies to unemployed individuals, reaching 1.94 in June 2023.

Among different employment categories, non-PMETs experienced a more significant decrease in unemployment rates (from 4.4% in 2022 to 3.6% in 2023) compared to PMETs (reducing from 2.6% to 2.4%).

Similarly, long-term unemployment rates decreased more for non-PMETs (from 0.7% to 0.5%) than for PMETs (declining by 0.1 percentage points to 0.4%) over the same period.

MOM said Indicators of under-utilization of labour showed improvement. The proportion of discouraged workers, those who refrain from job searching due to pessimism about finding suitable employment, remained low and stable at 0.4% in 2023.

Reasons cited by discouraged workers included beliefs about the unavailability of suitable work, discrimination by employers, and inadequacy in qualifications or experience.

Additionally, the time-related underemployment rate decreased from 3% in 2022 to 2.3% in 2023, marking the lowest rate in over a decade. This decrease indicates that more part-time workers in 2023 achieved the desired work hours compared to the preceding year.

Moreover, the percentage of employees in permanent jobs rose to 90.5%, reaching its highest level since 2016.

MOM: 1.12 million residents outside the labour force in 2023

Notably, the report said There were 1.12 million residents who were outside the labour force in 2023, an increase from 1.05 million in 2022.

“This rise was mainly due to fewer students taking on temporary jobs, ” the report noted.

The share of youths aged 15 to 24 among residents outside the labour force increased from 22.8% in 2022 to 24.5% in 2023, but is lower than the pre-pandemic share (27.3% in 2019).

“With fewer youths taking up temporary work, those pursuing education/training among residents outside the labour force also increased from 23.9% in 2022 to 25.5% in 2023.”

MOM report said household and caregiving reasons remained common reasons for being outside the labour force, but the share has held steady over the year at 23.8% in 2023, after declining from 27.6% in 2018.

“The decrease is helped by more women participating in the labour force. With flexible work arrangements becoming more prevalent after the pandemic, this may have helped more caregivers fulfil responsibilities both at home and at work.”

“While the share of retirees among those outside the labour force has declined from 28.1% in 2022 to 25.2% in 2023, it is expected to increase over time with an ageing population.”

The Economist: Zurich, Singapore world’s most expensive cities

On Thursday, The Economist unveiled Zurich and Singapore as the world’s most expensive cities, surpassing New York, reflecting the persistent surge in living expenses.

The British weekly estimated that prices have increased an average of 7.4% over the past year in 173 major cities, a slight slowdown compared to a record 8.1% inflation in 2022.

“The cost of living crisis is far from over and price levels remain well above historic trends” said Upasana Dutt, who led the study, which is based on the price of 200 products and services.

“We expect inflation to decelerate further in 2024,” she added, due to the effects of interest rate hikes by central banks to fight price increases.

Zurich dethroned New York, which topped the rankings last year alongside Singapore.

Four of the top 10 cities are in Europe, a result of continued high inflation affecting food and clothing, as well as the appreciation of the euro against the dollar.

The ranking is made in dollars, and converts other currencies to the greenback accordingly, which results to higher prices in the eurozone as the euro strengthens.