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

In 2023, Singapore residents experienced a 3% decline in real incomes for workers at the 20th percentile, while median earners faced a 2.3% decrease, despite nominal wage growth.

The Ministry of Manpower (MOM) on Thursday released insights on Singapore’s labor market in 2023.

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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.

He noted the ministry’s focus on specific age groups, such as women aged 45 to 49, where employment rates are not as high as desired due to factors like the aging population, which exerts downward pressure on employment rates.

“These are pockets or groups where we can try to raise the employment rate, but there will always be that competing… downward pressure from the ageing population, so we will expect employment rates to stay at this level,” he said.

Singapore’s employment rate dips in 2023 despite sustained labour market tightness

In 2023, Singapore witnessed a decline in its employment rate among residents aged 15 and above, dropping from the previous year’s historic high of 67.5% in what was described as an “exceptionally tight” labour market to 66.2%, according to MOM.

Despite this decrease, MOM emphasized that the labour market in 2023 remained relatively tight.

Both unemployment and long-term unemployment rates saw declines for both PMETs (professionals, managers, executives, and technicians) and individuals not holding such roles.

However, MOM defended that the decline in the employment rate throughout the year was primarily a result of more residents choosing to stay outside the labour force rather than facing difficulties in seeking employment opportunities.

The labour force participation rate among residents aged 15 and above decreased from 70% in 2022 to 68.6% in 2023, as highlighted in the report.

The report further highlighted that Singapore has the fourth highest employment rate when compared to countries in the Organisation for Economic Co-operation and Development (OECD).

“As a result of policies aimed at encouraging women to return to the workforce and improving the employability of older workers, Singapore has consistently maintained its high ranking over the decade despite an ageing workforce.”

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.

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Must be fake news from MOM, income decline cannot be 2.3%, it feels more like 23% after inflation.

What exactly is driving inflation in Singapore? Oil prices have stabilised for now. So have the cost of food commodities.

Consumption Tax increases perhaps? Increase in public transport fares? Increase in S&C Charges? The escalating asset bubble?

A surge in the population and an influx of money leading to more money and people chasing the same number of products?

What will the millionaire ministers blame next? The weather?

Must be fake news lah, Lawrence himself say now min income is $9000 per month , where got decline?
Condo on launch day 80% over sold out, where got income decline?
Must be oppo making fake news and stirring shit again!😆😆😆🤣🤣🤣

“MOM defended that the decline in the employment rate throughout the year was primarily a result of more residents choosing to stay outside the labour force rather than facing difficulties in seeking employment opportunities.” MOM is always afraid to define clearly who the “residents” are. Is it true blue Singaporeans or is it people who just happen to reside in Singapore, including the PRs and Foreigners? Be more specific if you want Singaporeans to agree with what you report. All these reports seemed to be prepping Singaporeans for the imminent GE. Many wonder if true blue Singaporeans have the resolve… Read more »

GST 1% this year another 1% next year = 2%. GST is a regressive tax. SG needed more targeted tax on the rich. Re-introduce back Estate Duties to redistribute wealth currently concentrated on a few top % of the population, where the majority are fighting over whatever leftover and crumps, especially when the floodgate poured into SG hundreds of thousands foreigners in a short few years

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