Have our real incomes been stagnating?
Real incomes are incomes that have been adjusted for price changes.
The majority of Singaporean workers and households have seen growth in their real incomes in the five-year period from 2007 to 2012. Real income growth in 2007-2012 was also stronger than in the earlier five-year period of 2002-2007.
For the lower 20 percent of Singaporeans, income growth was weak or negative in 2002-2007, and only recovered in the last five years (2007-2012).
The median worker saw real wage growth of 9.3% in 2007-2012. However, in the previous five years from 2002 to 2007, real wages of the median worker declined by 0.2% [Chart 1].
Real wages of the worker at the 20th percentile grew more slowly at 4.4% in 2007-2012, offsetting a fall by 3.7% from 2002 to 2007.
Note that the figures for real income growth are after deducting All-Items CPI inflation. This includes costs of imputed rentals on owner-occupied homes, which are not actual cash expenditures. Real income growth in the last five years was stronger when excluding this item at 8.2% and 13.2% respectively for the 20th percentile and median income worker in 2007-2012 (see footnote to Chart 1).
Chart 1: Change in the Real Gross Monthly Income from Work (including employer CPF contributions) of full-time employed Singapore Citizen, 2002-2007 & 2007-2012 (June)
Note: Deflating by CPI excluding imputed rentals on owner-occupied accommodation, the cumulative real growth for the 20th percentile and median income are -4.5% and -1.1% respectively in 2002-2007 and 8.2% and 13.2% respectively in 2007-2012.
Similarly, real median monthly household income from work on a per household member basis has increased by 13.9% in the last five years (2007-2012), after growing by 7.9% in the previous five years (2002-2007) [Chart 2].
Real income growth at the 20th percentile was also stronger in the second half of the decade (10.2%) than the first half (4.4%).
Real income growth in the last five years was stronger when excluding imputed rentals on owner-occupied homes at 19.2% and 18.8% respectively for the 20th percentile and median income household in 2007-2012 (see footnote to Chart 2).
Chart 2: Cumulative Real Change in Monthly Household Income from Work Per Household Member Among Employed Singaporean Households, 2002-2007 & 2007-2012.
* Deflating by CPI excluding imputed rentals on owner-occupied accommodation, the cumulative real growth for the 20th percentile and median income households are 3.1% and 7.2% respectively in 2002-2007 and 19.2% and 18.8% respectively in 2007-2012.
Household income from work includes employer CPF contributions.
International comparisons of real income growth
Slowing or stagnating incomes are a challenge for most developed countries, and the more developed ones in Asia. Chart 3 compares real income growth in Singapore with that in similar Asian economies. The median Singaporean household has seen its real income grow more than twice as fast as that in Hong Kong, and more so compared to South Korea and Taiwan.
Source: Data from National Statistical Offices and the IMF
- South Korea: based on average rather than median income. Also includes transfers but not taxes.
- Hong Kong: based on median income after accounting for cash transfers.
- Hong Kong data is for 2006-2011, unlike the other three countries (2007-2011).
- Cumulative real growth for Singapore from 2007-2012 is 17.7%. Data for 2012 is not available for Hong Kong, South Korea and Taiwan.