Income inequality in Singapore drops to its lowest since 2001

[Mista]

SINGAPORE — The income gap in Singapore has reduced to its narrowest since 2001, with the wages of Singapore’s lowest earners rising at a faster pace than those of the highest earners.

The Gini coefficient based on household income from work per household member dropped from 0.458 in 2018 to 0.452 in 2019, before accounting for government transfers and taxes.

The Gini coefficient measures income inequality as a ratio from one to zero where the higher the number, the greater the degree of income inequality.

The last time the Gini coefficient saw a drop almost as sharp was from 2015 to 2016 where it dropped from 0.463 to 0.458.

The 2019 figure is also the lowest since 2001 when it stood at 0.454.

After adjusting for government transfers and taxes, the Gini coefficient in 2019 fell from 0.452 to 0.398.

The Singapore Department of Statistics (SingStat), which released these figures in its annual report on Key Household Income Trends on Thursday (Feb 20), attributed the drop to the redistributive effect of Government transfers in the form of various schemes such as Workfare Income Supplement and rebates on utilities, service and conservancy charges among others.

INCREASE IN REAL GROWTH FOR THOSE IN BOTTOM 10TH DECILE

Those in the bottom 10th decile saw an increase in their real growth in average household income per member over the last 10 years.

This figure stood at 4.2 per cent (per annum) for the bottom 10th decile between 2014 to 2019, a one percentage point increase from the real growth in 2009 to 2014.

This increase is higher than the real growth seen by those in the 91st to 100th decile.

The highest earners saw their real growth in average household income per member drop from 2.8 per cent (per annum) from 2009 to 2014, to 2.5 per cent (per annum) between 2014 and 2019.

The real growth in average household income per member in 2019 for those in the 1st to 10th percentile was 4.4 per cent while those in the 11th to 20th percentile was 4.6 per cent.

The group that registered the highest growth last year was those in the 61st to 70th percentile, at 5.6 per cent.

The growth registered by those in the bottom 20th decile was significantly higher than the real growth in terms of average household income per member of 0.4 per cent seen by households in the top 10 per cent income group.

Overall, resident employed households across all income groups showed real growth in their average household income from work per household member, with those in the 1st to 90st percentile income groups registering a real growth of between 3.5 per cent to 5.6 per cent in 2019.

GROWTH IN MEDIAN HOUSEHOLD INCOME FROM WORK

The median monthly household income from work among resident employed households grew by 1.4 per cent in nominal terms, or 1 per cent in real terms, from S$9,293 in 2018 to S$9,425 in 2019.

Resident employed households refers to a household headed by a Singaporean citizen or permanent resident with at least one working person.

Over the last five years, the median monthly household income from work of resident employed households increased by 13 per cent cumulatively or 2.5 per cent per annum in real terms.

MORE GOVERNMENT TRANSFERS FOR THOSE IN ONE AND TWO-ROOM HDB FLATS

Resident households in one and two room Household Development Board (HDB) flats received S$10,548 per household member on average in 2019.

This was more than double the amount of transfers received by resident households staying in other dwelling types such as HDB four or five-room flats and condominiums.

On average, resident households, which includes households with no working person, received S$4,628 per household member from various Government schemes such as the Merdeka Generation Package and Bicentennial Bonus in 2019.

GROWTH IN WAGES OF TOP EARNERS HIT BY POOR ECONOMY

Experts TODAY spoke to said that the poor economy had affected the incomes of top earners here, leading to a narrowing gap between top and bottom earners.

DBS Bank senior economist Irvin Seah said that the growth in real incomes of higher earners, which consist of high-paying executives and business owners, has taken a hit.

High-paying executives have seen their bonuses reduced as a result of the poor economy last year while business owners have taken pay cuts to avoid retrenching their workers, said Mr Seah.

Likewise, Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said that the growth in incomes of those in the top 10th percentile has not kept pace with those in the other income groups due to the unfavourable financial environment.

“Financial market volatility due to the trade tensions and geopolitical uncertainties, coupled with very low interest rate environments do not favour wealth accumulation,” she said.

This, together with a bias by Governments to tax high income households following the global financial crisis may have led to the wages of high earners stagnating, said Ms Ling.

However, experts differed on whether the Government should focus its attention on higher earners in light of their slowing growth in real incomes.

Dr Chua Hak Bin, a senior economist at Maybank Kim Eng Group in Singapore, said that in addition to its focus on the lower-income group, the Government should also pay attention to professionals, managers, executives and technicians (PMETs).

If those in the PMET group were hit by the poor economy, this could have a trickle-down effect on those from lower-income groups. For instance, top-earners may cut back on their spending, impacting the businesses that lower-income workers are involved in, said Dr Chua.

However, Mr Seah disagreed, saying that top earners “can take care of themselves” and that it is the Government’s responsibility to take care of the bulk of the population.

Mr Zainal Sapari, the assistant secretary-general of the National Trades Union Congress (NTUC), said that the lowering of the Gini coefficient was good as it signalled the narrowing gap between top and bottom earners.

However, he added that more long-term measures, such as training and upgrading workers, were needed to ensure that workers could earn a better income.

Such measures, said Mr Zainal who is also the Member of Parliament for Pasir Ris-Punggol Group Representation Constituency, will ensure that the drop in the Gini coefficient sustains in future years.

On the rise in real median household income per household member last year, Mr Seah said this was partly due to the shrinking household size in Singapore.

Based on the latest official statistics, the average household size in Singapore is 3.24 as of 2018, down from 3.5 in 2010.

Read more at https://www.todayonline.com/singapore/income-inequality-singapore-drops-its-lowest-2001

 

[tower9]

Singapore is the Anti-Hong Kong. Smart and logical people solving problems instead of a bunch of dingbats supporting a decrepit corrupt system that is disenfranchising their own people while blaming an imaginary bogeyman (the Mainland).

 

[CHN Bamboo]

I found something interesting here.

The income gap in Singapore has reduced to its narrowest since 2001, with the wages of Singapore’s lowest earners rising at a faster pace than those of the highest earners.

The Gini coefficient based on household income from work per household member dropped from 0.458 in 2018 to 0.452 in 2019, before accounting for government transfers and taxes.

The Gini coefficient measures income inequality as a ratio from one to zero where the higher the number, the greater the degree of income inequality.

The last time the Gini coefficient saw a drop almost as sharp was from 2015 to 2016 where it dropped from 0.463 to 0.458.

The 2019 figure is also the lowest since 2001 when it stood at 0.454.

After adjusting for government transfers and taxes, the Gini coefficient in 2019 fell from 0.452 to 0.398.

versus

The reality is that Hong Kong is already operating as a living experiment in how the rule of law and electoral democracy can work within the Chinese context. The city ranks 16th in the World Justice Project’s Rule of Law Index, right behind Japan and ahead of France (17th), Spain (21st), and Italy (28th). On electoral democracy, however, there are significant challenges, which have little to do with the mainland.

A powerful, but oft-ignored factor underlying the frustrations of Hong Kong’s people is inequality. Hong Kong’s Gini coefficient – in which zero represents maximum equality and one represents maximum inequality – now stands at 0.539, its highest level in 45 years. By comparison, the highest Gini coefficient among the major developed economies is 0.411 (in the US).

This inequality is most starkly apparent in housing. The per capita residential space in Hong Kong is just 16 square meters (172 square feet), compared to 36 square meters (387 square feet) in Shanghai. Moreover, whereas nearly 45 percent of Hong Kong’s residents live in public rental or subsidized housing, 90 percent of Chinese households own at least one home.

Yet, despite having fiscal reserves of more than HK$$1.2 trillion (US$147 billion), Hong Kong’s autonomous government has failed to address inequality, precisely because of the electoral politics to which the protesters are so committed. The city’s Legislative Council – whose members are elected through a complicated process based on proportional representation – is too politically and ideologically divided to reach consensus.

Unable to push through tough reforms to subdue vested interests, as China’s government is doing on the mainland, the Council is also vulnerable to the influence of real-estate developers eager to block measures that would lower prices, such as the allocation of land for more public housing.

Hong Kong’s real problem is inequality.

I guess what Hong Kong lacks is a series of ‘left-wing policies’ implemented by the Singapore government.

 

[tower9]

I found something interesting here.



versus



Hong Kong’s real problem is inequality.

I guess what Hong Kong lacks is a series of ‘left-wing policies’ implemented by the Singapore government.

Hong Kong is dominated by a right wing money grubbing capitalist land hoarding elite who are making lives impossible for the average HK citizen and putting the poor into rented cages, while conveniently using their media organs to direct hatred against Mainland China, who have no control over local policies.

But not surprising at all. Hong Kong culture at its heart is selfish, greedy, mean spirited, discriminatory, angry and immoral at its very core.

 

[Mista]

I found something interesting here.



versus



Hong Kong’s real problem is inequality.

I guess what Hong Kong lacks is a series of ‘left-wing policies’ implemented by the Singapore government.

The inequality problems (especially housing) HK is facing are actually faced by many other developed countries as well. The excesses of capitalism went unfettered in many places.

A series of reports by the Economist:
Housing is at the root of many of the rich world’s problems
https://www.economist.com/special-r...-the-root-of-many-of-the-rich-worlds-problems

Singapore's housing policy is the biggest wealth redistribution in Singapore and a major social stabilizer, although it won't be captured in Gini coefficient numbers of measuring income inequality.

18:29

https://www.straitstimes.com/opinio...ingapore-versus-other-global-superstar-cities

 

[Nilgiri]

The inequality problems (especially housing) HK is facing are actually faced by many other developed countries as well. The excesses of capitalism went unfettered in many places.

A series of reports by the Economist:
Housing is at the root of many of the rich world’s problems
https://www.economist.com/special-r...-the-root-of-many-of-the-rich-worlds-problems

Singapore's housing policy is the biggest wealth redistribution in Singapore and a major social stabilizer, although it won't be captured in Gini coefficient numbers of measuring income inequality.

18:29

View attachment 607505

https://www.straitstimes.com/opinio...ingapore-versus-other-global-superstar-cities

Singapore has best system of supply side economics+free market liberalism and good (well managed) govt intervention in specific critical areas that I have seen anywhere.

It has good examples on all sides to contrast with all-in black/white absolutist arguments that are gaining huge traction in other parts of developed world.

The excesses of capitalism went unfettered in many places.

Actually its no longer really capitalism anymore (going by the definition of the first one that really defined it -Adam Smith - who really expounded maximum presence of society in all referencing/acticity and good moral setup as first important thing).

Rather this is oligarchism which tends to socialism/elitism (i.e disproportionate accumulation of resources because of bad economic+moral referencing with larger society)

 

[Mista]

Singapore Budget 2020: Building a caring and inclusive home for all Singaporeans
A vibrant economy provides good jobs and opportunities for Singaporeans, and allows families to do well. It also gives us the resources to support our people with their needs, to build a caring and inclusive home.

Our tax and spending policies reflect our values. Over the past decade, we have significantly increased our social spending.

We tripled our healthcare expenditure from $4 billion to about $12 billion a year, to meet the growing needs of our seniors and to ensure that every Singaporean has access to affordable and quality healthcare. We increased our investments in education, from $10 billion to about $13 billion, so that all Singaporeans will have the best chance to fulfil their fullest potential. We increased the expenditure on national development from $2.4 billion to $3.6 billion, with the bulk of this going into subsidies on public housing, so that every Singaporean household can have a home to call their own. Last year, we gave out about $1.1 billion in cash to Singaporeans who need more help.

This reflects our commitment to invest in our people, to give every citizen a stake in our society, to care for our seniors, and to provide more help to those with less.

SUPPORTING FAMILIES
Good education provides a strong foundation for children to grow, realise their aspirations, and continue a journey of lifelong learning. We have committed to decisive shifts in the Government's support for early childhood development. We are determined to give every child, regardless of circumstances, a good start in life.

As PM announced at the National Day Rally last year, we will step up efforts to improve the affordability, accessibility and quality of pre-school services. We have significantly enhanced pre-school subsidies and made them available to more families from this year. We will also increase the share of government-supported pre-school places from just over 50 per cent today, to 80 per cent by around 2025.

Overall, we are doubling our support for our young in their pre-school years. In 2018, the Government spent about $1 billion on the early childhood sector. Within the next few years, this will double to over $2 billion per year.


In the primary to pre-university school years, education is already heavily subsidised for Singaporeans. Primary school is free for all Singaporeans, while the secondary school fee is $5 a month. Students pay only a few dollars of miscellaneous fees.

For students from lower-income families, we will provide further help. We will enhance the MOE Financial Assistance Scheme by raising the annual bursary quantum for pre-university students, from $900 to $1,000. We will also increase transport subsidies for all students, and school meal subsidies for secondary school students. The enhanced Financial Assistance Scheme will cost an additional $9 million per year - a total of $52 million per year.

We announced that we would enhance bursaries for diploma and degree holders last year. Starting from Academic Year 2020, students from lower-and middle-income families in the polytechnics and autonomous universities can benefit from higher bursaries. We will also enhance bursaries for full-time ITE students from Academic Year 2020. Students from households who qualify under the lowest income tier for the bursaries will now receive 100 per cent fee subsidy on top of the cash bursary. Students from low-and middle-income households will also benefit from an increase in the cash bursary quantum by up to $200 a year.

The cost of bursaries for higher education will rise from $148 million per year to $198 million per year.

A good education lays a strong foundation for a better future. This is why this Government has been providing significant education subsidies for each child. A Singaporean child will receive over $180,000 of education subsidies in total by the time he turns 16. These include about $50,000 in government subsidies over five years when they enrol in a full-day childcare programme with one of the anchor operators.

For those from less-privileged backgrounds, there are additional subsidies for pre-school, bursaries, and other financial assistance schemes. This substantial investment is how we maximise every child's potential, regardless of family circumstances.

When Singaporeans are ready to start a family and own a home, we make sure that there is good access to quality and affordable housing.

Last year, the Ministry of National Development consolidated existing housing grants into the Enhanced CPF Housing Grant. With the Enhanced Housing Grant, first-time flat buyers can now enjoy up to $160,000 in housing grants. The monthly household income ceilings for subsidised flats and executive condominiums were raised to $14,000 and $16,000 respectively.

We expect around 16,000 HDB households to benefit from these enhancements each year.

ENABLING SENIORS
Singaporeans are living longer. Our life expectancy at birth is close to 85 years, the longest in the world. This is a good thing! Singapore will not just be a great place to raise a family, but a great place for seniors to live a life of purpose, dignity and contribution. Ageing with confidence includes having financial assurance in retirement.

Over the years, we have strengthened the four pillars of our social security system - home ownership, CPF, healthcare assurance, and income from Workfare and Silver Support. We have also been enhancing the ComCare schemes, which support Singaporeans who are unable to work and have little or no family support.

The CPF is a major scheme to enable Singaporeans to save enough for their retirement years. We need to keep on updating and improving our CPF policies over time, so that they remain appropriate for each cohort.

We have been adjusting the Basic Retirement Sum, or BRS, regularly, in line with rising income levels. Since 2017, household incomes per capita have risen by an average of 4.1 per cent per year (in nominal terms), while the BRS has increased by 3 per cent per year.

We will continue to adjust the BRS by the same 3 per cent per year for the next two cohorts. The BRS will be $93,000 for cohorts turning 55 in 2021, and $96,000 for those turning 55 in 2022. These modest continuing adjustments are necessary for payouts to keep up with basic retirement expenses.

We expect seven in 10 actively employed persons from these two cohorts to be able to set aside their BRS, significantly more than the four in 10 about a decade ago.

We are in a fortunate position that most of our seniors have housing assets that they can use to support their retirement, if they wish.

We will do more to help Singaporeans tap their housing assets for retirement by enhancing the Silver Housing Bonus and the Lease Buyback Scheme.

The CPF is a good retirement scheme, based on personal savings. Many Singaporeans want to top up their own, their spouse's, or parents' CPF accounts. We would like to encourage more to do so, particularly those whose CPF balances are on the low side.

To help those with less CPF savings to save more, I will introduce a Matched Retirement Savings Scheme from 2021 to 2025. Lower-to middle-income Singaporeans aged 55 to 70 who have not been able to set aside the prevailing BRS will be eligible. Under this scheme, the Government will match every dollar of cash top-up made to their CPF Retirement Account, up to an annual cap of $600. This is a way of encouraging and augmenting family support for our seniors with fewer means in retirement.

About 435,000 Singaporeans will be eligible.

While the CPF is a good scheme, for a small segment of the elderly population, it will not be enough.

Some had low incomes during their working years, and currently have little or no family support. We created the Silver Support Scheme to complement the CPF for this group, and give them more financial security in retirement.

I will raise the quarterly cash payouts by 20 per cent. For individuals living in smaller flats, this means that the cash payouts will increase from $750 to $900 per quarter.

I will also broaden the eligibility criteria of Silver Support. There will be a new payout tier to provide a smaller payout to seniors whose monthly household incomes per person are above $1,300 but not exceeding $1,800 - these seniors do not receive Silver Support today.

Overall, we expect about 100,000 more seniors to benefit from the enhanced Silver Support in 2021. The cost of Silver Support will nearly double, from today's $330 million, to around $620 million in 2021. These enhancements underscore the Government's commitment to provide seniors with greater assurance in retirement, and reflect the values we hold dear, such as taking care of our parents and seniors.

They will also complement the other schemes for our seniors, such as the Pioneer Generation Package and Merdeka Generation Package.

We will also help seniors stay active and contribute to the community. Many senior volunteers find volunteering gives them purpose, keeps them socially connected, and promotes active ageing. The community benefits from their wealth of experience and skills.

STRENGTHENING GIVING
Our success in taking care of every Singaporean, from pre-school to retirement, is only possible with the support of our community partners. The Government will continue to support the community in building a stronger giving culture.

Last year, I announced the Bicentennial Community Fund.

This year, the Ministry of Social and Family Development and National Council of Social Service will set up the Community Capability Trust to fund-raise and support our social service sector partners in enhancing their capabilities and capacities to serve the community.

For a start, together with the Tote Board, we will provide $200 million to the trust in FY2020, and match up to $150 million in funds raised over the next 10 years. This will provide a pool of funds our social service agencies can tap to transform for the future.

Many enterprises have also built inclusive workspaces for persons with disabilities, or PWDs. To support the employment of PWDs, the Special Employment Credit (SEC) and Additional SEC schemes provide wage offsets for employers hiring Singaporean PWDs earning below $4,000 per month. At the last Budget, we extended the SEC and ASEC until the end of 2020.

In 2018, more than 5,700 employers hiring over 8,600 Singaporean PWDs benefited from the SEC.

We will introduce the new Enabling Employment Credit, or EEC, to provide stronger support for employers of PWDs. It will replace the current SEC and ASEC schemes for PWD employment. It will be available for five years, from 2021 to 2025, at a cost of about $31 million per year. To ensure it remains helpful for PWDs to find employment and remain in the workforce, the Government will review the EEC after two years and make adjustments if necessary.

I will also top up three funds that provide targeted help for the elderly and the lower-income: $750 million to the ElderCare Fund, $500 million to the ComCare Fund, and $200 million to the Medifund. These funds provide a safety net for the low-income, by helping them to meet their daily expenses and healthcare fees.

Budget 2020 supports the Government's long-term strategy of building a caring and inclusive society. This is our continued effort to improve the lives of our people and our future generations. We must continue to work together to build a society where opportunities are available to every Singaporean, at every stage of life.

https://www.straitstimes.com/singapore/building-a-caring-and-inclusive-home-for-all-sporeans

 

[nahtanbob]

isn't this just a housing subsidy for the lower classes ?

 

[Mista]

If situation deteriorates significantly due to COVID-19, DPM Heng says will make case to tap on reserves

SINGAPORE: Due to continued prudence, Singapore did not have to draw on past reserves as it ramped up fiscal support in Budget 2020 for its economy and people amid the COVID-19 outbreak.

“But if the situation deteriorates significantly and calls for us to tap on our past reserves, I will make a case to the President to seek her approval to do so,” said Deputy Prime Minister Heng Swee Keat on Friday (Feb 28) in his wrap-up speech for the debate on the Budget statement.

He was addressing questions that have been raised over Singapore’s reserves and suggestions that it should be used to fund the country’s needs, instead of raising the Goods and Services Tax (GST).

During the Budget debate on Thursday, Workers' Party Non-Constituency Member of Parliament Leon Perera had asked if the growth rate of the reserves could be slowed down to release more funds to invest in people and companies.

READ: Measures in Budget 2020 appropriate for now to deal with COVID-19 challenges - DPM Heng
In his speech, Mr Heng described the reserves as Singapore’s “nest egg” – one that is “borne of hard work and discipline” by the country’s founding fathers.

He said for the financial year 2019, the Net Investment Returns Contribution (NIRC) was the largest single contributor to the Budget at S$17 billion, or 3.3 per cent of gross domestic product (GDP).

This is a “highly unusual and very fortunate position”, said Mr Heng, who noted that this was not the case in most advanced countries that pay about 2 per cent of their GDP in debt servicing of accumulated debt.

On the other hand in Singapore, the reserves have generated substantial returns, which help to keep taxes low.

“Today, the NIRC at S$17 billion is more than personal income tax collections at S$12 billion, and GST collections at S$11 billion.

“If we did not have the NIRC, even doubling personal income tax, or doubling the GST rate to 14 per cent, would still not be enough,” said Mr Heng.

“Tell me in which other country are citizens able to reap the benefits of past savings in this way?” he added.

“So let us never forget that what we have inherited is very unusual and very precious. Let us be responsible and steward these properly for our future generations.”

The reserves have also given Singapore, a small country with no natural resources, the confidence to deal with the ups and downs in the world, said Mr Heng.

This is why the country has a “robust set of rules to safeguard and manage the use of reserves”.

“The President plays a critical role in guarding against profligate spending, and to ensure proper use of our past reserves to safeguard Singapore’s interest when needed,” he said.

Mr Heng raised the example of how former President S R Nathan approved the provision of S$150 billion from past reserves to guarantee bank deposits in Singapore from October 2008 to December 2010 during the global financial crisis.

“That calmed our depositors,” he said.

“We did not have a single bank run. The S$150 billion remained untouched and returned to past reserves. Singaporeans’ money was safe,” added Mr Heng, who was the managing director of the Monetary Authority of Singapore then.

In 2009, then-President Nathan approved a draw of S$4.9 billion from the past reserves to fund the Resilience Package. A year later after the economy rebounded sharply, the Government decided to return the money used to the past reserves.

“It did not have to, but did so, to maintain the discipline that has allowed this unusual move in the first place,” said Mr Heng.

Emphasising the need to be disciplined in the use of the country’s reserves, he continued: “Now, we can do the easy thing and avoid the pain for ourselves today. We can decide not to raise GST to pay for our own spending, but to tap on our reserves and its investment returns instead.

“But by doing so, we will soon deprive future generations of the benefits that we enjoy today. What would that, then, say about us?” he said.

“Let us continue to keep the discipline, and keep the faith and promise to future generations of Singaporeans, by stewarding our reserves well in our time.”

https://www.channelnewsasia.com/new...gnificantly-due-to-covid-19-dpm-heng-12480226