Income gap shrinks for first time in four years

SINGAPORE — The income gap has narrowed for the first time in four years, with the Gini coefficient — a measure of income equality — falling last year to a nine-year low.

And after taking into account Government taxes and transfers, income disparity last year was at its lowest since 2000, when such data was collated.

The Department of Statistics’ latest report on Key Household Income Trends released yesterday showed that the Gini coefficient for last year was 0.463, compared with 0.478 in 2012. After adjusting for Government transfers and taxes, it was 0.412 last year .

Median household income from work grew to S$7,870 last year, an increase of 1.6 per cent in real terms. The median monthly household income from work per household member increased 3.2 per cent after taking inflation into account.

The top 10 per cent of households, in terms of income, was the only group that experienced a drop in income last year. For this group, average monthly household income from work per household member fell 5.2 per cent in real terms last year — in contrast to the 5.1 per cent increase they experienced in 2012, the largest rise among all income groups. Last year, the bottom 10 per cent of households saw their average monthly household income from work per household member increase 2.4 per cent in real terms — in contrast to a 1.2 per cent drop in 2012.

Economists whom TODAY spoke to noted how the finance and property sectors, for example, did not do as well last year. Government curbs on foreign labour, meanwhile, had helped to push up the salaries of low-income earners.

While the economists felt that the income gap will continue to narrow in the coming years, the Department of Statistics pointed out that changes in the Gini coefficient can vary from year to year. The department said: “A single year’s change may not be symptomatic of a longer term trend. For example, after declining in 2008 and 2009, the Gini (coefficient) rose in 2010 to 2012 before dropping in 2013.”

The department added that income for the bottom 80 per cent of households grew faster last year compared with that for the top 20 per cent.

CIMB Research Regional Economist Song Seng Wun noted the difficult market conditions in the finance sector last year, while SIM Global Education Senior Lecturer Tan Khay Boon pointed out that, in the real estate and property development sectors, property cooling measures had adversely affected sales, which in turn could have lowered the earnings of those working in the industry. Both economists said the curbs on inflow of foreign workers had resulted in increased wages, especially for lower-wage workers in the resident workforce.

DBS Bank Senior Economist Irvin Seah said the narrowing income gap could also be due to the impact of government measures to improve the income and employability of lower-wage workers, such as the Workfare Income Supplement Scheme and the Workfare Training Support scheme. The report “has reaffirmed the fact that (economic) restructuring is on track”, he said.

In terms of government transfers, which include Workfare Bonus, top-ups to Central Provident Fund and Medisave accounts, as well as rebates on utilities, resident households — including those with no working persons — received S$3,440 per household member on average from various government schemes last year, compared with S$2,760 in 2012.

In particular, households in one- and two-room HDB flats received S$8,630 per household member on average, compared with S$7,210 in 2012.

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