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)
Source: MOMNote: 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.
Source: DOS* 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 IMFNotes:-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.
There are regular claims that Singaporeans have lower purchasing power relative to people in other comparable places. Such claims cite surveys, such as the UBS Price and Earnings Report 2011. When looking at such reports, we need to also look at the assumptions and methods they use. For example, with regard to the UBS report:- It understated wages in Singapore. It assumed a set of common occupations across the world, thereby understating the proportion of higher skilled occupations in Singapore. In particular, Professionals, Managers, Executives and Technicians (PMETs) were under-represented. The study assumed that Singapore had only 9% PMETs but in actual fact, our resident employed workforce is made up of 52% of PMETs. And because PMETs command higher wages, assuming a smaller pool of PMETs in Singapore resulted in the wages for Singaporeans workers being understated.
- It overstated the cost of living for the typical local household. The study assumed a basket of goods (types of food and drinks, etc) representative of a family in Europe, but not of a local resident household. European consumption goods are likely to be more expensive in Singapore.A more detailed analysis of the UBS report can be found at:
Some other international reports with a similar expatriate focus are the EIU Cost of Living survey and Mercer report. A study by the Asian Competitiveness Institute used extensive international estimates and data by the World Bank and International Labour Organization to compare purchasing power in different cities. It found that the cost of living was high for expatriates as compared to other cities, but not for Singapore residents. The Institute also calculated the purchasing power of average wages based on a local resident’s cost of living and found that an average worker here has 34 per cent more purchasing power than one in New York. This is in contrast with the UBS report, where our purchasing power was only 33% that of New York’s. More details on this study are available at: