Singapore residents’ real median income falls 2.3% in 2023 due to high inflation
REAL median income fell 2.3 per cent in 2023, as high inflation chipped away at nominal wage growth, said the Ministry of Manpower (MOM) in the advance release of its annual Labour Force in Singapore report on Thursday (Nov 30).
Real wages for workers at the 20th percentile fell 3 per cent year on year, after taking inflation into account – though the decrease was smaller (minus 2.1 per cent) after accounting for government transfers, such as the Workfare Income Supplement and other related payments.
Nevertheless, real income growth remained positive over the decade between 2013 and 2023, with real median incomes rising 2 per cent per annum and real incomes at the 20th percentile rising 2.6 per cent per annum. (see amendment note)
The figures in the report are for the period of June and apply to Singaporeans and permanent residents. They are based on MOM’s mid-year Comprehensive Labour Force Survey, which looks at indicators typically not covered in the ministry’s quarterly labour market reports. (see amendment note)
Real income growth is likely to remain negative for the rest of the year, but should improve in 2024 with inflation easing, said MOM.
But how much improvement would depend on several factors, including the tightness of the labour market and the slowdown of the economy, said MOM’s director for manpower research and statistics Ang Boon Heng.
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Some sectors, which are experiencing more tightness, may see “above average” nominal wage growth, said Ang. This would be growth sectors with higher productivity and overall wages, such as financial and professional services, and insurance services.
“If you look at (recent job) vacancy data, these are also sectors that have a lot more vacancies than other sectors,” he added.
Real income growth is likely to be better in 2024, compared with this year, as “moderating inflation would bite less from nominal income gains in a still-uncertain economic environment that could soften labour demand”, said DBS economist Chua Han Teng.
Maybank regional co-head of macro research Chua Hak Bin agreed, but said the improvement will be “not that much better” than this year.
“Real income growth will likely turn positive, but barely so, in a range of 0 to 1 per cent,” he said, noting that while headline inflation will moderate in 2024, it will still be high by historical standards.
As for workers at the 20th percentile, Dr Chua said targeted government transfers would help to nudge real income growth for the segment higher and closer to between 2 per cent and 3 per cent in 2024.
Singapore’s labour market remained tight, but the weaker economic outlook has slowed labour market improvements in the short-term, said MOM.
The employment rate for residents aged 15 and above declined to 66.2 per cent, from the previous year’s historical high of 67.5 per cent.
But “we can’t expect the employment rate to keep growing until it reaches 100 per cent”, said Ang, who noted that Singapore continues to have one of the highest employment rates globally.
Structural factors – such as Singapore’s ageing population – will continue to put downward pressure on the employment rate.
Thus, MOM’s focus is on the quality of employment – that people can find good and higher-paid jobs; ensuring that those who want to work can find work; and improving employment rates among specific segments of workers, such as women between ages 45 and 49 who have left the workforce for caregiving reasons.
Unemployment rates continued to stay low, with the unemployment and long-term unemployment rates for non-professionals, managers, executives and technicians (non-PMETs) recording bigger declines than PMET workers.
The unemployment rate for non-PMET workers dipped to 3.6 per cent, from 4.4 per cent the previous year. It fell to 2.4 per cent for PMETs, from 2.6 per cent previously.
The long-term unemployment rate also fell for both PMETs – to 0.4 per cent, from 0.5 per cent a year ago – and non-PMETs – to 0.5 per cent, from 0.7 per cent before.
The incidence of discouraged workers – those not actively job hunting as they believe their search will not yield results – remained “stable and low” at 0.4 per cent in 2023.
Meanwhile, the resident time-related underemployment rate fell to the lowest in over a decade – reaching 2.3 per cent, from 3 per cent the previous year. MOM said this indicates that more part-time workers were able to have the work hours they want this year, compared with 2022.
The proportion of workers in permanent jobs rose to a high of 90.5 per cent, comparable to the level last seen in 2016, which was 90.6 per cent.
Amendment note: An earlier version of the article did not clearly state that the figures referred to real income growth per annum between 2013 and 2023 and also wrongly stated that the Labour Force in Singapore advance report publishes figures for the year ended June.
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