Singapore’s median household income edges up 0.2% in real terms in 2022, amid high inflation

SINGAPORE’S median monthly household income from work rose by a marginal 0.2 per cent in real terms in 2022 for resident employed households, just keeping ahead of high inflation, a Singapore Department of Statistics (Singstat) report showed on Thursday (Feb 9).

This was a sharp slowdown from 2021’s real growth of 1.5 per cent.

But nominal growth was higher at 6.1 per cent, from 3.6 per cent in 2021. The median monthly income from work was S$10,099 for resident employed households, up from S$9,520 in 2021.

While inflation’s surge in 2022 drove up household income from work, it also suppressed real income growth, noted OCBC chief economist Selena Ling.

CIMB economist Song Seng Wun said: “Given that inflation was significantly higher than the year before, that we managed to eke out some marginal gain is commendable.”

Betul Genc, Singapore country manager at human resource consultancy Adecco, also noted that “2022 was the year of the great resignation or re-evaluation, as well as huge layoffs especially in the tech sector”.

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From 2017 to 2022, median monthly household income from work of resident employed households rose 2.9 per cent cumulatively or 0.6 per cent per annum in real terms.

Growth rates were higher after accounting for household size. The median monthly household income per household member rose to S$3,287, from S$3,027 before – a growth of 8.6 per cent in nominal terms or 2.6 per cent when accounting for inflation.

Only the top tenth of households saw average income per household member fall in real terms, by 1.3 per cent, which Singstat said was partly due to larger household sizes. For the top tenth, average household size grew to 2.34 persons, up from 2.26 persons in 2021, a larger increase than for other deciles.

For all other income deciles, there was real growth in average household income from work per household member. This ranged from 1.1 per cent to 10.1 per cent, with the bottom 10 per cent of households seeing the highest rise in income.

To calculate real income changes, consumer price index for all items for the relevant household income group was used.

Household income inequality continued to fall in 2022, even before accounting for government transfers and taxes, said the report.

The Gini coefficient, which measures income inequality, dipped to 0.437 last year, from 0.444 in 2021. Zero represents complete income equality and one represents complete inequality.

After taking government transfers and taxes into account, the Gini coefficient decreased to 0.378 last year – less than 0.385 (*see amendment note) in 2021, and the second-lowest value since 2000. The lowest remains 0.375 in 2020.

Households received more government transfers last year, compared to 2021, Singstat noted. Resident households, including those with no employed person, received S$5,765 per household member on average in 2022, up from the S$5,257 received in 2021.

This was due to one-off and transitionary measures, as well as enhanced schemes, to cushion the impact of the goods and services tax rate increase and higher inflation.

Resident households in Housing and Development Board (HDB) one and two-room flats continued to receive the most government transfers.

In 2022, they received S$12,189 per household member on average, nearly double the amount received by resident households in HDB three-room flats.

Household income from work includes Central Provident Fund contributions from employers, while resident employed households are those where the reference person is a Singapore resident and at least one household member is employed.

While industry watchers agreed that wages will likely grow nominally in 2023, driven by continued labour market tightness, they were mixed on how real income growth would be impacted.

Nominal wage increases will vary across industries, economists noted, with service and tourism-oriented sectors as well as growth areas such as cybersecurity and digital services faring better than those in decline such as electronics manufacturing.

“Salary increases in 2023 are expected to surpass pre-pandemic levels, with increases between 4 and 7 per cent,” said Genc, even as businesses also seek to retain talent through strategies such as “diverse forms of work arrangements, enhanced offices with collaborative spaces and development opportunities”.

Ling expects that, while positive, both nominal and real wage income growth may remain muted in 2023: “Inflation may not ease significantly this year, at least not in H1 2023, especially for core inflation.”

Maybank economist Chua Hak Bin said: “There is a high likelihood that real income growth could turn negative this year, as inflation will remain elevated and erode the purchasing power of any wage gains” – which will be more measured this year, given slowing growth and downsizing in the tech sector.

Song was more optimistic. “Businesses, on a net basis, are hiring more than firing,” he said.

He added that while there is a possibility of a decline in real income, this would occur only if recession risks materialise significantly and force companies to cut wages, and inflation “re-accelerates” in H2 2023 because of a pick-up in global demand.

Song believes that the peak of inflation has passed, even if it does not return to pre-Covid levels “anytime soon”.

While recession jitters persist, the risk has been contained, and labour market conditions in Asia, the US and Europe remain resilient, he added.

“It looks like, short of another external shock, for 2023, the change in real median household income should be better than the 0.2 per cent in 2022.”

*Amendment note: A previous version of the story incorrectly stated that 2021’s Gini coefficient was 0.386. It was in fact 0.385.