As the first half of 2023 unfurled, Singapore faced a notable 4.5% decline in real median income, as reported by Senior Minister of State for Manpower Zaqy Mohamad. The reduction, marked by preliminary estimates, is largely attributed to persistent inflationary pressures and a dimming economic forecast.
During a parliamentary session on November 7, Zaqy Mohamad elucidated the challenges confronting Singapore’s economy, where inflation rates have soared to heights not seen since November 2008, peaking at 5.5% year-on-year in January. Despite this surge, there has been a noticeable decrease to 3% by September.
In stark contrast to the decrease in real median income, which factors in inflation, the nominal median income—earnings not adjusted for inflation—saw a marginal rise of 0.9% over the same period last year.
This downturn interrupts a half-decade trend of robust income growth outstripping inflation, with real median income increasing by approximately 9.4% from 2017 to 2022, equivalent to an annual growth of 1.8%.
Although 2022 recorded a real wage growth of 0.4%, the impact of inflation significantly curtailed the expansion rate, as detailed by the Ministry of Manpower in May.
Amid these broader economic currents, lower-wage workers in Singapore have experienced a silver lining with a noteworthy real income increase. From 2017 to 2022, those at the 20th percentile saw their real incomes climb by 15.4%, or an annual rate of 2.9%, outpacing the median’s growth and thus compressing the income disparity.
Looking ahead, the travel sector shows promise of robust wage increments, buoyed by a resurgence in demand. Similarly, wages are expected to hold firm within the labor-intensive services sectors, where enduring manpower shortages could amplify wage pressures.
The Singapore government remains cautiously optimistic, expecting inflationary tides to recede as the year progresses, despite the prevailing economic uncertainties that have led to the dip in real median income for the typical Singaporean worker.
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