Real household incomes decline for first time in over 10 years

SINGAPORE - The Covid-19 pandemic hit Singapore households hard last year, with overall median household income from work falling by 2.5 per cent in nominal terms from $9,425 to $9,189.

After taking into account inflation, this works out to a 2.4 per cent drop in real terms - the first such decline in more than 10 years, since after the economy was battered by the global financial crisis.

In 2009, median monthly household income from work fell by 1.9 per cent in nominal terms, or 2.5 per cent in real terms after factoring inflation in.

In a new report released on Monday (Feb 8) afternoon, the Department of Statistics(DOS) found that lower income households were the hardest hit, with those in the bottom 10 per cent seeing a 6.1 per cent real decline in income.

In contrast, the rest of the households recorded real declines of 1.4 to 3.2 per cent.

But Government transfers and taxes also significantly reduced the Gini coefficient from 0.452 to 0.375. The Gini coefficient measures income inequality from 0 to 1, with 0 being most equal .

"This can be attributed to the significant amount of government support provided during the Covid-19 crisis in 2020, especially for households staying in the smaller Housing Board flats," said the DOS in a statement.

Resident households - including those with no working persons - received $6,308 per household member on average from various Government schemes last year, compared with the $4,684 received in 2019.

The DOS also noted that median household income from work has increased over the last five years, at a rate of 1 per cent per year in real terms or 5.2 per cent cumulatively since 2015.

Median monthly household income from work per household member dropped from $2,925 in 2019 to $2,886 in last year, a decline of 1.3 per cent in nominal terms or 1.2 per cent in real terms.

In comparison, this figure grew by 14.6 per cent cumulatively or 2.8 per cent per year in real terms, from 2015 to 2020.

This article was first published in The Straits Times. Permission required for reproduction.