Real wages already adjusted for prices: Ministry

SINGAPORE - Last Friday's article ("MPs cheer push to narrow inequality") quoted sociologist Vincent Chua as saying that prices in Singapore "have gone up faster than real wages".

The statement unfortunately confused real wages with nominal wages. Real wages are already adjusted for prices.

The majority of workers and households have seen their real incomes grow in the last five years. The median Singaporean worker experienced real wage growth of about 9 per cent from 2007 to last year.

This estimate of real wage growth is after deducting all-items CPI (consumer price index) inflation from nominal wage growth. This includes costs of imputed rentals on owner-occupied homes, which are not actual expenditures.

Using another measure of inflation that excludes these imputed rentals, real income growth was stronger at 13 per cent.

On a household basis, real incomes went up more significantly because higher incomes for individual workers were accompanied by more members of households being employed.

Monthly household income from work per household member increased by 14 per cent over the five years, for the median household.

Excluding imputed rentals on owner-occupied homes, real incomes in fact rose by 19 per cent - for both median households and lower-income households at the 20th percentile of the income ladder.

Lim Bee Khim (Ms)

Director, Corporate Communications

Ministry of Finance

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