As you can see from the graph above, the richest households saw the greatest improvement in their incomes in 2011. The data refer to “resident households”, i.e. households headed by Singapore citizens or permanent residents, and was provided by the Department of Statistics.
However, the Straits Times story of 15 February 2012 preferred to focus on the fact that everybody “earned more last year”.
Before going on, I need to give you the numerical data behind the above graph:
There are three important facets of the above numbers I need to highlight: Firstly, the monthly incomes from work include CPF contributions made by employers. Since the total mandatory CPF contributions (employer + employee) make up about 30% of “income” (lower for employees over 50), what it means is that the average household in the first decile, earning a gross $1,581 per month in 2011, actually had only about $1,100 in available money. As I will show below, that household had 3.75 persons to feed in 2011.
The second thing to note is that the decile ranking is not based on household income but on household income per member.
Thirdly, households with no employment income are not included at all in this analysis. Page 5 of the booklet issued by the Department of Statistics (Key Household Characteristics and Household Income Trends, 2011) indicates that 9.3 percent of households have no employment income. This figure includes the 5.8 percent classified as “retiree households”, defined as those comprising solely of non-working persons aged 60 years and older.
Unlike in the case of the previous two articles on Yawning Bread, where I was of the view that those numbers were hard to interpret, being selective and piecemeal, in this case the numbers are quite clear. The frustration they produce however, is simply that nothing is changing. The income gap continues to widen.
But that is an observation buried fairly deep inside the Straits Times’ version. The newspaper’s report begins by focussing on the median:
The median income of a Singapore family has gone up, and it rose faster than inflation last year, according to a government report.
This income, which is the mid-point in a range, jumped 11 per cent to $7,040 a month last year as more family members went out to work in a growing economy overflowing with jobs.
As inflation was around 5 per cent, the family enjoyed a real income growth of 5.6 per cent, said the report of Key Household Characteristics and Household Income Trends in 2011, released yesterday by the Department of Statistics.
Economists like Mr Irvin Seah of DBS Bank cheered the achievement, saying: ‘The fact that real income has risen across the board suggests all Singaporeans have benefited from the healthy economic growth in recent years.’
— Straits Times, 15 Feb 2012, Singapore households earned more last year, by Cai Haoxiang [emphasis added by Yawning Bread]
It’s only when you get to the lower half of the story that you sense the reporter trying to tell us it isn’t all sweetness and light.
But Prof [Randolph] Tan is concerned about the widening income gap between the top and bottom 10 per cent.
The Gini coefficient, a measure of income inequality, went up to 0.473 last year, indicating the gap has widened. It was 0.472 in 2010.
Then the story took an interesting turn, which perked me up. It reported that even though the household income increased more for rich households, in these well-to-do households, the income per member increased by less. That’s quite a trick, I said to myself, but I quickly guessed that it was due to changes in household size, a point confirmed by the Department of Statistics.
Besides overall household income, the report also gave the average income per household member.
It showed that wages of those at the bottom increased at a faster rate than those at the top. The reason, said a Department of Statistics spokesman, is the change in the family size, albeit slightly.
The family size of the bottom 10 per cent shrank last year, while that of the top 10 per cent grew.
Although it was explained in the story, I had to check the data for myself. Indeed, found that the richest decile of households increased size by about 5% while the poorest decile decreased in size by 5%. Click thumbnail for data.
Why is that happening? The figures won’t be able to tell us. One possibility is that the better-off are able to have more children, and those in the lower-income brackets are not. This would be consistent with the observation made by others that many Singaporeans just cannot afford to have children based on what income they have. At a broad social level, even as we respect individual choice, this cannot but be a bad sign.
The question that seizes us is this: At what point does personal and family stress spill over into social collapse?