“GDP is growing, but you can’t eat GDP. You can’t even eat employment. Incomes you can eat, if you spend them,” says the Economist, the PAP’s bible, in a post on the US economy, two days ago.
Well going by this tot, the PAP should be afraid, very afraid going into 2015 and a probable election before 2016. The recent data released by MoM. S’porans have no growth in real income to eat. And if they don’t have real growth in income before next GE, 60% mark may not hold.
Because going by MoM’s data, S’poreans are seeing “peanuts” real growth in wages in 2014.
S’pore’s real median income (i.e, income after adjusting for inflation) growth is at its slowest pace since 2009 with the real median earnings rising to just 0.4%, inclusive of the employer CPF contributions.
A DBS economist said that the real income growth of 0.4% for this year is disappointing, compared with 4% last year. “Should the trend continue, it will raise questions over whether the policies made so far to boost productivity, and real median incomes, are working.”
A Barclays Capital economist blamed the slowdown in growth and the property sector as the main reasons for median incomes stagnating. “There are a lot of professionals in the sector, such as lawyers and bankers. When property slowed down, companies were not able to pay good raises since the profit margins were constrained at the top.”
Worse, the “exceptional” 4% in 2013 was partly pulled up by the initial effect of the Wage Credit Scheme launched last year, whereby the Government co-funds the wage increases given to Singaporean employees.
Good piece from TRE (it’s editorial stuff is usually very decent: taz the adv of having a scholar, unlike TOC which has no scholars, only anti-PAP fruscos) dated 29th November.
*MOM said, “The employment rate rose to a new high, as more women and older residents were in the labour force amid a tight labour market and low unemployment. There was sustained growth in incomes in the recent five years, with the income growth of lower income earners keeping pace with that at the middle.”
However, upon reviewing the data, it was observed that Singapore’s real median income (i.e, income after adjusting for inflation) growth is actually at its slowest pace since 2009 with the real median earnings rising to just 0.4%. This is inclusive of the employer CPF contributions.
A DBS economist said that the real income growth of 0.4% for this year is disappointing, noting that it was 4% last year. He said, “Should the trend continue, it will raise questions over whether the policies made so far to boost productivity, and real median incomes, are working.”
A Barclays Capital economist blamed the slowdown in growth and the property sector as the main reasons for median incomes stagnating. He explained, “There are a lot of professionals in the sector, such as lawyers and bankers. When property slowed down, companies were not able to pay good raises since the profit margins were constrained at the top.”
However, the “exceptional” 4% in 2013 was partly pulled up by the initial effect of the Wage Credit Scheme launched last year. Under the scheme, the Government co-funds the wage increases given to Singaporean employees.
The following table was drawn up by ST in its news report today (29 Nov) quoting figures from MOM’s Singapore Workforce report:
Notice that MOM did not report the figure for the real median income growth if the employer CPF contributions were excluded (i.e, employees’ take-home pay does not include employer CPF. It’s locked inside the CPF till old age). ST reported it simply as “n.a.” or “not available”.
However, thanks to a TRE reader, Win battles lose war, he was able to work out that the real median income growth excluding employer CPF contributions is actually -0.6% for this year.
The reader said:
“Actually, you can calculate this missing statistic from the data in the table.
Since nominal and real income growth (including employer CPF) was 1.8 and 0.4% respectively – doesn’t it mean that inflation was 1.4% (1.8 – 0.4%)?
Therefore, with nominal income growth (excluding employer CPF) at 0.8% – doesn’t it mean that the real income growth was -0.6% (0.8 – 1.4%)?”
“What is the reason for this statistics becoming ‘n.a.’ (disappeared)?” he asked.
“Could it be because it may be embarrassing for real income growth to be negative, despite inflation being at around a 6-year low?”
The reader further illustrated that the real income growth is getting worse for Singaporeans in the past 5 years (2009 to 2014) compared to the previous 5 (2004 to 2009):
With this missing statistic, and the real income growth (excluding employer CPF) at -0.1, 1.3, 2.6, -1.9 and 5.8% from 2009 to 2013, we can calculate the annualized real income growth from 2009 to 2014 as 1.4%, compared to the 1.9% (including employer CPF) in media reports.
Even so, with this 1.9% annualized real income growth (including employer CPF) in this past 5 years (2009 to 2014), it is worse when compared to that of the previous 5 years of 2.5% (2004 to 2009).
And these numbers would even be worse for the corresponding figures of real income growth (excluding employer CPF)!
Note that the salary figures in the table above only reflected the incomes of full-time workers. Those of part-time workers were not included.
The reader asked a pertinent question – are the policies of PAP government working? Whatever happened to the following usual rhetoric from the government?
- curtailing foreign labour influx will raise incomes
- a tight labour market will raise incomes
- numerous productivity initiatives and schemes will raise incomes
- the Wage Credit Scheme will raise incomes
- Skills upgrading will raise incomes
Life getting tougher for Singaporeans
Retiree Michael Ng, 67, reportedly told a Financial Times reporter that life has become “more stressful” of late [Link].
Mr Ng said, “My children have to work very long hours. People have to work hard to maintain their lifestyles, transport costs have already increased these past two years and housing has gone up a lot.”
Indeed, the Public Transport Council (PTC) announced this month that it has started the annual fare review exercise. Public transport operators may submit their applications for fare review to the PTC for consideration by Dec 19.
SMRT’s Vice-President Patrick Nathan told the media, “We seek a better alignment of fares and operating costs, and will be submitting our application for a fare review in the coming weeks.”
Public transport fares were only last adjusted in Apr this year. There was a fare increase of 3.2% – just half of the total fare cap of 6.6%. It means the remaining 3.4% will be brought forward to this year’s fare review exercise.
And MOE has just announced that students entering polytechnics and the ITE next year will have to pay more school fees, with tuition fees raised by 2 to 5%.
Locals enrolling in the polytechnics next year will pay $2,500 in tuition fees per year, up from the current $2,400. For ITE, students will have to pay about $17 and $13 more for the Nitec and Higher Nitec courses respectively. But those hoping to enrol in the ITE’s technical diploma course will have to pay $106 more annually.
Middle-income Singaporeans losing sense of belonging to Singapore
Even the academics noted that the sense of security typically associated with being middle-class has given way to anxiety among such Singaporeans.
“When we think about the middle class, we think of security, comfort and social mobility. But all these are sort of in decline,” said NUS sociologist Tan Ern Ser at a recent forum, which focused on the state of Singapore’s middle class.
Exacerbating the anxiety is the rise in living costs, which has led to many middle-income Singaporeans no longer being able to afford what they think they deserve.
“If the middle class itself is facing threats of long-term unemployment and socioeconomic insecurity, then its value as an aspirational category becomes open to question,” said Dr Lionel Wee, the vice-dean of NUS’ Faculty of Arts and Social Sciences.
SMU economics professor Ho Kong Weng also noted that middle-class Singaporeans now feel less proud about their national identity. Prof Ho said they felt a weaker sense of belonging to the country. And unlike the more mobile rich, they may not have the option to leave the country, Prof Ho said.
Meanwhile, the MOM report also mentioned that unemployment for Singapore residents in their late 20s stood at 5.8% this year, the highest since 2009. For those under 24, the rate was 8.8 per cent.