Real median income in Singapore falls 2.3% in 2023 on high inflation

The labour force participation rate among residents aged 15 and above declined from 70 per cent in 2022 to 68.6 per cent in 2023. - ST

SINGAPORE: Workers are feeling the pinch in 2023, as high inflation takes its toll on wage growth.

In preliminary labour force data released on Nov 30, the Ministry of Manpower (MOM) said resident workers at the 20th-percentile salary level saw their real incomes fall 3 per cent year on year, while those drawing the median wage saw a 2.3 per cent decrease year on year.

Singapore’s employment rate for residents aged 15 and above also fell from 2022’s historic high of 67.5 per cent in an “exceptionally tight” labour market to 66.2 per cent, said the ministry.

“Residents” refers to Singaporeans and permanent residents.

MOM said the labour market remained tight in 2023, with unemployment and long-term unemployment rates declining for both PMETs (professionals, managers, executives and technicians) and those not in such roles.

The ministry said the decline in employment rate over the year was due to more residents staying outside the labour force, and not because of difficulties in seeking employment.

The labour force participation rate among residents aged 15 and above declined from 70 per cent in 2022 to 68.6 per cent in 2023, it noted.

MOM also noted that labour demand is easing as the number of job vacancies fell for five consecutive quarters, and the ratio of job vacancies to unemployed people “also dipped significantly” for the second consecutive quarter to 1.94 in June 2023.

Non-PMETs saw a larger decline in unemployment rate, from 4.4 per cent in 2022 to 3.6 per cent in 2023, compared with that for PMETs, which dropped from 2.6 per cent to 2.4 per cent over the same period, MOM said.

The long-term unemployment rate also fell more for non-PMETs, from 0.7 per cent to 0.5 per cent, compared with a 0.1 percentage point decline to 0.4 per cent for PMETs over the same period.

MOM added that indicators of labour under-utilisation improved as well.

For one, the time-related underemployment rate declined from 3 per cent in 2022 to 2.3 per cent in 2023, the lowest in over a decade.

“This indicates that more part-time workers in 2023, compared with 2022, were able to have the work hours they want,” MOM said.

Time-related underemployment rate is defined as the percentage of those aged 15 and above who normally work less than 35 hours a week, but are willing and available to engage in additional work, out of the entire pool of those employed.

Meanwhile, the incidence of discouraged workers remained stable and low at 0.4 per cent in 2023.

Discouraged workers are those outside the labour force who are not actively looking for a job because they believe their job search would not yield results.

Reasons workers cited for being discouraged include the beliefs that there is no suitable work available, that employers discriminate against them, and that they lack necessary qualifications, training, skills or experience, MOM said.

MOM added that the proportion of employees in permanent jobs rose to 90.5 per cent, the highest percentage since 2016.

Meanwhile, the number of own-account workers, which refers to self-employed people without employees, declined to pre-Covid-19 levels after four years of increases.

The category includes platform workers such as taxi and private-hire car drivers, as well as delivery workers who use matching platforms in their work.

The number of regular platform workers fell by about 20 per cent, with most of those who exited being delivery workers.

MOM said this was most likely due to the easing in demand for deliveries compared with the immediate post-pandemic period.

“The increased job vacancies and job stability associated with employee jobs could have prompted these platform workers to take up salaried jobs,” it added.

MOM said nominal income, which does not take inflation into account, was higher in 2023 than in 2022.

At the 20th-percentile income level, workers earned $2,826 in 2023, up from 2022’s $2,779.

Even after accounting for Workfare Income Supplement (WIS) and related payments, real wages for those at the 20th-percentile wage level still declined by 2.1 per cent.

“While real income growth for the remainder of 2023 is likely to remain negative, we expect an improvement in real income growth in 2024 with inflation easing,” said the ministry.

It added: “Over a longer time horizon from 2013 to 2023, real income growth remained positive, and wage dispersion narrowed between the (20th-percentile) worker and the median worker.”

In 2023, nominal income for workers at the 50th percentile, or median level, stood at $5,197, up from 2022’s $5,070.

The results in the 2023 advance labour force report are drawn from the annual Comprehensive Labour Force Survey, which is conducted on a representative sample of resident households.

More than 27,900 households responded to the latest survey.

Ang Boon Heng, director of MOM’s manpower research and statistics department, told reporters at a media briefing on Nov 30 that the 0.9 percentage point narrowing of the decline in real wages for 20th-percentile earners shows the significant impact made by the WIS and other payments.

“Considering that inflation is high... I think with inflation easing, we will be able to see positive impact on the lower-wage workers with all these policies,” he said.

He also said Singapore still has one of the highest employment rates worldwide, despite its decline.

However, said Ang, the ministry is looking into employment rates for specific age groups, with the rates for some groups, such as women aged 45 to 49, “not as high as we hope them to be”.

“These are pockets or groups where we can try to raise the employment rate, but there will always be that competing... downward pressure from the ageing population, so we will expect employment rates to stay at this level,” he said. - The Straits Times/ANN

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