Singapore's real income surge in 2024

[SINGAPORE] Singaporeans' real incomes will rise in 2024 as salaries rise and inflation falls, according to the Manpower Ministry. Real incomes account for inflation and reflect an individual's purchasing power.

The anticipated rise in real incomes for 2024 comes as a welcome relief for Singaporeans who have faced economic challenges in recent years. Experts attribute this positive trend to a combination of factors, including the government's proactive economic policies, a rebound in global trade, and the successful implementation of productivity-enhancing measures across various sectors. This upward trajectory is expected to boost consumer confidence and stimulate domestic spending, further fueling economic growth.

Nominal incomes climbed quicker this year than previous, with the nominal median gross monthly income rising from S$5,197 (US$3,880) to S$5,500, according to an advance release of the Ministry of Manpower's labour force report. This represents a 5.8% gain, up from 2.5% growth last year.

At the 20th percentile, the lowest end of the income spectrum, nominal income was S$3,026, up 7.1% from S$2,826. From 2022 to 2023, nominal income increased by only 1.7%. According to MOM, the growth in nominal income, along with the reduction of inflation, suggests that real incomes will grow in 2024.

The reduction in inflation plays a crucial role in the projected real income growth. Singapore's central bank, the Monetary Authority of Singapore (MAS), has implemented a series of monetary policy adjustments aimed at curbing inflationary pressures. These measures, combined with a stabilization in global commodity prices, have contributed to a more favorable economic environment for real wage growth.

Real incomes for employees at the 20th percentile increased by 4.6% after declining by 3.0% in 2023. Median real incomes increased 3.4% after falling 2.2% last year. "In fact, I believe we see a broad-based increase across all deciles, so we are not focusing solely on these two groups," said Mr. Ang Boon Heng, director of the personnel research and statistics department.

"The real income growth in 2024 was close to the average growth rates seen in the years preceding COVID-19 ... when inflation was lower," concluded the study's conclusion.

The ministry stated that income growth at the 20th percentile was more than that of the median income earner. According to Mr Ang, this suggests that income disparity is narrowing.

This narrowing of income disparity is a significant development in Singapore's ongoing efforts to create a more equitable society. The government's focus on uplifting lower-wage workers through targeted initiatives has played a crucial role in this trend. Labour economists note that this reduction in income inequality could lead to improved social cohesion and a more robust middle class, which is essential for long-term economic stability and growth.

"This was supported by initiatives that aim to uplift lower-wage workers, such as the (Progressive Wage Model) and the National Wage Council's recommendation on the quantum of wage increase for lower-wage workers."

It also stated that lower-paid workers may expect to see higher income increases in the future years, and that productivity is still outperforming wage growth. MOM also stated that the majority of workers aged 25 to 64 who moved to different industries witnessed a gain in pay.

That shows that changing industries resulted in "positive employment outcomes". The trend of workers successfully transitioning between industries highlights the adaptability of Singapore's workforce and the effectiveness of the country's skills development programs. The SkillsFuture initiative, launched by the government to promote lifelong learning and skills mastery, has been instrumental in facilitating these career transitions. This adaptability is particularly crucial in an era of rapid technological change and evolving industry landscapes, ensuring that Singapore's workforce remains competitive on the global stage.

"They were generally hired into higher-skilled positions in more productive sectors," the survey stated, citing financial and insurance services, computer and communications technology, and professional services. Over the last ten years, more people have relocated into such areas.

After accounting for inflation, over 60% of industry switchers in 2024 earned at least 5% more, while the remaining 20% earned roughly the same. The remaining 20% experienced a real income loss of at least 5%.

While the overall trend is positive, the 20% of industry switchers who experienced a real income loss underscore the challenges that some workers face in transitioning to new sectors. The Ministry of Manpower, in collaboration with industry partners, is actively working on enhancing support mechanisms for these individuals. This includes targeted retraining programs, career counseling services, and temporary financial assistance to ensure that no one is left behind in Singapore's economic transformation journey.