SINGAPORE: As wages increased and inflation eased, real incomes for Singapore residents rose in 2024, the Manpower Ministry said on Thursday (Nov 28).
Real incomes take inflation into account, and measure the purchasing power of an individual.
Nominal incomes increased at a faster pace this year compared with last year, with the nominal median gross monthly income increasing from S$5,197 (US$3,880) to S$5,500, the Ministry of Manpower (MOM) said in an advance release of its labour force report.
That is a 5.8 per cent increase, up from 2.5 per cent growth last year.
At the 20th percentile - the lower end of the income scale - nominal income stood at S$3,026, a 7.1 per cent increase from S$2,826. From 2022 to 2023, nominal income grew only 1.7 per cent.
The increase in nominal income coupled with easing inflation means real incomes grew in 2024, said MOM.
For employees at the 20th percentile, real incomes grew 4.6 per cent after shrinking 3 per cent in 2023. Median real incomes grew 3.4 per cent after contracting 2.2 per cent last year.
"In fact, I think we see a broad-based increase across all deciles, so it's not just these two groups that we are focusing on," said Mr Ang Boon Heng, director of the manpower 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," the report said.
The ministry noted that income growth at the 20th percentile was higher than for median income earners. Mr Ang said that means income inequality is narrowing.
"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 added that lower-wage workers can expect to see greater income increases in the coming years, and noted that productivity is still outpacing wage increases.
The Progressive Wage Model (PWM) is not just a “minimum wage plus scheme”, said NMP Raj Joshua Thomas. It has revalued the work that is done not only in terms of wages, but also in terms of career progression, job perception and their contribution to Singapore’s economy, he said. In his adjournment motion in Parliament on Monday (Oct 14), he said more can be done for PWMs to continue to contribute to the reshaping of attitudes and perceptions towards low-wage work, and consequently, its value. It is critical to acknowledge that it is not sustainable nor desirable for the PWMs for all sectors to continue indefinitely, he said. Sectoral PWMs, once they have achieved their objective of correcting wages that were valued wrongly, must at some point “return the determination of wage increases to the market”, he said. This is critical or the PWMs may become a “crutch” to workers - who will only be able to achieve wage growth due to interventions by the tripartite partners and not through themselves showing the value of their work, nor negotiating for it. It is critical that while the PWMs are in force, workers are empowered to realise the value of their work, skills and training, and to organically demand for higher wages as they grow in expertise and seniority. This will position them to be able to continue to grow their value and wages even if their sector is eased out of the PWM. “If we fail to do so, then these vulnerable workers will remain vulnerable forever. We must avoid this as one of the outcomes of the PWMs,” he said. Mr Thomas proposed PWM 2.0 - with several key features. Firstly, the respective sectoral tripartite clusters would no longer need to prescribe year-on-year wage increases over a period of a few years, which is the current practice. The prevailing wage floors at the point of moving to 2.0 would continue to apply and to be enforced as a form of sectoral minimum wage for each rung. Secondly, the skills ladders should remain and be periodically reviewed, including whether there is a need for further training or refreshers. This will ensure that skills remain relevant and productivity continues to grow. Thirdly, the PWMs would not be inactive - they would “merely be dormant”. If wages in a PWM 2.0 sector stagnate for some time after they are returned to the market, then the tripartite partners can step in again to prescribe wage increases. The PWMs will be “living, breathing creatures, vigilant and ready” to take corrective measures if necessary, said Mr Thomas. Finally, each tripartite cluster should continue to look at matters related to the value of work in their sector, such as working conditions and workplace safety and health. Mr Thomas said as the PWMs mature beyond their 10th year, he is confident that they will be positioned to raise wages, increase productivity, improve the working conditions of workers and contribute to their sense of dignity and pride in their work. He is hopeful that one day, “low-wage work” will be called just “work” or even better - “good work”. Responding, Senior Minister of State for Manpower Zaqy Mohamad agreed with Mr Thomas on the need to take stock and refresh the PWM approach. He stressed that the PWM is not just about raising wages but is also about raising the value of the jobs involved. The tripartite partners regularly review the skills ladders while workers are required to go through skills training and encouraged to take on higher-value jobs. He hopes to see wages in more jobs rise sufficiently, so that there is no longer a need to mandate PWM wage increases. Mr Zaqy said as PWM sectors negotiate wage requirements over the next few years, he hopes that more workers can see significant uplift, and over time, more higher-level job roles can have their wages left to market forces. “But for now, the majority of our PWM workers still need the support and uplift from our PWM requirements. We will certainly continue to monitor and review PWM together with our tripartite partners,” he said.
MOM also highlighted that the majority of workers between 25 and 64 years old who transitioned to different industries saw an increase in income.
That suggests that changing industries led to "positive employment outcomes".
"They were generally hired into higher-skilled positions in more productive sectors," the report said, pointing to financial and insurance services, information and communications and professional services. Over the past ten years, more residents have moved into those sectors.
Nearly 60 per cent of 2024's industry switchers earned at least 5 per cent more after accounting for inflation, and around 20 per cent earned around the same amount.
The remaining 20 per cent saw their real income decline by at least 5 per cent.
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