The Straits Times says

Encouraging steps on income inequality

For close to a decade, Singapore has been reducing income inequality, but still has some way to go before reaching levels that prevail in most other advanced economies. Moreover, there are other measures of inequality that need to be addressed. The just-released Key Household Income Trends report showed encouraging progress in both patterns of household income growth since 2014 as well as trends in income inequality. While household incomes per household member rose across the board in the 2014-2019 period, those in the top 10 per cent recorded the slowest growth of 2.5 per cent per year in real terms. By contrast, the remaining 90 per cent of households enjoyed growth ranging from 3.9 per cent to 4.5 per cent per year over the same period. Last year, the differences were even more stark: the top 10 per cent saw income gains of 0.4 per cent, while the rest experienced gains ranging from 3.5 per cent to 5.6 per cent.

These positive trends contributed to the decline in the Gini coefficient, which measures inequality on a scale of zero to one, with a higher coefficient denoting greater inequality. After peaking in 2012 at 0.478, Singapore's Gini coefficient trended down to 0.452 per cent in 2019, the lowest since 2001. After transfers and taxes, it was substantially lower at 0.398. This suggests the progressive policies of recent years made a difference. These include the progressive wage model, which sets out minimum pay and training requirements for workers such as cleaners and security guards at different skill levels, as well as special transfer schemes such as the Workfare Income Supplement, goods and services tax vouchers, rebates on utilities, health subsidies and Silver Support. Moreover, the report shows that transfers have been well targeted, with households in Housing Board one-and two-room flats receiving about $10,500 per household member, more than double the amount received by groups in other dwellings.

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A version of this article appeared in the print edition of The Straits Times on February 22, 2020, with the headline 'Encouraging steps on income inequality'. Subscribe