Lower-income families were hardest hit by the Covid-19 pandemic, with new data from the Department of Statistics (DOS) showing that the average household income from work per member fell most significantly for this group last year.
The bottom 10 per cent of households saw a 6.1 per cent decrease in real income, while the remainder recorded declines of between 1.4 per cent and 3.2 per cent.
In a report released yesterday, the DOS noted that households in the first to 60th percentiles saw a $37 to $49 drop in their average household income per member.
Those in the 61st to 100th percentiles reported a drop of between $96 and $337.
Despite this, Singapore's Gini coefficient, which measures income inequality, was significantly reduced from 0.452 to 0.375 after government transfers and taxes.
People living in one-and two-room Housing Board flats received an average of $13,670 in government transfers per household member last year. This was nearly double the transfers received by those living in three-room flats.
Examples of such transfers include money given out under schemes to mitigate the impact of the pandemic, such as the Care and Support Package and Self-Employed Person Income Relief Scheme.
It also included funds distributed under older programmes, such as the Workfare Income Supplement and Goods and Services Tax Voucher.
The DOS noted that some households in larger flats received more subsidies because of their household composition.
For instance, households in five-room flats have, on average, more children of schoolgoing age than those in four-room flats.
Hence, these households received more education subsidies on average. This led to them having a similar level of transfers as those in four-room flats.
OCBC Bank chief economist Selena Ling noted that all over the world, the pandemic has hit lower-income and freelance workers harder than white-collar workers.
"Essentially, fiscal policy and transfers continue to play an important role in mitigating the adverse impact of the Covid-19-induced recession on household balance sheets, especially for those in the lower deciles," she said.
Singapore University of Social Sciences associate professor of economics Walter Theseira added that it will be important to help members in affected households upgrade and change their jobs, especially for individuals in roles that may fall out of demand as the economy recovers.
These could include people who are working as safe distancing ambassadors or food delivery riders, he said. "All these jobs pay the bills, but people are going to want better jobs with better career prospects as the economy recovers," Prof Theseira said.
"So I think it's going to be very important to try to direct government support towards better job creation and to help employ Singaporeans in these better jobs as the economy recovers."
