The Covid-19 pandemic hit Singapore households hard last year, with the overall median household income falling for the first time since the economy was battered by the global financial crisis more than a decade ago.
Last year, the median household income fell 2.5 per cent in nominal terms from $9,425 to $9,189. After taking into account inflation, this works out to a 2.4 per cent drop in real terms as prices eased.
The dip matches the decline seen in 2009, when the median monthly household income from work fell by 1.5 per cent in nominal terms, or 2.4 per cent in real terms.
In a report released yesterday, the Department of Statistics (DOS) found that lower-income households were the hardest hit, with those in the bottom 10 per cent seeing a 6.1 per cent real decline in income.
The rest of the households recorded real declines of between 1.4 and 3.2 per cent. But government transfers and taxes significantly reduced the Gini coefficient from 0.452 to 0.375.
The Gini coefficient measures income inequality from 0 to 1, with 0 being most equal - meaning there was less inequality last year.
"This can be attributed to the significant amount of government support provided during the Covid-19 crisis in 2020, especially for households staying in the smaller Housing Board flats," said the DOS.
Resident households - including those with no working persons - received $6,308 per household member on average from various government schemes last year, compared with the $4,684 received in 2019.
The DOS also noted that median household income from work has increased over the last five years, at a rate of 1 per cent per year in real terms or 5.2 per cent cumulatively since 2015.
Median monthly household income from work per household member dropped from $2,925 in 2019 to $2,886 last year, a decline of 1.3 per cent in nominal terms or 1.2 per cent in real terms.
In comparison, this figure grew by 14.6 per cent cumulatively or 2.8 per cent per year in real terms, from 2015 to last year.
6.1% Real decline in income of those in the bottom 10 per cent of households.
1.4-3.2% Real decline in income of the rest of the households.
CIMB economist Song Seng Wun said although the decline in overall median household income was not surprising given the pandemic, the dip was smaller than expected given that Singapore marked its worst recession last year.
This is likely due in part to Budget 2020 measures, such as the Jobs Support Scheme, which helped prevent the labour market from weakening as much as originally feared, he said.
He expects recovery in the coming year to be uneven, with this year's Budget likely targeted at the sectors that need more help.
OCBC Bank chief economist Selena Ling added her hope that Singapore will see some stabilisation in household incomes this year.
However, this depends on the shape of the recovery trajectory, she added. "If we get a K-shaped recovery where the lower-income households continue to be weighed down by the soft labour market conditions, then the Covid-19 pandemic may have a relatively long tail in terms of impact on jobs and incomes, despite the gross domestic product growth bounce tipped for 2021."
Deputy Prime Minister and Finance Minister Heng Swee Keat will deliver the Budget statement at 3pm next Tuesday.
His speech will focus on helping workers and businesses to adapt, innovate and grow.