SINGAPORE - 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.
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 after factoring in inflation.
In a new report released on Monday afternoon (Feb 8), 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.
In contrast, the rest of the households recorded real declines of 1.4 per cent to 3.2 per cent.
But government transfers and taxes also 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.
"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 in a statement.
Resident households - including those with no working individuals - 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 in 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 2020.
CIMB economist Song Seng Wun said that although the decline in overall median household income was not surprising, the dip was smaller than expected given that Singapore marked its worst-ever recession last year.
This was 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.
Mr Song added that recovery in the coming year will be uneven, with this year's Budget likely targeted at the sectors that need more help.
Impact on lower-income households
Households in the first to 60th percentiles saw a $37 to $49 drop in their average household income per member.
But those in the 61st to 100th percentiles saw a drop of between $96 and $337.
On the flip side, people staying in one- and two-room HDB 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.
This money was given out through schemes announced last year to mitigate the impact of the pandemic, such as the Care and Support Package and Self-employed Persons Income Relief Scheme. It was also distributed through older schemes, such as the Workfare Income Supplement and Goods and Services Tax Voucher.
The DOS also 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 school-going age than those in four-room flats. Hence, these households received more education subsidies on average, which led to them having a similar level of transfers as those in four-room flats, it said.
OCBC Bank chief economist Selena Ling noted that all over the world, the Covid-19 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-induced recession on household balance sheets, especially for those in the lower deciles," she said.