Workers aged 35 to 44 and lower-income earners hit hardest by pay cuts due to Covid-19: DBS report

The incomes of more than half of people aged 35 to 44 plunged by more than 30 per cent, according to the report. ST PHOTO: CHONG JUN LIANG

SINGAPORE - Workers aged 35 to 44 have borne the brunt of the Covid-19 pandemic, with its dismal economic climate having taken a heavy toll on their salaries.

More than a quarter of these workers have seen their incomes decline in recent months. Among them, more than half (56 per cent) saw their incomes plunge by more than 30 per cent, according DBS Bank.

These workers, who form the bulk of Singapore's workforce, enjoy fewer support measures compared to older workers, said DBS Group Research senior economist Irvin Seah, who was in the team behind the report.

"Older workers have a lot of policy support measures like the Wage Credit Scheme and the Workfare (Income Supplement) Scheme, which are essentially some form of safeguard for them," he noted.

At the same time, those aged 35 to 44 also face higher competition from their younger peers and their relatively higher wages also make them susceptible to wage cuts, he added.

The DBS report was based on macro-economic data and anonymised findings from 1.2 million retail customers aged 25 to 70 who use DBS as their main salary crediting bank, over the March to May period. Work permit holders were excluded from the analysis.

The report also found that lower-income workers - those who earn less than $3,000 per month - make up almost half of customers who have experienced a fall in salaries. Within this group, 51 per cent saw their incomes decline by more than half.

In May, a larger proportion of customers - 26 per cent - saw their incomes shrink by over 10 per cent, compared to 15 per cent in March. Among them, about a third saw their incomes plunge by more than half.

Many people also do not have sufficient savings to tide them over their loss in earnings. In May, 64 per cent of workers who had experienced a significant fall in income had less than three months of emergency funds. Among this group, 42 per cent - or 27 per cent of those who had taken large pay cuts - had less than a month of such funds.

In terms of sectors, the aviation sector saw the largest spike in workers whose incomes deteriorated, with 81 per cent of people employed in the sector experiencing lower incomes in May, up from 39 per cent in March.

In a media briefing on Tuesday (Aug 18), Mr Seah called the Covid-19 pandemic "a highly regressive event which could potentially widen the income gap in Singapore".

He said: "Its impact on the various income groups has been disparate and uneven, and as we have found, skew unfavourably towards lower-income earners."

The Government has put forth "a decisive and robust fiscal response to the pandemic" in terms of the various Covid-19 support measures, including those announced by Deputy Prime Minister Heng Swee Keat on Monday, he said.

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Measures such as the Jobs Support Scheme helped mitigate job losses, he said, "but more targeted policy intervention may be required to provide calibrated assistance to those that are worst affected".

Despite the pandemic's adverse impact on incomes, one silver lining is that more retail investors sought to grow their wealth by buying stocks when the equity markets plunged in March.

As of June, these retail investors outperformed institutional investors and the benchmark Straits Times Index. They shifted significantly towards equities, and away from bonds and unit trusts, noted the report, which was jointly produced by DBS Group Research and DBS Financial Planning Group for the bank's new DBS NAV Financial Health Series of research reports.

The report also found that younger customers tended to invest more actively, a trend that was seen across the various income groups.

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