Income gap narrows slightly by maclaren1


									                                                                                 Publication: The Straits Times, p A8
                                                                                 Date: 20 February 2010

                        SMU                                                      Headline: Income Gap Narrows Slightly

                                                                                                                   I   .                                                                                       1

Income gap
                                                                                                                           LESS DISTANCE BETWEEN RICH AND POOR
                                                                                                                           Shgapore's income gap
                                                                                                                           narrowedfor the second
                                                                                                                           strabht year in 2009, largely
                                                                                                                           due to government help fw

narrows slightly                                                                                                           -
                                                                                                                           Isw-income hakreholds
                                                                                                                                Based on original income

                                                             But overall, income slipped across the board for
Overall fall in incomes,                                   families last year, when the recession pushed up un-
                                                           employment and drove down wages, according to the
                                                                                                                              more unequal income dlstrlbutlion.

but low-income                                                Its study of household
                                                           Statistics Department. income trends among Singa-

families boosted by aid                                    pore residents, released yesterday, shows Singa-
                                                           porels m i coefficient - a measure of income inequal-
                                                           ity - was 0.478 last year.
I BY CLAWSSAOON                                               This is a drop from 0.481 in 2008, and 0.489 in
THE income gap in Singapore has narrowed for the              These figures, however, do not include govern-
second year in a row.                                      ment help.
   A slight dip last year is the result of higher-income      Singapore Management University economist
families suffering a bigger drop in lncome relative to     Hoon Hian Teck noted that, after taking into account
lower-income households.                                   taxes and government benefits, the Gini coefficient
   At the same time, low-income families received a        went down even further last year, to 0.453.                 "
boost in government aid, including wage subsidies in          The smaller the Gini coefficient, the narrower the                                                   Source SINGAPORE DEPARTMENT OF STATISTICS
last year's Resilience Package and other aid schemes.      income gap.
                                                                                                                                                                                                    ST GRAPHICS
    Professor Hoon thinks it is very likely thdt
schemes to save lobs under the Resilience Package
and income supplements for low-wage workers
helped to narrow income inequality.
    Measures under last year's Resilience Package in-
cluded the Jobs Credit wage subsidy scheme, while
the Workfare Income Supplement, introduced in
2007, boosts the earnings of Singaporean workers
earning $1,500 or less per month.
    The other reason for the declining Gini coeffi-
cient last year is simply that ((when incomes fall,
higher incomes have greater leeway to fall more",
said labour economist Chew Soon Beng of Nanyang
Technological University.
    The median monthly household income fell by
$100 from 2008, to $4,850 last year. This 1.9 per
cent slide was foreseen by analysts, given the state
of the labour market then.
    After adjusting for inflation, the decline was
2.5 per cent.
    However, last year's median household income
was still higher than in 2007 and the years before.
    Prof Hoon attributed it to "government efforts
in the past five years to encourage older workers to
continue working, which boosted household in-
    While this trend was temporarily interrupted by
the recession, he expects incomes to grow this year
as the economy improves.
    The Statistics Department study shows that for
the top 10 per cent of employed households, their
average monthly income fell by $961 to $22,062 - a
nominal 4.2 per cent drop.
    For the bottom 10 per cent, the corresponding in-
come figures are a $9 drop to $1,303 a month - a
nominal 0.7 per cent fall.
    DBS economist Irvin Seah said it was difficult to
predict whether the income gap would further nar-
row this year.
    He foresees the economy growing by 6 per cent
and, in turn, lifting the earnings of the higher-in-
come group.
    But at the same time, poorer households will not
be left behind.
    "With the Government planning to tighten the
tap on foreign workers, it should translate into a
positive income effect on lower-lncome groups,"
he said.

  Source: The Straits Times O Singapore Press Holdings Limited. Permission required for reproduction.

To top